Fo­sun eyes US com­pa­nies

China Daily (Canada) - - FRONT PAGE - By PAUL WELITZKIN in New York paulwelitzkin@

China’s Fo­sun Group is on the look­out for ma­ture com­pa­nies in the US and Europe with strong brands and prod­ucts and ser­vices that can be ex­ported to China’s mar­ket­place, ac­cord­ing to a man­ag­ing direc­tor at the con­glom­er­ate.

Har­vey Fine, who man­ages global in­vest­ments and strate­gies and runs Fo­sun’s New York of­fice, was among the panel mem­bers dis­cussing global merg­ers and ac­qui­si­tions (M&A) in the dig­i­tal era at the 2015 In­ter­na­tional Fi­nan­cial Fo­rum hosted by The M&A Ad­vi­sor Tues­day in New York.

The panel dis­cussed M&A op­por­tu­ni­ties against the back­drop of a com­plex global eco­nomic pic­ture that in­cludes a con­tin­u­ing US re­cov­ery from the fi­nan­cial cri­sis, China’s mod­er­at­ing growth and a still­strug­gling Europe.

Fo­sun, which was started two decades ago by four col­lege grad­u­ates, has grown to be­come one of China’s largest con­glom­er­ates. Shang­haibased Fo­sun man­ages funds from in­sur­ers to make in­vest­ments and is mod­eled af­ter War­ren Buf­fett’s Berk­shire Hathaway Inc. It has in­vested in in­sur­ers and re­tail­ers across Europe, as well as in real es­tate in the US, Lon­don and Ja­pan.

“We tend to look at in­vest­ments from a long-term per­spec­tive,” said Fine. Fo­sun is drawn to sec­tors that will ben­e­fit from China’s chang­ing life­style and ris­ing mid­dle class, which in­cludes re­tail and travel- re­lated in­vest­ments. “It’s why we in­vested in Club Med and the travel firm Thomas Cook,” he added.

He noted that only 3 per­cent of Chi­nese have a pass­port, so the po­ten­tial mar­ket for in­ter­na­tional travel is huge.

China’s gross do­mes­tic prod­uct per capita to­taled about $6,626 in 2013, about three times less than the Czech Repub­lic.

“We are al­ready tap­ping the high-end Chi­nese con­sumer by mak­ing in­vest­ments in fi­nan­cial-ser­vices providers and other com­pa­nies that tar­get that group,” he said. Ris­ing in­come in China will al­low those com­pa­nies to ex­pand their cus­tomer base in China, Fine said.

Fine said Fo­sun is also aware of the de­mo­graphic trends in China, driven in part by the one-child pol­icy. China is al­ready an age­ing so­ci­ety. A 2010 cen­sus showed that nearly 14 per­cent of Chi­nese cit­i­zens were over 60, and nearly one in 10 were over 65. “It’s why we have in­vested in a se­nior health care com­pany,” noted Fine.

An­drew Rice, a se­nior vice-pres­i­dent at The Jor­dan Co, said China’s la­bor rates are now dou­bling ev­ery five years, and that has caused some man­u­fac­tur­ers to look else­where, mainly to the As­so­ci­a­tion of Southeast Asian Na­tions (ASEAN).

“They have been work­ing on form­ing a com­mon mar­ket much like Europe but with no com­mon cur­rency,” said Rice. The ASEAN mar­ket will pro­vide a con­sumer pool of some 600 mil­lion peo­ple.

Jef­frey Wells, ex­ec­u­tive direc­tor of cy­ber devel­op­ment at the Mary­land Depart­ment of Busi­ness and Eco­nomic Devel­op­ment, said cy­ber threats can shake the In­ter­net and global com­merce to the core.

“We will lose con­trol of the In­ter­net in the next five years if we don’t get a han­dle on this,” he said.

Car­los Mor­eira, the CEO of Wisekey, said the In­ter­net will have 50 bil­lion de­vices like phones, tablets and watches con­nected to it by 2020. “Who are the hack­ers?” he asked the au­di­ence. “Be­hind the hack­ers you have a well-or­ga­nized in­dus­try that in­tends to profit from the lack of cy­ber se­cu­rity.”

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