— Speech by Chairman Li Feilie at the Group’s 2016 Awards Ceremony

(March 10, 2017 · Shenzhen)

　　Dear Feishang colleagues:

　　Hello, everyone! It’s truly a great pleasure to gather with you all here once again. Today, we’re holding Feishang Group’s annual awards ceremony, where we’ll solemnly recognize the teams and individuals who made outstanding contributions in 2016. I hope that every member of our group will learn from their dedication to Feishang’s mission and their spirit of striving bravely and taking the lead. On behalf of all the shareholders of the Group, I’d like to extend our heartfelt congratulations and gratitude to the winning teams and individuals. Thank you all for your hard work, and I wish you good health, job satisfaction, and continued success in your careers. In addition to our own Feishang Holdings and its affiliated companies attending today’s ceremony, we’ve also specially invited several key partner companies—such as Mr. Peng from Guanglong Optoelectronics and Mr. He from Zhaohe—to join us. We warmly welcome and thank you all for coming.

　　Feishang Group is a truly family-like enterprise. Over the years, the group’s sustained growth has been made possible only through the joint efforts of all its member companies, partners, and employees. Therefore, every year we hold a group-wide recognition ceremony—a solemn cultural event—to express our heartfelt appreciation and gratitude for everyone’s hard work throughout the year, as well as to reaffirm our passionate commitment to our shared mission. At the same time, this recognition ceremony provides us with an opportunity to collectively discuss the group’s future development plans, align on our strategies, and sketch out our vision. It helps us build even stronger confidence in realizing our dream of becoming a great enterprise of our era, enabling each member company, partner, and every Feishang colleague to achieve mutual value and win-win outcomes as they put our corporate mission into practice. Here, on behalf of the group’s leadership, I’d like to share with you the group’s key achievements in 2016, analyze and assess the impact of the macroeconomic environment on us in 2017 and beyond, and outline our strategies and countermeasures. This will enable us to concretely implement our goals and direction for the group’s future development and to lay out our priority tasks for 2017.

　　Part One: Key Achievements of the Group in 2016

　　Some of us entrepreneurs used to gather frequently at the end of 2016 and the beginning of 2017, all talking about how cold 2015 and 2016 had been. Our Feishang Group has a very unique business profile—it’s unlike other corporate groups. While other groups might focus on just one particular industry, our Feishang Group, as everyone saw during the recent recognition ceremony for outstanding employees and top teams, encompasses a wide range of sectors. We’ve got businesses in coal mining—those are tough, grueling jobs—and in the past we were also involved in steel production; now we’re second-largest shareholders in that sector. We also have operations in mining, which are equally challenging. But at the same time, we’re engaged in some truly high-end industries too—for instance, our CEO Peng is involved in chips and microwave technology, and we even have doctors wearing white coats. Our business spans numerous sectors. That’s precisely why so many entrepreneurs have been eager for me to share my thoughts—they feel that Feishang touches on a broad spectrum of industries, with some businesses facing real hardships while others are thriving. Although this winter has been bitterly cold and some industries are indeed struggling, other sectors are actually doing quite well. At Feishang, we have traditional industries, we have the information technology sector, and we even have “evergreen” industries—like healthcare, which we consider an evergreen sector. Within these industries, you’ll find companies working in high-tech, cultural industries, film and TV production, advertising, and much more. Feishang’s portfolio is incredibly diverse, and the companies represented here today are only a small subset; we haven’t invited all of our partners yet.

　　In 2016, the world as a whole experienced considerable turmoil—whether in Europe or Asia, with the exception of the United States. The U.S. faced electoral upheaval but enjoyed a robust economy. Europe, much like us, was undergoing a period of systemic transformation. Whether China’s economic environment has hit rock bottom or is merely stuck in a sideways trend remains a subject of debate. Some experts argue that we’ve already reached the bottom, while others contend that we haven’t—and that current data are all fake. Indeed, 2016 was a particularly challenging year for the real economy. This difficulty stemmed first from the broader cyclical trends in our economy, second from the adjustments we’ve been making to our own economic structure, and third from the pressure exerted by the government’s anti-corruption campaign. Under the combined weight of these multiple pressures, it’s no exaggeration to say that our overall macroeconomy—and especially the real economy—was mired in a deep winter.

