Fosun International Co-CEO Xu Xiaoliang: Reshaping Profit Structure and Moving Toward Long-Term Value Growth

Byline: Wang Lixin

Fosun International Co., Ltd. (hereinafter referred to as “Fosun” or “Fosun International”) has issued a warning regarding losses and earnings for more than a month, and reactions from the stock market, bond market, banks, and rating agencies have been relatively stable.

On the evening of March 30, Fosun International released its 2025 annual report. During the reporting period, total revenue reached RMB 173.43 billion, with adjusted industrial operating profit of RMB 4.0 billion. In accordance with the principle of prudence, Fosun made non-cash impairment provisions and performed a fair value remeasurement, resulting in an annual book loss of RMB 23.4 billion.

“Losses are always not good. Such performance is unprecedented in Fosun’s more than 30-year development history.” On March 31, Guo Guangchang, Chairman of Fosun International, said at the 2025 earnings briefing that, from a long-term perspective, it marks Fosun’s entry into a brand-new stage of development. He added that Fosun International Co-Executive Chairman Wang Qunbin also said at the earnings briefing that, as things stand, Fosun does not face pressure for further impairment in the future.

After the meeting, Xu Xiaoliang, Co-CEO of Fosun International, granted an interview to reporters of the Securities Daily, providing a detailed explanation of the logic behind the financial impairment treatment and how the target of billions of yuan in profits will be realized.

Put Down the Burden and Lay Out the Home Facts

Regarding the decision to record these non-cash impairment provisions, Xu Xiaoliang said candidly that there are mainly two major factors. First is the shift in the real estate industry’s overall trends; impairments related to real estate account for roughly 55%. In this “provision” that Fosun made, “provision-making” actually allows Fosun to shed burdens, prepare to move forward with lighter equipment, and—rather than making things obscure—allows investors to see clearly, converting uncertainty into certainty and dispelling investors’ concerns. Second is the shift in the consumer environment, which led to impairments of non-core assets accounting for about 45%. Since 2008, Fosun has been “going global” to invest and look for core industries that can be deeply cultivated. In that process, Fosun has paid tuition fees; investments that seemed fine at the time later resulted in goodwill impairment as consumption conditions and industry competition dynamics changed. Recording this portion of impairments is a way to bid farewell to past history and to search for a new, farther road.

“For Fosun’s employees and partners, this is about laying out the home facts.” Xu Xiaoliang said that Fosun’s willingness to make this decision at this time requires “courage,” and also has “confidence”—and both are indispensable.

From March 6, when Fosun released its warning of loss and earnings, to the evening of March 30, when it released its 2025 annual report, Fosun did three things in this period: first, the controlling shareholder and management announced that they would increase their holdings of no more than HKD 500 million worth of shares within 12 months; second, they clarified that the target of RMB 10 billion in profits would remain unchanged; third, they raised Fosun’s planned target payout ratio from 20% to 35%, and specified that the expected dividend for the fiscal year 2026 would be no less than HKD 1.5 billion.

Based on market feedback during this phase, the “confidence” that Xu Xiaoliang spoke of is currently being recognized. This is mainly reflected in Fosun’s share price and bond performance remaining stable, rating agencies maintaining their ratings on Fosun, and Fosun continuing to sign normal strategic cooperation agreements with domestic and overseas banks with which it has long-term collaborations.

“The core of this recognition—or understanding—is that you can see Fosun’s future ‘cards in hand’ are certain and worth looking forward to.” Xu Xiaoliang said that Fosun has achieved “RMB 10 billion in profits” in the past; going forward, everyone can see how Fosun’s “new RMB 10 billion in profits” will be built.

“8424” Reshapes the Profit Structure

Returning to the ranks of “RMB 10 billion in profits,” Fosun has a clear direction and strategic plan.

“There is a very famous watermelon in Shanghai Pudong Nan-hui called 8424. Borrowing that name, Fosun’s ‘8424’ is also a sweet watermelon.” Xu Xiaoliang told reporters from the Securities Daily, “The ‘8’ refers to Fosun’s four major core subsidiaries: Fosun Pharma, Yu Garden, Fosun Portugal Insurance, and Fosun Culture & Tourism. These ‘four big kings’ provide RMB 8.0 billion in profit; the first ‘4’ refers to the companies in Fosun’s secondary-tier group that together achieve RMB 4.0 billion in profit, such as Hainan Mining, Dingrui Reinsurance, and others. The ‘2’ refers to the investment-oriented enterprises contributing a combined profit of about RMB 2.0 billion; and the last ‘4’ refers to cost spending at the Fosun International headquarters level, including financial costs, where the goal is to keep it within RMB 4.0 billion. After this ‘add and subtract,’ the interim target is to once again achieve RMB 10 billion in profits.”

In Xu Xiaoliang’s view, within the “new RMB 10 billion in profits,” the internal structure is driven mainly by operating profits, while investment profits account for only about 20%. Once this milestone is completed, Fosun will no longer be the Fosun of the past. Going forward, Fosun will rely on its capabilities in industrial operations to underpin long-term value growth.

