Fosun Plays on Chinese Consumption in Europe

By Isabella Steger

China?s Fosun Group has been at the forefront of the Chinese private sector?s push into Europe, but its chief executive said bargain prices aren?t the group?s only consideration when sourcing deals.

Speaking at the Asian Financial Forum in Hong Kong on Monday, Liang Xinjun, head of the Shanghai-based conglomerate, said Fosun made a deliberate decision to invest overseas, but it differs from its Chinese peers?it is doing more than just ?buying resources to bring back to China.?

Armed with a belief that the Chinese consumer will continue to play an increasingly important role in driving economic growth, Mr. Liang said he is looking for ?foreign companies that will benefit from [Chinese consumption],? particularly in the services sector.

To that end, Fosun has invested in European companies such as French resort operator Club M?diterran?e?SA, in which it has a 9.71% stake valued around 44 million euros.

According to Fosun?s website, the company helped Club Med open its first resort in China six months after the deal was struck in 2010. Club Med aims to have five resorts in China by 2015, which would make it the company?s largest overseas market.

Fosun also has a 10% stake in Greek jewelry retailer Folli Follie Group SA , which it bought for around 85 million euros in 2011.

Mr. Liang said that when making investments overseas, he doesn?t seek majority control, but would rather strike a deal where he can have board representation instead.

?We want to help these companies expand in China while keeping their original management teams. That way, they will support us more,? he said.

European companies battered by the financial crisis have been seeking foreign investment in recent years, which allowed private Chinese enterprises to cherry-pick assets.

However, Mr. Liang said that Chinese companies need to seek acquisitions that would give them technological expertise and internationally well-known brands, as buying an asset just because it?s cheap is ?a mistake that the Japanese have made in the past.?

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Source: http://feeds.wsjonline.com/~r/wsj/deals/feed/~3/fOpRhm2mj7g/

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