　　In the past, Feishang experienced a harsh winter in traditional industries. Yet I’m deeply optimistic—not just optimistic, but extremely optimistic. That’s because I’m highly confident in the positive impact that the macroeconomic efforts to reduce overcapacity will have on Feishang going forward. Why? In nature, it’s always the flies that freeze to death during the harshest winters; those that survive rise to become the dominant species. Starting this year, Feishang has already weathered the storm, as we can see from the development of each of the group’s industrial sectors.

　　I. The outlook for each of the Group’s industrial sectors is optimistic.

　　(1) Traditional Industries

　　Over the past year, Feishang’s traditional industries have faced numerous challenges—but they’ve managed to pull through. Take our coal industry, for example: it could be described as having narrowly escaped certain doom, yet today it’s already reaping the benefits of supply-side reform. Even the steel industry—where we’ve already exited but remain as a secondary shareholder—is doing well; last year, Pinggang Steel turned a profit. Since October of last year, the coal industry has posted monthly surpluses, and this year, there’s no doubt at all that it will continue to be profitable. Moreover, the state’s determination to reduce overcapacity remains unwavering. The three major traditional sectors of Feishang—coal, steel, and copper processing—have all been tightly regulated by the state and subjected to capacity-reduction efforts. Especially last year, companies in these three sectors collectively had 3 billion yuan in loans abruptly withdrawn. Yet despite this dire situation, Feishang has still managed to survive, which clearly demonstrates that we’ve successfully weathered the toughest tests.

　　Why do we say that the darkest days are behind us? Because these three business segments have all been gradually bottoming out since October of last year, and now the signs of reaching that bottom are becoming increasingly evident. So it’s fair to say that in the traditional industrial sector—the segment where Feishang has suffered the most—we’ve already emerged from the trough. In the end, only the survivors will prevail. Although in the future we may no longer have the opportunity to return to those once-glorious, highly profitable days, we believe things won’t be quite as tough anymore. From this perspective, for Feishang, the darkest times are indeed behind us. Yet we must still remain humble and respectful toward tomorrow, continuing to maintain the mindset we’ve cultivated during the hard times.

　　(2) Emerging Industries

　　In the realm of emerging industries, our nascent information sector is thriving—almost as if the depths of winter have nothing to do with it. Over the past year, our healthcare segment has also achieved remarkable success. Although our healthcare division hasn't been in operation for very long—just a little over three years—the Daopei Hospital, which initially had only two facilities, will soon see two additional hospitals opening smoothly this year. Once these new hospitals open, the hospital group under Feishang will become Asia's largest hospital specializing in hematological diseases. In fact, they’ve even told me that it could potentially become the world’s largest hospital dedicated to treating blood disorders. This is truly a highly successful enterprise of ours.

　　Various institutions are scrambling to take equity stakes in us—even some supposedly top-tier firms are practically begging to invest, all chasing after us at valuations of over 2 billion or 3 billion. Faced with the relentless pursuit from these heavyweight institutions, our Dean Dao Pei acts just like a proud princess. This is our hematology hospital.

　　In our healthcare sector, Huikou Hospital, under the leadership of President Wang, has achieved remarkable results over the past year. In the South China region, we aim to establish a strong brand in the field of dentistry and strive to become the leading brand not only in South China but throughout Southern China. Last year, Huikou Hospital also turned a profit of over 30 million yuan. Similarly, Dahé Medical, led by General Manager Zhang, posted profits exceeding 30 million yuan last year as well. In the next two years, we expect even faster growth. Thus, our healthcare sector is completely unaffected by this harsh winter—this was precisely our original assessment at Feishang. Whenever the economy takes a downturn, the healthcare sector tends to thrive: people focus on getting health checkups, seeking medical treatment, and putting aside their concerns about making money, because there’s simply no money to be made anymore.

　　Our other business segment—the cultural sector—is also performing exceptionally well. The Dream舟 Film & Culture segment, which many of you are familiar with, achieved its revenue target of 200 million yuan in 2016, a truly impressive feat. Additionally, our smaller cultural industry segment, Sanle in Hainan, has also turned a profit of several tens of millions of yuan. In the next step, if any of you here today happen to travel to Hainan, you’ll find that roughly half of the outdoor advertisements you see out there are actually produced by Feishang. We’ve essentially monopolized the outdoor advertising market in Hainan. Of course, we have other businesses as well—such as Guanglong Optoelectronics, led by our President Peng, which successfully listed on the New Third Board last year and generated over 18 million yuan in post-tax profits. Even more importantly, our chip project is on track to get launched as scheduled, and it will begin delivering its expected results this year, creating excellent conditions for us to enter the securities market—whether it’s the ChiNext board, the SME board, or the main board. Meanwhile, other companies like Siqi and Sike Micro have also achieved significant milestones.

