Updated Dec. 14 | Who Is Guo Guangchang, the Tycoon Rumored to Have Been Taken Away, and What Does His Business Have to Do With Your Life?

Fosun, the group he founded, may be the most active Chinese investor overseas.

Updated Dec. 14: According to Caijing, Fosun chairman Guo Guangchang has finished assisting judicial authorities with their inquiries, returned home, and attended Fosun's 2015 annual work meeting today.

According to Caixin, Guo Guangchang, the 48-year-old chairman of Shanghai's Fosun Group, is indeed out of contact. Word of his disappearance began spreading on social media yesterday afternoon: passengers said they saw him fly from Hong Kong back to Shanghai and saw police take him away at the airport.

We don't yet know whether Guo is under investigation himself or assisting one. But the "Fosun family" of stocks stopped trading this morning, and the companies issued announcements about it. This is a big deal.

The shares "temporarily halted" include Fosun Group's two Hong Kong-listed businesses, Fosun International and Fosun Pharma. The stated reason: "the company has inside information that has not yet been announced." Guo personally holds 45.84% of the first and 18.83% of the second, and these stakes are the source of his wealth.

On this year's Forbes China rich list, Guo's fortune rose from 26.32 billion yuan last year to 46.36 billion yuan, putting him 11th, just behind NetEase founder Ding Lei.

Because Fosun invests across so many industries, a long list of mainland-listed companies is tied to the group, including Nanjing Iron & Steel, Yuyuan Tourist Mart, Friendship Group, Tianyao Pharmaceutical, Xiangrui Technology, Yizhi Pharmaceutical, Haixiang Pharmaceutical, Zhaojin Mining and Lianhua Supermarket.

Founded in 1992, Fosun is now China's largest private conglomerate. It is also one of the few Chinese companies investing heavily abroad: since September alone, The New York Times has run ten articles on Fosun's deals in Europe and the Americas.

How did Fosun get started?

In 1985, Guo Guangchang left the countryside to study philosophy at Fudan University. Deng Xiaoping's Southern Tour speeches in 1992 moved him to drop his plan to study abroad. With Liang Xinjun, a colleague at Fudan's Communist Youth League committee, he founded Guangxin Technology Consulting.

It was the first time China had fully opened its economy. Guangxin started with registered capital of just 38,000 yuan. Doing market research for companies such as Yuanzu, Apollo and Lucky Film, it earned 1 million yuan in 10 months.

In 1993, Guo decided to quit market research and concentrate on property sales and biopharmaceuticals. That year Guangxin was renamed Fosun, meaning "Star of Fudan." Wang Jianbin, Tan Jian and Fan Wei, graduates of Fudan's genetic engineering department, joined over the following period, and the business shifted mainly to genetic engineering. In 1995, a PCR diagnostic reagent for hepatitis B earned Fosun its first 100 million yuan.

In 1998, the restructured Fosun Industrial went public. As the first private company in Shanghai to list, it raised 350 million yuan in one offering, and from then on pursued a strategy of diversified capital operations. Fosun International was set up in Hong Kong in 2004 and listed on the Hong Kong Stock Exchange in 2007.

The Fosun family now holds stakes in four mainland-listed companies, two Hong Kong-listed companies and two companies listed overseas, and through minority stakes it touches many more listed companies.

Fosun is now in its 23rd year, with investments spanning insurance, mining, tourism and healthcare. More important, it is one of very few Chinese companies making big investments abroad.

What is Fosun doing today? The parts that touch your life

In its early years, Fosun invested in industry, moving into real estate, retail, steel, mining and other sectors.

In 1994, Fosun developed Fosun Garden and entered real estate;

In 2001, Fosun Group put 350 million yuan into a joint venture with Tangshan Jianlong Industrial Co., Ltd. in Hebei;

In 2003, Fosun invested in Ningbo Steel and set up Nangang Union;

In 2002, Fosun entered retail by taking control of Yuyuan Tourist Mart;

In 2004, Fosun invested in Zhaojin Mining, which listed on the Hong Kong Stock Exchange in 2006;

In 2007, Fosun began investing in mining;

In 2010, Fosun bought 7.1% of Club Med, its first direct investment abroad.