With a clear battle plan, how to achieve this goal is the path Fosun will take next—and also a focal point that the industry is watching.

From the rollout of its subdivided businesses, after Fosun has paid the tuition fees it needed to pay and taken the falls it needed to take, it has shifted toward industrial operations and built four major business segments: Health, Happiness, Abundance, and Smart Manufacturing. These four segments currently have steady revenue growth and have honed their respective core competitive strengths.

The Health segment has nearly 70 innovative drug projects under research and development (calculated by indication), building a stepped pipeline structure of “early-stage frontier layout, mid-stage potential validation, and late-stage expansion in clinical phases.” Currently, multiple blockbuster-potential products are being reserved.

The Happiness segment has made it through the consumption-pressure phase and has restructured its portfolio. Xu Xiaoliang believes that “Culture & Tourism+” is entering spring and will greatly drive growth in Fosun’s core consumer businesses.

The Abundance segment’s business has been improving steadily and continues to generate profits. The Fosun Portugal Insurance business, acquired by Fosun in 2014, has been expanded to regions outside the mainland, including Europe, Latin America, and Africa. International business continues to grow rapidly, and international business accounts for more than 30% of the consolidated total business scale, with Latin America accounting for more than 60%. Fosun’s two domestic subsidiaries—Fosun United Health Insurance and Fosun Prudential Life—have also reached new levels in both profitability scale and quality.

The Smart Manufacturing segment has achieved breakthrough progress. Fosun’s Hainan Mining’s mineral product types already cover multiple strategic mineral resources such as iron ore, lithium ore, oil, and natural gas. In 2025, it completed the production and sales of the first batch of lithium hydroxide, achieving a breakthrough from “0” to “1.” Fosun’s subsidiary Wansheng Co., Ltd. focuses on base construction and has already established a global capacity layout.

In Xu Xiaoliang’s view, there is no enterprise that can always have fragrance along every path. After Fosun completes this impairment provision, it will continue to push forward with the “leaner body, stronger health” strategy, embrace lighter partnerships and heavier responsibility, and maintain a balanced approach to offense and defense. It will strengthen global operating capabilities, increase innovation efforts, and invest in the future more calmly and more firmly.

Take the Path of “Innovation + Globalization”

In the industry’s view, Fosun’s four core businesses can be advanced steadily, and behind that are inseparable from two driving forces: “innovation + globalization.” As Xu Xiaoliang puts it, innovation and globalization are not optional questions—they are required answers.

Fosun’s innovation is closely connected with globalization. Xu Xiaoliang said that this is reflected in Fosun’s reliance on two key innovation capabilities: “global R&D + global BD (business development).” Fosun follows a path of “integrated innovation” and brand operations that can stand up to storms, along with a high gross margin approach. Based on implementing this strategic path, Fosun’s overseas business revenue in 2025 was RMB 94.86 billion, accounting for 55% of total revenue, up 6 percentage points year over year.

“When you have a global perspective, targeting different global consumer markets means you will have different consumer groups, and you can find whitespace,” Xu Xiaoliang said, giving an example. Yu Garden’s Old Temple Gold faces consumption-market pressure in the domestic market, but after moving to Malaysia, it uses advanced domestic production processes to expand the market; in that local market, it can achieve “standing out from the crowd.” In addition, for example, Fosun’s Fosun Heterogen (Han Lin) has already achieved a dual-engine drive of biosimilars and innovative drugs. Core products such as Hanliqang® (漢利康®), Hanquyou® (漢曲優®), and Hanshuangzhuang® (漢斯狀®) have been approved for listing in about 60 countries and regions worldwide.

Xu Xiaoliang further emphasized that Fosun’s innovation is not something that can be done in isolation; it can be carried out through ecosystem synergy—smart innovation and smart integration. Besides enabling Chinese brands to “go out,” it also needs to do dual circulation both domestically and internationally, as well as build a dual circulation across Fosun’s internal and external ecosystems. For example, turning travel destinations into customer source bases enables mutual empowerment across multiple industries within Fosun, helping identify global growth points. In 2025, 20% to 30% of passenger traffic at Sanya Atlantis Resort came from overseas. Another example is building a large membership system. By the end of 2025, Fosun reached a global long-term strategic cooperation agreement with BYD. With “concentric circle” customer exchange of rights on both sides, both benefit greatly.

Of course, another direction to turn innovation into practice is the use of AI. Xu Xiaoliang said that Fosun does not pursue the concept of big models; what it cares about is whether AI can solve real-world problems. Now AI has already been integrated into Fosun’s daily operations; decision-making efficiency has improved, operating costs have been optimized, and profit margins have been expanded.

Looking ahead, how the target of RMB 10 billion in profits will be realized remains to be observed. But perhaps, as Xu Xiaoliang revealed, Fosun will turn losses into profits as soon as possible. As for Fosun’s even longer-term path, it may be just as Guo Guangchang has shown: Fosun will firmly exit assets that are not performing well or fail to meet value standards, focus resources on high-growth core tracks, and steer Fosun toward a lighter, healthier, and more sustainable direction of development.