　　Therefore, I’m very optimistic about Feishang’s future development.

　　II. Main Achievements of Each Member Enterprise

　　(1) Copper Business Segment

　　In Xinko Materials’ copper business, we had previously projected a loss for 2016. However, thanks to increased sales from our subsidiary, Xinguhe, as well as the efforts of the new management team, we managed to reduce the loss successfully. Hengxin Copper Industry has made some positive explorations in the area of pension benefits.

　　Habiao Mining has encountered significant challenges. As our first overseas mining project, it has been plagued by numerous uncontrollable factors. Specifically, the mining agreement was rejected by Bolivia’s National Mining Corporation, leaving over 40,000 tons of ore stranded and making it impossible to complete the project. With the support of the Group’s headquarters, a new team began intensive work last June, introducing a streamlined and highly efficient organizational structure and achieving phased progress in various areas, including resolving disputes over the mining contract.

　　(2) Coal Business Segment

　　In 2016, the coal business segment remained in the depths of winter, and so far, there has been virtually no noticeable improvement in the industry’s prospects. Under these harsh industry conditions, the Group’s coal business has consistently faced difficulties. Nevertheless, all employees at Feishang Energy and Feichi Energy have gritted their teeth, diligently honed their skills, and continuously improved themselves amid these challenges, achieving valuable accomplishments along the way.

　　In 2016, Feishang Energy adopted the slogan “Rooted in survival, we live toward death”—a year that marked a turnaround for the company. With safety as its top priority, sales as its driving force, coal quality at its core, and production capacity as its guarantee, the company, despite extremely challenging circumstances, made a concerted effort to introduce high-efficiency screening equipment, build supporting coal preparation plants, and construct a wharf. On the one hand, these measures addressed the difficulties caused by poor coal quality—such as sluggish sales, low selling prices, and logistical bottlenecks. On the other hand, they helped establish an integrated industrial chain covering production, coal preparation, and transportation, enabling the company to take a solid step forward in the high-end anthracite market. Trade coal has also entered the stage of actual operations. Overall, Feishang Energy’s performance in 2016 largely met expectations, laying a robust foundation for its future growth and expansion.

　　In 2016, the coal mines under Feichi Energy Company were in a “standby” status. With no revenue generation, the company implemented a series of measures to reduce various expenditures. At the same time, during the standby period at the major coal mines, the company ensured the safety of all mine assets. In addition, efforts to integrate mines and secure existing financing are steadily progressing.

　　(3) Forestry and Agriculture Sector

　　Fengshang Forestry focused its 2016 business objectives on “relisting Huasheng” as its core task. The company achieved remarkable results in ensuring stable core profits, promoting comprehensive compliance, and actively seeking transformation. Despite the continued challenging industry environment, Fengshang Forestry delivered strong performance in both operational and listed-company profitability, exceeding its annual budgeted profit target. The company has clearly assigned various compliance requirements to specific individuals and mandated the participation of all employees, thereby making compliance a regular, ongoing practice. Furthermore, the forestry farm’s strategic transformation has made significant breakthroughs, enabling it to enter the wood supply chain sector, where it now primarily engages in timber import agency services, port handling and loading/unloading, warehousing and logistics, and trade finance, thus enhancing its operational capabilities.

　　In 2016, Zhaohe Seed Industry, in line with the Group’s strategic objectives, focused on enhancing the quality and performance of its varieties. Leveraging its capital advantages to the fullest, the company overcame various challenges—including low grain prices, high land-transfer costs, and significant inventory pressures—by concentrating on upgrading variety quality. It acquired “Guang8A” and its related series of varieties, which exhibit a highly coordinated combination of high yield, disease resistance, and superior quality, thereby further strengthening its core product lineup. In terms of operations, the company continuously expanded new sales channels, actively developed its presence across the national market, and achieved leapfrog growth.

