×
You will be redirected back to your article in seconds

Fosun Invests in Movies With an Eye Toward China’s Growing Middle Class

With Hollywood courting Chinese capital, conglomerate Fosun Intl., the largest stakeholder in Jeff Robinov’s Studio 8, is looking to oblige — but on its own terms.

Fosun, which also owns more than one-fifth of Bona Film Group, and recently bought a significant minority stake in Cirque du Soleil, is nevertheless better known to financial analysts for its interests in mining, insurance, pharmaceuticals and asset management. But company execs, led by chairman Guo Guangchang, prefer to define Fosun’s concerns by those to whom it targets its diverse products — China’s growing middle class.

As China’s population has become predominantly urban and wealthier, the economy has begun to turn from investment to consumption. Having disposable income changes the nature of the goods and services people buy —  to clothing that’s more fashionable and vacations that more often are taken outside China; it also generates growing expenditures for free-time diversions, like movie tickets. Guo describes Fosun’s activities as belonging to “hives” that include health care, culture/entertainment and travel/leisure — areas “precisely focused on China’s middle class lifestyles.”

Over the past few years, Fosun has bought firms that add to its deal-making firepower and its range of financial products to sell to China’s aging, gentrifying population, including insurers in Portugal and the U.S., a financier with investment banks in the U.K. and Germany, and a Hong Kong brokerage.

But for many 21st century investment managers, conglomerates are out of fashion. Shares of congloms often trade at a discount to the sum of their parts, or to their more targeted peers.

Fosun hopes to combat that attitude not just by targeting consumer growth sectors, but also, like two of China’s other corporate giants, Wanda and Alibaba, with investments in the entertainment industry, and by driving change from the old economy to the digital economy.

Fosun spent more than $500 million in 2014-15 to upgrade the Internet offerings of its existing portfolio of businesses. And last month, it bought 9% of Sina Corp., China’s Nasdaq-listed Internet services and social-media group.

Fosun’s string of acquisitions of small and medium insurance companies is modeled on Warren Buffet’s Berkshire Hathaway, which has retained its allure among small investors. Berkshire sees
revenues that flow from insurance premiums as funding for growth businesses in its portfolio, and as capital for acquisitions. Property revenues have a similar function.

Fosun’s strength has been to build into sectors that have been opened up by the government. It started selling medical diagnostics kits, then moved into pharmaceuticals, before branching into property when that was allowed, and then into steel, iron ore extraction and gold mining. In the past 12 months, it bought Club Mediterranee and a piece of the U.K.’s Thomas Cook, pumping up its travel business — another growth sector in China.

Now, with the entertainment sector a national priority, Fosun has targeted the space, investing $200 million for a 48% stake in former Warner Bros. exec Robinov and his Studio 8, and increasing its stake in China’s prolific Bona Film Group from 7.5% to 20.8%. The two companies are backers of Ang Lee’s upcoming “Billy Lynn’s Long Half Time Walk,” the first pic greenlighted at Studio 8.

In April, the conglom revealed a nascent film production and investment unit, Fosun Pictures. And last week, Fosun held a strategy presentation for Shanghai Film Festival delegates.

But it’s a plan revealed last month that might be the most telling as to what’s on Fosun’s horizon: At that time, the company announced it was adding $1.2 billion to its acquisitions capacity, raising the cash through the issue of new shares on the Hong Kong Stock Exchange. So while bowing a film production arm and backing high-profile movies are a good start, it would seem they’re only the appetizer on Fosun’s entertainment menu.

Popular on Variety

More Film

  • Gully Boy to represent India in

    'Gully Boy' to Represent India In Oscars Race

    The Film Federation of India has chosen Zoya Akhtar’s “Gully Boy” as its entry in the Academy Awards’ international feature film category. The picture, a coming of age tale about an aspiring rapper in Mumbai’s Dharavi slum premiered at the Berlin film festival in February before opening to a wave of acclaim at home in [...]

  • Lucy-Lost

    Cartoon Forum: 30th Anniversary, Little Giants and New Generations

    TOULOUSE, France –  Celebrating its 30th anniversary, Cartoon Forum wrapped Sept. 19 having showcased the ever-growing strength of European animation. 85 projects were pitched from 24 countries at the co-production forum platform that played host to north of 1,000 investors, distributors and producers – a record number. Falling on French-speaking Belgium – Wallonie-Bruxelles – whose [...]

  • Renee Zellweger Rufus Wainwright Sam Smith

    Renée Zellweger: Judy Garland Was 'My Childhood Hero'

    Awards buzz is building around Renée Zellweger for her performance as Judy Garland, emerging as a frontrunner in the Oscar race for best actress. But for her, the real prize was paying tribute to Garland, of whom she’s been a lifelong fan. “Nobody was prettier, nobody sang prettier…the adventures she had, [she was] my childhood [...]

  • Topic Studios

    Layoffs Hit Topic Studios as TV Division Relocates to West Coast (EXCLUSIVE)

    A small round of layoffs has hit Topic Studios this week in the television division, insiders familiar with the company told Variety. One of the insiders said three executives at the New York-based producer and distributor are out: senior vice president of scripted programming and Viacom alum Lisa Leingang, vice president of development Mona Panchal [...]

  • 'Downton Abbey' Music Gets 'Bigger, Better,

    As 'Downton Abbey' Hits the Silver Screen, the Music, Too, Gets 'Bigger, Better, Grander'

    When “Downton Abbey” fans hear that familiar strings-and-piano theme, a Pavlovian response ensues: Get to the television immediately, because you don’t want to miss a minute of the addictive Crawley family melodrama to follow. This week, with the “Downton Abbey” movie reaching theaters on Friday, fans can’t wait for their fix of Lady Mary and [...]

  • 45 Seconds of Laughter

    Film Review: '45 Seconds of Laughter'

    “Everyone is worth more than their worst act,” said Roman Catholic sister and anti-death penalty advocate Helen Prejean, and it’s with these words that “45 Seconds of Laughter” closes. It’s an apt sentiment on which to leave Tim Robbins’ sincerely felt documentary study of the therapeutic acting workshops run by his own theater company in [...]

More From Our Brands

Access exclusive content