(Yicai Global) May 13—The most important cause for recent difficulties faced by the real economy is not the impact from the internet but the economy’s need for transformation and upgrade, said Wang Jianlin, China’s richest man and the founder of Wanda Group.
The key to the development of the real economy lies in innovation, and the way to overcome the difficulties is to introduce differentiated products rather than keep producing the customary products and maintain a customary business model, Wang said in a speech.
As for Wanda Group’s overseas acquisitions, Wang Jianlin recalled: “Somebody told me that I would never succeed when I planned to acquire overseas cinemas. There was even a famous professor writing a 3,000-word article to demonstrate that I would definitely fail on the grounds that there had never been an intercontinental cinema company in the world. But my argument was that there was also no aircraft in the world in the past.”
In his view, the world’s film distribution channels have been basically divided up at present and it is almost impossible to reshape the market. The only way to make inroads into the industry is merger and acquisitions. However, we can hardly buy a well-performing company from others and we can only buy a badly-performing company before rejuvenating and revitalizing it through management, he stressed.
With regard to the future sustainable management of Wanda Group, Wang Jianlin told that the core to achieve the sustainable growth for Wanda Group is to pursue long-term stable cash flow. For instance, Wanda Group thought about developing shopping malls in the 1990s when peers were still engaged in real estate development, assuming the shopping malls would not collapse within 100 years, he mentioned, adding that Wanda now has to gradually move into the tourism and sports sectors, all of which will bring long-term cash flow. The sports brands with a longer history will make more money, and a large-scale tourism project may occupy the resources for 100-200 years.
Having moved into the health care industry three years ago, Wanda Group may gradually regard the health care industry as part of its investment portfolio in the future, revealed Wang Jianlin, but said whether the health care industry will be a pillar industry of the group remains to be demonstrated. On the other hand, Wanda Group currently has no plan to enter the education sector in large scale, for it has not discovered a better way for the education sector to generate profits and cash flow.
In May 2012, Wanda Group bought AMC Theaters, the second largest cinema chain in America at the time, for US$ 3.1 billion. In March 2016, AMC Theaters acquired the fourth largest theater operator, Carmike, in the US, which gave the Wanda Group the largest share in both China and US, the world’s two largest cinema markets. Soon after that, AMC Theaters acquired Europe’s largest cinema chain Odeon & UCI, ensuring Wang Jianlin and his group reach out to the world’s major movie theatre markets and have an important say in the industry globally.