(Bloomberg) -- Chinese conglomerate Fosun International Ltd. is looking to expand its foothold in North America’s tourism and leisure market through acquisitions, as the owner of Club Med SAS launches a new product line in China.
“We’re interested in anything related to the tourism sector, from travel agencies and resort brands to recreational content providers,” Qian Jiannong, senior vice president of Fosun International, said in an interview on Saturday in Qinhuangdao, a port city three hours’ drive east of Beijing, where Club Med unveiled a new line of resorts named Joyview.
A bigger presence in North America would complement Club Med and Fosun’s tourism portfolio, which generates most of its revenue from Europe and Asia, according to Qian, who also chairs Fosun Tourism and Culture Group. Ongoing trade tensions between China and the U.S. will not affect demand for travel and vacations, he said. “We take a long-term view when making an investment decision. If it is a good target, we will not hesitate,” Qian said, declining to name any specific targets.
Club Med is the crown jewel of a tourism and leisure empire that Fosun has been assembling, which also includes a joint venture with British travel agency Thomas Cook Group Plc (LON:TCG), and a $1.6 billion luxury hotel complex, called Atlantis, on China’s southern island of Hainan.
Joyview Expansion
Unlike other Club Med resorts that are more destination-driven, Joyview retreats are mid-scale getaways typically a couple of hours drive from major cities, targeted at Chinese millennial travelers and multi-generational families, while also serving corporate functions such as conferences and team-building.
The new offering was tailored for Chinese vacationers who have shorter holidays, said Qian, who conceived the idea in 2011. “After I joined Club Med board in 2010, I suggested to them there needed to be a different product for the Chinese market,” he said. Fosun first invested in Club Med in 2010, and acquired control in 2015 for $1.3 billion after a protracted takeover battle against Italian billionaire Andrea Bonomi.
Chinese ownership has revived Club Med, whose fortunes were flagging prior to the takeover. According to Fosun’s annual reports, Club Med recorded its most winter season visitors in a decade last year. Operating profit posted compound annual growth of 26 percent between 2015 and 2017.
More Resorts
In addition to Qinhuangdao, Anji, a county three-hour drive from Shanghai famous for the bamboo forest featured in the 2000 kung fu drama “Crouching Tiger, Hidden Dragon,” and another resort close to the Great Wall will open later this year. “We think there’s room for three to four Joyview resorts around top-tier Chinese cities, and one or two near second-and-third tier cities,” Qian said.
Fosun, an insurance-to-pharmaceutical conglomerate, has re-emerged from the Chinese government’s crackdown on capital flight last year. While companies such as HNA Group Co., Dalian Wanda Group Co. and Anbang Insurance Co. have been scrambling to shed assets to stay afloat, Fosun has managed to continue its expansion, snapping up companies ranging from French fashion house Lanvin to Brazilian brokerage Guide Investimentos.
Folli Follie Folly
Qian, who is also a non-executive director of FF Group, listed in Athens and owner of the Folli Follie brand, said Fosun intends to safeguard its interest as a minority shareholder while it awaits the results of a re-audit of FF’s 2017 results being conducted by Ernst & Young.
“We believe in the brand and in the industry of affordable luxury,” he said. “As a financial investor, we are not involved in the operation of Folli Follie and are not in possession of any inside information” with regards to the alleged accounting irregularities.
FF is besieged by allegations from a New York-based hedge fund, Quintessential Capital Management, that it fudged its financial accounting. QCM’s charge that Folli Follie may have only half of the stores it claims sparked a sell-off earlier this month that resulted in a more than 60 percent drop in FF’s stock.
While disputing QCM’s allegations, FF published a new list that showed the number of stores in its key Chinese market shrank by more than half last year, even as sales in Asia increased. The company said that it has hired Ernst & Young for a re-audit of its 2017 financials.
Fosun is FF’s second-largest shareholder. It first invested in 2011 and after QCM’s report, Fosun twice increased its interests and now holds 16.37 percent.
Fosun International said in statement on Thursday that the company had sent an inquiry letter to FF. “We hope to have prompt clarifications,” Qian said Saturday.
To contact Bloomberg News staff for this story: Jing Yang de Morel in Shanghai at jyang543@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, John McCluskey, Ovais Subhani
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