LETTER TO SHAREHOLDERS

Dear shareholders,

Since the global outbreak of the novel coronavirus pneumonia (“COVID-19”) in early 2020, the pandemic situation remained volatile globally and new COVID-19 variants continued to emerge overseas. The battle between mankind and COVID-19 has changed from a “skirmish” to a protracted battle. We have also witnessed sporadic COVID-19 outbreaks in China. In facing the pandemic and other external negative factors, Fosun persevered and worked unremittingly, continued to develop its four major business segments, namely Health, Happiness, Wealth, and Intelligent Manufacturing, accelerated the implementation of “Profound Industry Operations + Industrial Investment” strategy, and successfully achieved our goal of group-wide steady growth. As a global innovation-driven consumer group, during the Reporting Period, the Group’s operating revenue achieved RMB161.29billion, representing a year-on-year increase of 18.0%, while profit attributable to owners of the parent achieved RMB10.09 billion, representing a year-on-year increase of 26.1%, and the profit of industrial operations amounted to RMB10.59 billion, representing a steady year-on-year increase of 30.3%. Thank you to shareholders for your on-going support to Fosun, Fosuners will continue to work diligently to achieve better results in return for your trust in us.

Developing forward amid challenges, Upheld our original aspiration for 30 years

The past year has been a very unusual year, The global epidemic situation remained volatile, the geopolitical landscape changed abruptly, and "black swan" events emerged one after another. In the pandemic era, global political and economic uncertainties have increased drastically, posing severe challenges to capital markets, supply chain management, and production and operations of enterprises. Fosun responded effectively by leveraging on its industrial capabilities, proactive strategic and swift tactical adjustments. Fosun’s ecosystem is much more beyond a simple hedging mechanism, in facing such a challenging operating environment, Fosun will be able to deploy global resources and leverage the multiplier effect to form its own internal ecosystem in order to protect the interests of customers and shareholders to create more value.

This year, Fosun enters into the 30th year of establishment. After nearly 30 years of development, Fosun has grown into one of the few domestic enterprises that is equipped with global operations, investment capabilities, and accumulated profound technology and innovation capabilities. Over the years, Fosun has endured different stages of development, but we have always adhered to the values of “Self-improvement, Teamwork, Performance, and Contribution to Society”. Through the continuous upgrade in our strategic evolution, we remain committed to our mission of serving one billion families worldwide and creating happier lives for families worldwide. As a global enterprise rooted in China, we insist on increasing investment in technology and innovation, deepening our development in industry operations and industrial investment, in order to drive growth with innovation; we remain true to our original aspiration and strive for the well-being of the society. Fosun has developed business for good with a customer-oriented focus. We always believe that people’s pursuit of happier and brighter life remains unchanged regardless of the external situation. The significance of the existence of an enterprise is to bring more warmth and love to the society. As the market becomes more volatile, the challenges become more complex, and Fosun’s perseverance to stand firm on its strategy will become increasingly important. It is this perseverance that made the one and only Fosun today.

Investors often ask me, as Fosun has developed into one of the world’s most diversified enterprises with businesses across many sectors today, can it be well-managed? I believe very much so, and organizational support is the key. In 2021, Fosun made a very important strategic upgrade that the Group has set up four committees of overseas operation, technology and innovation, ecosystem and FES to further affirm our strategic determination. In the future, we will continue to forge ahead with these four “multiplier growth” as the core drivers to safeguard the development of Fosun.

Globalization is an irreversible trend and win-win cooperation is the key to success

In 2021, the talks of de-globalization were rampant, but it was also precisely the moment that the value of Fosun’s globalization capabilities became more apparent. During this period, the cost of labor, goods and capital have all increased significantly around the world, which poses challenges to business globally. Thanks to Fosun’s globalization capabilities developed over the years, Fosun not only maintained a steady global development in the midst of the crisis, but also positioned itself to a head start on the path to the future global recovery.