　　(4) Healthcare Sector

　　The healthcare sector is an industry that was relatively late in being integrated into the Group’s industrial structure, yet it embodies the Group’s strategic transformation direction. It’s gratifying to see that the companies in which we’ve invested have experienced rapid growth over the past few years and have risen strongly within the Group’s industrial landscape, once again validating our assessment of broader trends and reinforcing our conviction in our strategic transformation and in redefining Feishang.

　　Lu Daopei Hospital has newly expanded to include the Yizhuang Hospital and Shunyi Hospital, bringing the total number of hospitals from two—Yanda Hospital and Shanghai Hospital—to four.

　　Over the past year, Dahé Medical has further strengthened its internal controls and enhanced its management capabilities. The company has placed great emphasis on safety, achieving zero medical incidents throughout the entire year. The newly established Shanglin Instruments and Shanglin Pharmaceutical companies have provided significant impetus to Dahé Medical’s business development. The newly built Linquan Quanhe Hospital and Jieshou Jing’an Orthopedics Hospital have opened one after another, and construction has officially begun on the Xincai Honghe Hospital, marking the start of a major expansion phase for Dahé Medical.

　　In 2016, Huizhou Dental focused on the development strategy of “stabilizing growth, safeguarding our market share, and building core competitiveness.” Adhering to a philosophy centered on technology, customer satisfaction, and market orientation, and with the concerted efforts of all employees, the hospital’s revenue and profits came close to their target values. Throughout the year, the hospital reported zero safety incidents and no major medical disputes. Its core team remained stable, and it successfully recruited and nurtured talent for key positions. The company also achieved milestone goals in its compliance work for going public. In addition, its affiliated Guangzhou Yahao Dental Hospital, affiliated with Jinan University, officially opened for business, marking the launch of a new strategic initiative.

　　In 2016, Shanghai Yake Bio, in which we hold a stake, also established a strategic partnership with the Group, further clarifying the company’s development goals and direction. The company is now focusing its efforts on the research and development of a tumor cell immunotherapy technology platform. In particular, the company’s flagship CAR-T cell therapy has achieved a major breakthrough and demonstrated efficacy that has reached an internationally leading level. Relevant findings have already been presented by collaborating hospitals at the annual hematology conferences in Europe and the United States.

　　(5) Information Technology Sector

　　In 2016, Guanglong Optoelectronics successfully completed its listing on the New Third Board, achieving a historic breakthrough. The new project, designated as a national-level initiative, has also been smoothly launched, laying a solid foundation for our next stage of rapid growth.

　　Despite unfavorable conditions such as deep restructuring and intensifying competition in the wireless digital TV equipment industry in 2016, Guilin Siqi still achieved sales revenue of over 100 million yuan. While enhancing its internal management, the company vigorously promoted the R&D of new products, successfully developing high-efficiency transmitters and national-standard modulators. It also completed the construction of a national laboratory and launched several new product development projects.

　　In 2016, Guilin Silewei reorganized its corporate structure, refined its internal management system, enhanced its company qualifications, and controlled procurement costs. As a result, the company’s operations have entered a normal track and now possess the foundation necessary to participate in market competition.

　　Shenzhen Sike Micro is a technology-driven startup company. In 2016, it successfully developed several key products and technologies and filed nearly 20 intellectual property applications. The company has also collaborated with numerous large industry organizations, establishing a clearer business model.

　　(6) Cultural Industry Sector

　　Mengzhou Film & TV Company achieved a profit of nearly 200 million yuan and completed a series of large-scale productions. Hainan Sanle Company now monopolizes half of the outdoor billboards on Hainan Island, paving the way for its next phase of expansion.

　　(7) Mining and Other Business Segments

　　Over the past year, Pingxiang Steel has seen its business bottom out and then rebound, achieving profitability for the entire year. After capacity reduction, the survivors have emerged as industry leaders and are now reaping the benefits of supply-side reforms.

　　In 2016, Feishang Non-Metallic filed applications for 7 utility model patents and 5 invention patents in the areas of R&D and technological upgrades. Meanwhile, its R&D projects with Southwest University of Science and Technology are proceeding as scheduled. Wuhu Mining has reduced the company’s overall operating costs. Bashi Mining has basically completed its planned objectives.

　　Due to various constraints, Haifeng Chemical has not yet achieved its business targets; however, the transformation efforts are progressing smoothly.

