Fosun eyes investment opportunities in US oil, natural gas sector

The Shanghai Fosun High Technology (Group) Co Ltd, a private conglomerate, plans to invest in the United States' oil and natural gas sector as a strategic move amid growing Chinese energy demand.

Chief Executive Officer Liang Xinjun said the company believes it's a good idea to invest in the US, because the fast development of that nation's energy industry amid a supportive policy environment can lead to profitable investments.

He told China Daily that the company had been seriously considering investing in upstream energy businesses in the US for three to four years. He declined to release any timetable for the investment plan.

Fosun has recently invested in real estate assets in the US and the United Kingdom.

"The key factor in overseas investment is the success rate," he said. "We have to ensure that, to be responsible to the shareholders."

Fosun has invested in real estate, medical services, insurance, the media, and the steel and mining industries. The US plan is its first step into the oil and gas business.

"I have strong confidence in China's economy, driven by its growing middle class, which will greatly contribute to the country's consumption," said Liang. "In five to eight years, any industry in the world related to China's middle class will find big opportunities."

He said three major sectors - culture, travel and medical services - will see "huge growth" as a result of the country's growing middle class.

During the first half, Fosun invested in three foreign companies: US high-end women's knitwear producer St John Knits International Inc, where it invested $55 million for a 33.3 percent stake; US-based Saladax Biomedical Inc ($22.5 million); and Israel-based cosmetic and medical lasers provider Alma Lasers Ltd ($221.6 million).

The company also invested in French resort operator Club Mediterranean SA, putting in 44 million euros ($58.9 million) in 2010, as well as Greece-based high-end retailer Folli Follie Group SA in 2011.

Liang said the company only invests in foreign projects where about 30 percent of the profit will come from the Chinese market within three to five years, to achieve better control.

"We would like to invest in such foreign leading companies and bring their products or services back to China for local consumers," said Liang. "We never look just at cheap (overseas projects)."

Fosun prefers not to be the biggest shareholder in a project, which sends a signal of strong trust in the local management team and avoids conflicts with local communities, said Liang.

Many Chinese companies focus on "instant returns" from their overseas investments, which can lead to failures, said Li Ruogu, chairman of the Export-Import Bank of China.

He said China is still at the beginning stage of "going global", which most investors in the nation see as buying a mine or taking shares in foreign assets. These investors have limited knowledge of overseas investment conditions.

"Going global is a slow learning process," said Hellmut Schutte, vice-president of the China Europe International Business School in Shanghai.

He suggested that Chinese companies not "jump" during their overseas expansion. "Be slow rather than bold," he said.

dujuan@chinadaily.com.cn