That year, Guo Guangchang said: "We are transforming from a diversified industrial group into an investment group, mainly using the boom in China's economy to connect with and raise high-quality capital worldwide." Its first choice was upscale consumer sectors: luxury goods, high-end services and high-end healthcare. Within luxury goods, it favored clothing, shoes and hats.

In recent years, Fosun has gradually shifted toward finance and asset-light investments. In Fosun International's 2014 annual report, Fosun described its strengths as an investment group as "comprehensive financial capabilities with insurance at the core" and "being rooted in China with the ability to integrate industries globally."

In early 2015, Fosun formally adopted an investment strategy centered on health and happiness, with tourism, fashion, film and television, and live performance as priorities. According to Fosun International's 2015 interim report, its traditional steel and real estate businesses contribute a shrinking share of group profit.

Fosun CEO Liang Xinjun once explained: "In the past, whenever Fosun came up, people most liked to ask how real estate was doing, how steel was doing. That is no longer Fosun's mainstream. In principle we will no longer invest in heavy assets. Fosun's new assets will shift toward asset-light areas such as health, happiness and finance, and we will buy as little as possible of anything unrelated."

Insurance

In 2011, Fosun entered insurance abroad, forming Fosun Prudential Life in a joint venture with America's Prudential Financial.

In 2014, Fosun completed its purchase of Portugal's largest insurance group, one of the most important acquisitions in its 23-year history. The deal added more than 13 billion euros in total assets, including more than 12 billion euros available for investment.

In May this year, Fosun announced it would acquire the American insurer Ironshore.

Insurance plus investment is now the core of Fosun's future business. Its insurance arm includes its Portuguese insurance group, Yong'an Property Insurance, Fosun Prudential Life and Ironshore. This "all-insurance" setup lets Fosun gather very cheap insurance money through many channels and put it into higher-yielding investments.

Insurance has grown rapidly from 3% of Fosun Group's total assets in 2013 to nearly 40% today.

Healthcare

Here, Fosun International holds 39.83% of Fosun Pharma, and through Fosun Pharma holds 27.83% of Sinopharm. Both are Hong Kong-listed drug companies. Fosun also owns Starcastle Senior Living, a joint venture with the Fortress investment consortium, whose first high-end senior-care project opened in May 2013.

Like most drug companies, Fosun Pharma and Sinopharm used to concentrate on drug manufacturing, which demands heavy investment but pays high returns, and on medical equipment and diagnostics. But Fosun wants to do something heavier, such as investing directly in hospitals.

Some startups in the industry, such as Chunyu Doctor and DXY, have begun similar trials. Fosun's plan is to carry its strength in cancer-drug development into clinical care. It is targeting specialist cancer hospitals in second- and third-tier cities and general hospitals with more than 500 beds, and over the past two years it has pushed ahead, starting by buying five private hospitals in one go.

In the first half of this year, Fosun also completed its acquisition of Luz Saúde, a Portuguese high-end healthcare group.

Real estate

In October 2013, Fosun bought Lloyds Chambers in the City of London. That December, Fosun Group paid US$725 million (about 4.4 billion yuan) for One Chase Manhattan Plaza, a New York landmark. The office tower was once one of two landmark buildings owned by the Rockefeller family.

In July this year, Fosun, through its Portuguese insurance group, bought Palazzo Broggi, a landmark in Milan. Over the past two years, Fosun's property arm has set up in New York, London, Tokyo, Hong Kong, Sydney and continental Europe, investing in core properties, asset management companies and property development.

Through direct investment, Fosun manages several hundred thousand square meters of core property in New York, London, Sydney, Tokyo and other cities.

Tourism

Fosun International has been in tourism since 2002. But its 2010 stake in Club Med was one of its biggest moves in the field.

Club Med runs nearly 80 all-inclusive resorts in 30 countries, but all four of its resorts in China were built after Fosun bought in. Club Med is now a Fosun subsidiary: in March this year, a consortium led by Fosun International bought the French resort operator for 939 million euros (about 6.379 billion yuan).

Qian Jiannong, the Fosun Group vice president in charge of this business, once said that China already had a fast-growing market in high-end business hotels and budget hotels, but almost no leisure resorts. Building a presence here would, on the one hand, stimulate domestic demand for resort holidays and, on the other, prepare for the outbound travel market that would follow as consumers traded up.