　　III. Main Responsibilities of the Group Headquarters

　　In terms of financial and capital management, as I just mentioned, we’ve faced extremely tight cash flow over the past year. This is because our traditional banking business segment has been calling in loans. Although our business segments remain profitable, rising raw material costs have increased our working capital needs. Coupled with the banks’ loan recovery efforts, this has left us in a very tight financial position. Under these circumstances, it’s truly remarkable that our financial and capital management team has still managed to ensure the smooth operation of the entire corporate group.

　　In terms of compliance efforts, as we’ve begun to adopt our new positioning as “pioneers,” we’ve been systematically strengthening our compliance capabilities and refining our compliance guidance and enforcement processes. On the capital operations front, our headquarters staff have been actively going down to the field to provide guidance—indeed, they’ve been running around nonstop. We’re hopeful that in 2017, we’ll see new enterprises filing for IPOs, and in 2018, we’ll have new companies listed either in Hong Kong or domestically.

　　In audit work, you’ll often see the audit department from our group headquarters at our subsidiary enterprises as well. Their tireless efforts across various locations are aimed at proactively identifying risks for our shareholders. In terms of human resources, we’ve provided extensive support tailored to the needs of our member companies and partners. As for strategic management, we’ve developed distinct management approaches for each member enterprise, taking into account their unique strategies and characteristics.

　　Colleagues, as I’ve briefly outlined just now, looking solely at our operational metrics over the past year—2016—we’ll find that our overall performance hasn’t been ideal, and we’re far from satisfied. Traditional industries continue to struggle, bearing tremendous pressure from substantial losses; meanwhile, emerging industries are still in the incubation phase. Although we do have several enterprises achieving profits of over 20 million or even 30 million yuan, this isn’t what we’re striving for. These are merely early steps, and we’ll need to keep investing further. Yet all of this—whether it’s losses or profits—is part of the cost of our group’s strategic transformation, and these experiences, whether painful or rewarding, are invaluable assets that have left their mark on us through the years.

　　Part Two: Feishang’s Development Strategy for the Next Three Years

　　The second part will focus on Feishang’s development strategy for the next three years. The first subtopic is the title of my speech at the Peking University Entrepreneur Club: “Recognize the Right Timing, Leverage Local Advantages, Rally Human Strength, and Gladly Play the Role of the Pushcart Driver.” These few words encapsulate the guiding principles behind Feishang’s future development—and also serve as a summary of the joys, sorrows, hardships, and bittersweet experiences I’ve had over the past year in running our business. Over the past year, all of you entrepreneurs here, as well as our employees, have worked extremely hard. Some of you have achieved great success, while others have faced considerable challenges and exhaustion. I deeply empathize with your struggles and fatigue, because I’m not only one of your shareholders but also your de facto controller and a key partner in your journey. When you make profits, I’m delighted; when you suffer losses, I feel deeply pained. Yet whether it’s amid that pain or in moments of joy, I’ve always been reflecting on whether I’ve done enough, and whether I could have done even better.

　　First, understand the timing of the heavens; leverage the advantages of the land; and strive for harmony among people.

　　Some of our newly joined partners may not have heard my speeches before, but many others have. Two years ago, I introduced the concept of “four cornerstones” that Feishang adheres to: In everything we do and in every strategy we pursue, we first need to establish momentum—“leverage momentum,” “embody the right principles,” and “master the art of execution.” Even our company anthem, “Flying Over,” is imbued with profound insights in every single line. We talk about “borrowing the winds that stretch for ten thousand miles”—but what exactly does “ten-thousand-mile wind” mean? Every time I take on a new project, I ask myself: What is our “ten-thousand-mile wind” in this particular endeavor? We have “strong wings”—but what exactly are these “strong wings”? Once you’ve got those “strong wings” and can “borrow the winds that stretch for ten thousand miles,” only then can you truly “embrace the world.” And when you embrace the world from such a grand perspective, from high above, your vantage point is entirely different. Whether you’re already partnering with Feishang or are yet to join us, I hope that all our partners value our ability to help them “embrace the world” from a lofty vantage point. That’s precisely the original intention behind their decision to collaborate with us.

　　(1) Recognizing the right time.

