CEO of Chinese conglomerate Fosun warns against splashing out on cheap foreign assets

It is “very dangerous” for Chinese enterprises to buy overseas assets or equities simply because they are cheap, said Liang Xinjun, vice-president and chief executive of conglomerate Fosun International.

“As for us, we only focus on assets that can benefit from the China momentum. That means buying overseas assets with reasonable price and bringing them back and promote their growth in China ,” Liang said at Macquarie’s annual Greater China Conference in Hong Kong on Thursday.

“In the next five to 10 years, both the growth and the major markets for global consumption will be from emerging markets, including China,” said the co-founder of Fosun, adding the country’s momentum comes from what he described as business to family (B2F), such as health care and entertainment sectors.

Corporate leverage in China has been very high while government leverage may rise because of potential losses as a result of state owned enterprises (SOE) reforms and the local governments’ ongoing struggles to tackle overcapacity problems, but household leverage remains low, Liang said.

The country with the world’s largest population provides investors the biggest middle-class base and millennials, as well as the largest mobile internet market, he said.

“If we cannot immediately promote the growth of a foreign acquisition in China, such as in six months, we don’t do that [transaction],” Liang said, adding the key lies in how domestic enterprises promote the assets they acquire in China.