Also in March this year, Fosun International paid 91.85 million pounds (about 624 million yuan) for a stake in the British leisure travel group Thomas Cook. The thinking behind this overseas deal is the same: Fosun hopes Thomas Cook and Club Med will work together, taking Chinese tourists abroad and bringing foreign tourists to China.

Lifestyle

Fosun also bought Cirque du Soleil, Canada's national treasure, this year. We have reported before on how Cirque du Soleil thrived in the ancient business of the circus, and how it caught the eye of big Chinese companies such as Fosun and Wanda.

According to Fosun in June, a China project with Cirque du Soleil is nearly ready: Cirque du Soleil's biggest money-maker, the resident show, will come to Hangzhou Xintiandi, a development Fosun has invested in that is under construction. The show will have its own theater and is scheduled to premiere in early 2018.

Other companies Fosun holds stakes in include Yuyuan Tourist Mart (home of the City God Temple that every Shanghainese knows, and one of China's earliest listed commercial joint-stock companies), Bona Film Group (as prominent as Huayi Brothers in film distribution, production and investment), Atlantis, Studio 8 and Silver Cross, all businesses tied to middle-class lifestyles.

Fosun also bought into the fashion jewelry brand Folli Follie as early as 2011, then in 2013 acquired 35% of the European luxury menswear brand Caruso and invested in the American womenswear brand St. John.

In 2014, Fosun became the largest single shareholder of the German fashion and lifestyle brand Tom Tailor. Not long ago, it set up Fosun Fashion Group to manage its holdings in fast fashion, luxury goods, live performance and entertainment after investment.

Why is Guo Guangchang always called "China's Buffett"?

The Financial Times has called Guo Guangchang "China's own Buffett," and Guo calls himself Buffett's "Chinese disciple." Both Guo's rise and Fosun's have been bound up with the workings of the capital markets.

In a speech at the China Europe International Business School, Guo said Fosun began as a "three nothings" company. He said: "As an investment company, I noticed Buffett, someone we can learn from. What he says and what he does are not that profound; the key is whether you can keep doing them."

From 38,000 yuan in registered capital to a personal fortune of more than 40 billion yuan, Fosun Group has over 23 years invested in insurance, pharmaceuticals and health, real estate, steel, mining, retail, services, finance and asset management. The New York Times has likened it to a mini Berkshire Hathaway, Buffett's company.

But Guo adopted Buffett's "insurance plus investment" model only in recent years.

In 2010, Guo took up tai chi. That same year, Fosun began adjusting its investment strategy, moving out of heavy assets such as steel and gold and into asset-light businesses with good cash flow that hold up well in downturns.

"Sell policies, collect the float, invest the float smartly, and make a lot of money." Buffett and Berkshire Hathaway's success with "insurance plus investment" is also the main strategy behind Fosun's investments in recent years.

What about the earlier investigations?

Over the past two years, Guo Guangchang has repeatedly been the subject of rumors that he was "under investigation."

Two years ago, rumors said Guo had been barred from leaving Hong Kong. The next day, Fosun-family shares slid all day after the open. Guo then came forward to deny it, saying someone was deliberately shorting the stocks.

In August this year, the court issued its first-instance verdict in the case of Wang Zongnan, former general manager of Shanghai Friendship Group. The judgment set out how Fosun Group was involved, saying Wang had used his position to benefit Fosun Group. Guo Guangchang was named in it. Other rumors link Guo's disappearance this time to the earlier cases of Shanghai vice mayor Ai Baojun and Xu Xiang, head of Zexi Investment. As of press time, the Fosun-family listed companies had not issued trading-halt announcements. "I believe in Chinese culture; it leads people back to their inner selves, back to what they truly need inside. When people get rich enough, their hopes change. At first, they want to become wealthy and show off their wealth, which is perfectly normal. But in the end they find all this boring and turn to inner balance, which is what truly matters." Guo told the reporter this at the end of an interview with the Financial Times last year, while discussing China's economic growth. The question now is whether the generation of Chinese entrepreneurs who grew rich at breakneck speed still has time to find the balance Guo speaks of.

Cover image from Fosun International