　　I’d like to discuss with everyone: What exactly is “Tian Shi”—the right timing? And what is the “Tian Shi” we’re facing today? Only by recognizing and seizing the right timing can we harness its power to create major opportunities for ourselves. To put it simply, over the next three years at Feishang, our mission is to become “carriers”—but what kind of carriers? In plain terms, we aspire to be deeply embedded in the industries we’ve chosen, closely collaborating with our partners, helping them craft their strategies and industrial layouts, supporting them in capital management, and ultimately enabling their businesses to thrive. Who wouldn’t welcome such “carriers”? In the coming years, Feishang’s transformation will hinge on whether we can help our partners achieve success—and when they succeed, so will we.

　　1. The Internet era has transformed lifestyles and industrial cycles.

　　The advent of the global internet era has truly transformed the world. In the past, an industrial cycle might last eight to ten years; today, however, the internet age has turned the globe into a true “global village”—a village where knowledge is shared openly. As soon as you develop a new technology, others will quickly learn about it and even surpass you. This means that technological upgrades and industry transitions are happening faster and faster. What does this imply? It implies increasing uncertainty: the amount of certainty we can count on—and the timeframes within which that certainty holds—continuously shrink. The world now finds itself in a state of profound uncertainty. While there have been many successful stories in the past, numerous well-known companies have also gone bankrupt. Why is that? Because their past successes all relied on the certainty of a broader environment. In the past, a new technology might last eight to ten years; today, it might last only three years—and in the IT industry, even shorter, with updates and replacements occurring every six months.

　　As decision-makers, our entrepreneurs are constantly called upon to make choices in environments marked by uncertainty and incomplete information—this, in fact, poses a tremendous challenge for us. What does this mean? It means that a new era has arrived; it means the days of going it alone are over; and it means that under conditions of heightened uncertainty, business risks have soared. If you can’t fully leverage your strengths and maximize your profitability within the brief windows of relative certainty, you’ll find yourself unable to withstand the inevitable downturns ahead. Thus, for Feishang, our key takeaway is this: You must push your strengths to their absolute limit, and under the right circumstances and following the right mechanisms, you must earn the money that’s rightfully yours. Only then will you have the capital necessary to weather the winter—a business philosophy that’s profoundly important.

　　2. China’s commerce has entered a new era of capital and securities.

　　China’s business landscape has entered a new era of capital securitization, and this assessment is crucial. If our traditional enterprises fail to step onto the capital markets, you’ll have only one path left—death. That’s because you haven’t changed your mindset; you haven’t embraced the new era, while others have already done so. No matter how hard you work or how much you earn in your lifetime, you’ll still earn less than what others can make by simply entering a small capital market.

　　Entering the capital market comes with an important requirement: you must be compliant. Without compliance, your profits will remain stuck in the agricultural era—still mired in a self-sustaining, self-developing phase, unable to tap into external forces or leverage the advanced tools and resources others can offer. As a result, you’ll inevitably be left behind. The defining characteristic of the capital era is that corporate competition has shifted to a competition centered on valuation. At the pinnacle of valuation-driven competition lies going public. Going public injects liquidity into valuations, and liquidity itself is invaluable—a fact that many entrepreneurs fail to recognize. A fundamental prerequisite for liquidity is standardization and compliance; if you’re not compliant, who would want to play along with you? If you’re not compliant, how could anyone possibly trust you? From this perspective, in the new era, every factor upon which you’ve relied for survival could potentially become an obstacle—or even a shackle. In the new era, if you haven’t securitized your assets, you’re simply out of the game. Only through securitization can you better navigate uncertainty. This is precisely what we call “the right timing”—this is the overarching trend.

　　3. Domestic demand has been artificially boosted by both market and non-market factors, becoming a major driving force. Therefore, if we fail to keep a close eye on domestic demand—whether it’s the investments we’ve already made or those we plan to make in the future—we’ll surely miss out on this “boundless, soaring breeze.”

　　4. Eating, drinking, entertainment, and health among the middle class represent a major trend for the future. In the past, our primary concern was simply having enough to eat—addressing the “food” issue and, by extension, the “transportation” issue, i.e., getting around. Today, however, the top priority is “quality”—eating well, dressing well, eating healthily, playing healthily, maintaining physical health, and nurturing mental well-being. Only by focusing on health-oriented consumption will you have a real chance of success. Whoever can cater to the consumption patterns of the middle class—and seize the “long-lasting favorable winds” of middle-class spending—will be poised to emerge victorious over the next decade.

