Fosun eyes US companies
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.”