Is Fosun International Ltd. making a wise business choice or merely trying to keep out of trouble?
If the acquisitive healthcare-to-entertainment conglomerate was operating in a totally transparent country, we'd applaud billionaire chairman Guo Guangchang's decision to quit his executive posts at group companies to make way for younger management.
Transforming a sprawling $20 billion enterprise run by a select few into a more polished operation with a better professional-management structure is a prudent move, especially for a business that's been listed for more than a decade.
But this is China, where Guo, and dozens of other CEOs, have vanished at the whim of Beijing. (Guo for his part turned up days later, explaining that he'd aided a government investigation.) President Xi Jinping's corruption crackdown, which forced dealmakers to curtail overseas acquisitions of trophy assets, won't be drawing to a close anytime soon.
So Guo's stepping out of the public eye could be more about trying to remove Fosun's name from Beijing's no-fly list when it comes to M&A. It's not so different from the decision earlier this week by HNA Holding Group Co. to ditch the HNA name and adopt the moniker CWT International Ltd., a Singaporean warehousing and delivery company it acquired.
Guo might be following the example of his friend and Alibaba Group Holding Ltd. founder Jack Ma, who stepped down as day-to-day chief of the e-commerce giant but remained chairman and continues to set strategy. In fact, the wording of Guo's announcement nearly mirrors Ma's, who said in 2013 that he wants to "encourage our young leaders to step forward," and that "at 48, I am no longer young for the internet business." Guo is 50.
For Shanghai-based Fosun, a true transformation toward a more shareholder-friendly business would include steps like increasing the group's paltry dividend, reducing debt or selling off ancillary units. Fosun could also look to diversify its investor base so that it has a bigger public float. Adding women and international expertise to its board would help too.
For now, it's unclear whether Guo's decision to promote "more globalized executives" represents a stride toward good governance or a small step to take cover from Beijing. Either way, it's at least a move in the right direction.
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