　　5. The way, pace, and quality of China’s economic growth have undergone a qualitative transformation and are increasingly being recognized. The benefits of supply-side reform are gradually being realized, and the era when “survivors” reign supreme is slowly dawning. This point can be said to serve as a guiding principle for Feishang’s existing traditional industries.

　　The points just mentioned above constitute what we call “Tian Shi”—the right timing. This “Tian Shi” enables Feishang to strategically select future “tracks,” serving as the guiding principle for our new business ventures. Feishang will firmly focus on the sectors we’ve already chosen—healthcare, telecommunications, and cultural industries—and, in the next phase, also on elderly care. Our investments will be heavily tilted toward these areas. For instance, in healthcare, in addition to expanding our presence domestically, we also aspire to establish a foothold overseas, effectively combining high-quality overseas practices with China’s emerging trends. Only then can we achieve the kind of “overtaking on a curve” effect. While “Tian Shi” has helped Feishang choose our strategic tracks, we remain optimistic about our existing industries—such as coal—and believe that our copper processing has already reached its bottom. As the broader environment gradually shifts, we are both confident and determined to leverage Feishang’s capital management capabilities to carve out a whole new path for ourselves, where in niche markets, those who persevere and adapt will ultimately reign supreme. As for our forestry business, although it’s still far from fully compliant at present, we’re sparing no effort to ensure that we operate in full compliance going forward.

　　(2) Leverage geographical advantages

　　Where does our “advantage of location” lie? Our “advantage of location” is none other than our own inherent strengths. We must clearly recognize the existing advantages that Feishang currently possesses. Simply put, what exactly does Feishang do? Feishang is engaged in real industry—transforming real industry into an industrial sector. That’s the first stage. The second stage involves turning this industrial sector into capital goods. And the third stage is to bring these capital goods back into the industrial sector, making them the undisputed kings of industry. Feishang is involved in all three of these areas. As long as a partner meets the criteria of these three stages, they can become one of our collaborators. So, what specific advantages does Feishang have that enable it to excel in all three of these stages?

　　Feishang’s unique strength lies in its commitment to being the “pusher”—the person who helps others move forward. Who are these “pullers”? You are the pullers! So, what does Feishang use to push? We leverage our existing strengths—and the strengths we’ll build in the future. I know you’re probably asking: If we’re just going to be the pusher, how is Feishang different from a traditional securities firm? Here’s how I’d explain it to them: We provide end-to-end support for you—from the very beginning all the way through to post-listing activities. Moreover, while a typical securities firm might assist hundreds of companies at once, we’re different. This year, I might only work with two or three companies—and best of all, I’ll do it for free! We have real capabilities: our strategic planning prowess, our compliance expertise, and our capital management skills—all of which are our key advantages.

　　1. Strategic planning capability

　　Feishang boasts nearly two decades of experience in the industry—experience not only in manufacturing but also in driving industrial development. We’ve been through every stage of the journey, giving us a solid foundation, rich success stories, and valuable lessons from our failures. Our international perspective and strategic vision have earned us recognition across various sectors and industries. Each transformation we’ve undertaken has been a testament to our successful business strategy. We’re adept at seizing opportunities—and indeed, people often tell me, “Fei Lie, you’re a true opportunist!” Every successful person is an opportunist; those who stick rigidly to one path tend to burn out early. There’s a crucial distinction between being an opportunist and being an opportunity seeker: opportunities are long-term, and any sound strategy must be built on solid opportunities. So what exactly is opportunism? Simply making big money when an opportunity arises—that’s just business. A true opportunity seeker, or “opportunist,” is someone who builds a career—a completely different ballgame, despite the mere one-character difference. Our ability to craft strategic layouts is something we at Feishang take immense pride in. We can help our partners and even our own businesses develop high-level strategic plans. Partnering with Feishang means you can stand taller, see farther, and dream bigger. I especially encourage our partners and our teams to embrace ambition—this is one of our key strengths. And we’re fully committed to continuously reinforcing this advantage in the future. In fact, the Group’s headquarters will focus heavily on building our capacity to serve our subsidiaries—starting with strengthening our strategic planning capabilities. This is precisely where we differ from securities firms: they won’t help you formulate a strategy, whereas we will. We’ll provide you with ample connections, access to social and governmental resources, and even national-level resources—all designed to support your company’s strategic development. This is precisely the critical aspect I mentioned earlier—the importance of turning enterprises into thriving industries.