In 2021, Fosun established the Overseas Operation Committee to expedite Fosun’s global organizational evolution and foster the multiplier growth of its global business. Fosun’s international team and ecosystem members are the core of Fosun’s globalization capabilities. While highly aligning with Fosun’s values, they are able to execute and operate independently, adopt appropriate methods, and deep dive into the local markets to carry out product development, sales & segment expansion; the strategy is to have the vision to serve the world. HAL’s acquisition of Bankhaus Lampe is an example demonstrating the ability to take root in the local market. Founded in 1852, Bankhaus Lampe is a well-established and longstanding private bank in Germany. HAL first proposed the acquisition of Bankhaus Lampe in 2020, and the acquisition was completed in September 2021. The HAL team and Fosun’s German team overcame the difficulties of business travel and the challenges of the pandemic. Leveraging on its strong local execution capability, Fosun’s presence as a global financial player was enhanced and upgraded.

On the other hand, having a vision to serve the world means that the organization must be equipped with cross regional, cultural, and organizational operation capabilities, and must develop a global mindset, especially the idea of connecting Chinese resources to the world. Taking Lanvin Group as an example, single-store sales of Lanvin in the U.S. market saw an explosive month-on-month growth in 2021, while its sales in China also maintained a triple-digit growth or above. Moreover, it has deeply penetrated the online market. The true sense of globalization enables our member companies to truly become active units of Fosun’s globalization footprint, promoting the mutual connection between Fosun’s development in China and overseas.

Just as the pandemic will eventually pass, the tides of de-globalization will not be the mainstream development in the future. I believe that from a long-term perspective, countries around the world have to build a coopetition (cooperation + competition) relationship, in which cooperation is more important than competition. Fosun has always been actively cooperating with major companies and talents around the world. Intuitive Fosun, our joint venture with Intuitive Medical in the United States, continued to promote the development of the Da Vinci Robotic Surgical Systems in China and established Asia Pacific’s first innovation center in Shanghai; Fosun joined hands with BioNTech, a German biotechnology company, to jointly develop the COVID-19 mRNA vaccine (COMIRNATY?), which has been rolled out in Hong Kong, Macau and Taiwan region. I believe that, at the end of the day, we, as mankind, share more common interests than differences.

Synergy in the ecosystem and “multiplier growth”

As we enter next stage of digitalization economy, the advantages of internet platforms are gradually fading?amid?the increasing online customer acquisition costs. Traditional offline commercial operators tend to fall into the “sub-leasing” dilemma, compromising between the rental cost and operating performance. To break out of this dilemma, we must consider the online, offline platforms and the upstream industries together holistically, and Fosun’s FC2M ecosystem provides a perfect foundation for such consideration.

The “F” in FC2M stands for both “Family” and “Fosun”. Since Fosun started the mission of serving one billion families worldwide, we have understood our customers better, and we have linked Fosun’s unique values together at a higher level. Fosun’s C2M ecosystem is centered around family, with our product spectra in various industries covering different families and consumption scenarios. It also has the client (“C-end”) interfaces covering online and offline as well as different demographics. It is a three-dimensional way to serve the all-round needs and living styles of family customers.

In the FC2M ecosystem, firstly, the Maker (“M-end”) achieves cross-scenario and cross-platform sales growth while creating good products and delivering brand power. Leveraging on the “unique and good products”, Fosun’s product strategy is well-received by the market, and the first batch of good products have begun to become blockbusters with huge market impact. For instance, Laomiao’s “Guyun Gold” series recorded sales of nearly RMB4 billion in 2021; Atlantis Sanya became a phenomenal tourist destination, with sales of RMB1.45 billion in 2021, representing a year-on-year increase of 18.6%.

Secondly, offline C-end business creates both new lifestyles and consumption scenarios that also help improve the quality and enhance the value of our business. The online platform portal on the other hand bring in more effective traffic, it preserves a membership system with member profiles exchangeable within the entire ecosystem. On the basis of this cognition, investment performance and profit indicators are no longer our only target and guidance. We have already taken the first step to explore this C-end strategy by onboarding our customers to a membership system across different businesses, and in the future, we aim to create an integrated membership system for our customers across different industries. As at the end of the Reporting Period, Fosun has accumulated 396 million operational members, representing an increase of 27 million compared with the previous year; both of the two flagship consumer platforms, Fosun Alliance and Fosun Health, have achieved upgrades and growth. Fosun Alliance has facilitated cross-sector consumption from 20% of its active members, and Fosun Health has accumulated 13.34 million registered users, and collaborated with 16 external and internal enterprises.

Lastly, with a flexible supply chain and a strong marketing team, the Link-end facilitates the efficiency and synergy of the entire ecosystem; we aim to achieve data-driven processing, flexible supply chain management as well as integration of production, supply and distribution process. In 2021, through our global supply chain, the Group has achieved an overall reduction of RMB2.0 billion in procurement costs, improved direct procurement rate and centralized procurement rate by 9% and 6% respectively. In the future, we aim to leverage on the ecological multiplier effect to provide more good products to our customers..

Technology and innovation-driven development have been manifested over time

In the process of enterprise development, investment can be a tool to expedite the process, while on the other hand business operation can lead to improved financial performance. However, only technology and innovation can enable a company to?develop a full-fledged advantage and assume leadership in the industry. Therefore, Fosun has always defined technology and innovation capability as one of our core competences. Technology and innovation could only be accumulated over time. Thanks to Fosun’s long-term persistence in technology and innovation-driven development, we were able to harvest the fruits of success brought by technology and innovation in 2021.

In the pharmaceutical field, the sales of HANLIKANG (漢利康?), a blockbuster anti-cancer product, doubled in 2021 and reached RMB1.69 billion; the new product Su Ke Xin (蘇可欣?), which was launched at the end of 2020, recorded revenue of RMB426 million in 2021; Yi Kai Da (axicabtagene ciloleucel injection) was introduced into China and became the first CAR-T cell therapy approved for commercialization in China, and has served around 100 patients. The significance of Fosun’s technological innovation in the health segment is not only reflected in sales, but it also aims to bring more and better health protection to tens of millions of families and provide hope to cure intractable diseases.

In the Intelligent Manufacturing segment, one of Nanjing Iron & Steel’s technological innovation, special weathering steel, was widely used in the “Snow Dragon”(雪游龍）(National Sliding Centre) in the Beijing Winter Olympics 2022. This project was the most challenging among the facilities in the 2022 Winter Olympics in terms of design specification, construction difficulty and facility complexity. Since the “Snow Dragon” track was exposed to open air while ice had to be generated repeatedly on the surface, the steel plate must possess strong atmospheric corrosion resistance, the weather resistance of the special steel provided by Nanjing Iron & Steel for the Winter Olympics was eight times more resistant than that of ordinary steel. Through technological innovation, ?Fosun is honored to contribute to our country’s Winter Olympics and Olympic athletes from all over the world. More importantly, we also deeply recognize the greater significance of technological innovation beyond pure corporate development.

The twin-driver of investment and industry operations

In the past 29 years, Fosun has established a global layout with footprints across the Health, Happiness, Wealth, and Intelligent Manufacturing segments through investments. And industry operations enable each of the businesses to flourish globally. Leveraging Fosun’s profound investment gene and capabilities, our mergers and acquisitions are in fact a series of product and service enhancements centered around the concept of “family”. For that reason, we do not blindly pursue trendy new models in the market, but insist on doing the “right things” and the “difficult things”- reinforcing our fundamental positioning as a family consumer group, and striving to bring better experience of health, happiness and wealth to families worldwide.

In the past, the twin-driver of investment and industry operations were accomplished in parallel and were relatively independent of each other. The purpose of investment then was only to complement our business as another piece of the puzzle. Today, the logic of Fosun’s investment and industry operations has entered a new evolution. We invest to build on Fosun’s industrial matrix at a deeper level based on the perspective of industrial development. During the Reporting Period, various industries of Fosun have achieved rapid growth, and the profit of industrial operations amounted to RMB10.59 billion, representing a year-on-year increase of 30.3%. At the same time, there were many highlights in our industrial investment performance, such as Nanjing Iron & Steel’s investment in Wansheng, a global leading new phosphorus-based materials manufacturer, and Lanvin Group’s acquisition of 100% equity interest of the Italian footwear company, Sergio Rossi. These transactions are highly synergistic with the Group’s ecosystems, and have substantial growth potential.

FES?+ talents to create core competitiveness of a longstanding enterprise

In 2021, Fosun introduced the concept of the “Fosun Entrepreneurship/Ecosystem System” (FES system). In this system, we have two visions and expectations for “E”, one is Entrepreneurship, we leverage FES to empower, motivate and manage Fosun entrepreneurs; the other one is Ecosystem, we empower the enterprise through FC2M. FES serves as a bridge between Fosun’s ecosystem and talents with entrepreneurial spirit, and it is also a system that helps Fosun’s ecosystem and entrepreneurs succeed. Since Fosun’s establishment, Fosun has had many successful experiences in industry operations and investment, but we have yet to summarize and refine the past successful experiences. Through the FES system, we have formed a “trinity” of case library, expert library and toolbox. In the future, we will help Fosun’s ecosystem and entrepreneurs to succeed through the training, certification and application of methodology and tools under the five modules of “Entrepreneurial Organization”, “Ecosystem Multiplier Growth”, “Value Growth”, “Refined Operations” and “Risk Control” .

Another core strategy of organizational assurance is organizational talents. In 2021, Fosun continued to build a multi-level and multi-dimensional partner system, bringing the total number of global partners to more than 140. In the past, we required our global partners to shoulder the responsibility to excel in their professional field, as these elite talents must lead the team to deliver solid performance and create growth in their respective sectors in Fosun. However, this year, we have put forward higher requirements for our global partners. In addition to the aforementioned duties, they must also create an FC2M environment at the highest level, leading individually and collectively as the nodes of ecological integration to promote the multiplier effect between segments and functional lines. We will create a “pyramid” partner backup array, forming a competitive dynamic partnership management mechanism that allows talent appraisals at different levels according to their performance. We also put forward new requirements for these Fosun talents. They must not only be excellent “players” to deliver solid performance on the ground, they must also be excellent “coaches” to set goals as leaders, and excellent “directors” to guide holistically from the Group’s perspective so as to maximize their role as global partners. We will continue to evolve the organizational mechanism, build talent echelons, implement digital and intelligent budget planning to achieve global empowerment and maximize synergy from ecosystem procurements.

Sound financial position, ESG continued to evolve

By maintaining a stable leverage ratio, we adopted an approach to pursue steady and sustainable development. As at the end of the Reporting Period, the total debt to total capital ratio of the Group was 53.8%, representing a slight decrease year-on-year, and the average financing cost was at a historical low of 4.6%. In addition, although the capital market has become increasingly volatile, the Group continued to achieve a balance between investment and disposal in 2021. While adhering to our controlling-stake investment strategy, Fosun actively disposed of non-core assets, and actively carried out equity financing to increase the transparency of asset valuation. On the basis of the stable credit rating of the Group, we are also actively expanding financing channels to further reinforce the stability of corporate financing.

Along with our rapid development, Fosun leveraged its own industrial advantages to actively contribute to the society through public welfare programs such as supporting the combat against the pandemic, providing disaster relief, Rural Doctors, universal education, culture promotion, and entrepreneurship support. Fosun has participated in the joint construction of the “Malaria-Free World” project for more than 15 years. According to incomplete statistics, since 2005, Fosun Pharma has supplied more than 200 million vials of Artesun (artesunate for injection) with independent intellectual property rights to the international market and saved more than 40 million lives of patients with malaria, most of which are African children under five years old. Over the years, Fosun Foundation has leveraged Fosun’s industrial resources to carry out public welfare work in the fields of rural revitalization, culture, education, art, youth entrepreneurship and employment, etc. We actively promote community development and support people’s livelihood to improve social well-being. Fosun continues to actively cooperate with our member companies to promote the implementation of ESG strategies. In December 2021, the Company’s MSCI ESG rating was upgraded to AA. This upgrade is a recognition of the Company’s ESG management effort as well as an affirmation of Fosun’s commitment to its original aspiration.

Many people consider the pandemic as a “hurdle” in our era, but I believe that it is more of a “watershed” that clearly separates the 2020s from the previous three decades. Looking back, 2022 and 2019 seem like they belong to two completely different eras: geopolitical landscape, trend of globalization, trending business models, popular industries and even the way of life have undergone and are still undergoing profound changes.

After 30 years of development, most of Fosun’s enterprises have passed the start-up stage and developed from 0 to 1, and the future is the limitless vision of growth from 1 to N. Fosun shall?always uphold our original aspiration, and only then could we venture far and long. There was no one like Fosun before Fosun came long. We have chosen this path not because it is easy, or because someone else has already trodden the path before us. Despite the challenges ahead, we choose this path because we believe it is meant for us, even if it is the road less traveled by.

Guo Guangchang

23 March 2022