　　2. Compliance Capability

　　The second difference from securities firms is that we have the capability to ensure compliance throughout the entire process—something that securities firms won't do for you, nor will intermediary agencies. After all, they’re in business to make a profit. We’re different: we invest our own money and work closely with you precisely because of our higher goals. That’s the fundamental distinction between us and them. As for going public, it’s just one step in our journey toward soaring success—not the most important one. The most crucial part is leveraging the IPO platform to continuously pursue mergers and acquisitions, thereby realizing our ultimate dream of becoming industry leaders. Feishang’s vision is to achieve this transformation within five years and cultivate three to six sub-industries into top-tier global players in their respective niche markets. Our ambitions are huge, but whether we can make it happen depends on all of you. I alone simply can’t do it all by myself.

　　3. Capital operation capability

　　Feishang’s third capability is its capital operations expertise—a strength that has long been widely recognized and which helps our shareholders and partners unlock value. This capability is precisely what securities firms lack; they are merely intermediaries that handle administrative procedures. This, too, is the third key difference between us and securities firms. In the past, we wanted to be the ones pulling the cart ourselves. We believed we were doing a great job—and indeed, in some areas we’ve led exceptionally well. Take steel, for example: we transformed a small mill with an output of just over a million tons into one producing 12 million tons, placing us among the industry’s top players—a feat that’s truly remarkable for a private enterprise. Or consider our port business: starting out as a modest facility handling around 100,000 tons, we’ve now become the leading port along the entire Yangtze River route. And then there’s Guizhou Coal—where we’ve emerged as a major new force. Now, as Feishang looks to embrace the new era and embark on its third transformation, we’re keenly aware that our own capabilities fall short. That’s why we’re reaching out to forge even stronger partnerships. Over the past two years, Feishang has acquired and integrated many new business segments—but we’ve chosen to remain second-tier shareholders, important second-tier shareholders, rather than aiming to become majority owners. It’s not that we lack the financial resources to take on a majority stake, nor is it that we’re unwilling to do so. Rather, we simply can’t afford to become majority shareholders. Why? Because being a majority shareholder comes with specific responsibilities and obligations. First and foremost, you must have deep familiarity with the business at hand—and we simply can’t possibly become experts in every single business we might pursue.

　　Right now, some bosses have been telling me that Feishang was planning to send over a general manager. I replied, “Feishang won’t be sending over a general manager. If Feishang were to send one over, it would mean that this business doesn’t align with our model. We’d prefer that both the general manager and the core business platform be handled by our partners—after all, we’re just the ones pushing the cart; we’ll stick to what we do best. But we’ll definitely take steps to mitigate risks, and that’s our right. Once the original general manager starts performing poorly, we’ll have both the obligation and the authority to reselect someone—but that’s precisely the outcome we’d least like to see.”

　　For Feishang’s next step in business development, the first priority is to select the right track—within the industry, we carefully choose enterprises and teams that are a good fit for collaboration with Feishang, and only then do we help them achieve success. The second step is to help our existing business teams become shareholders and empower them to take on the role of driving forces. Right now, we already hold a controlling stake, meaning Feishang itself has become the driving force. As for our teams, they’ve all become part of the Feishang family. Gradually, Feishang will transition from being both the driver and the pusher to focusing solely on being the pusher. Of course, selecting shareholders isn’t something we can do casually; we can’t afford to “try it out” like some CEOs suggest. After all, we don’t have the luxury of time or resources to afford trial and error.

　　We implement Feishang’s distinctive management model by embracing a service-oriented mindset, layer by layer. Of course, our supervision must also be compliant and regulatory-compliant. Among the companies in which Feishang invests, we have no interests other than those of our shareholders. At Feishang, we aspire to operate in compliance and with strict adherence to regulations. The hallmark of capital securitization is precisely compliance—compliant profits are entirely different from non-compliant ones. Therefore, what we seek is audited, compliant profits. Without compliance, there’s simply no point, because Feishang doesn’t rely solely on dividends for growth. Relying exclusively on dividends isn’t enough; dividends alone can’t build an outstanding enterprise. Only by following Feishang’s unique model can we truly fulfill the original intentions behind our collaboration with Feishang—and only through such cooperation can we realize Feishang’s original aspiration of contributing to the nation through industrial development. We must firmly keep in mind what makes Feishang different, and every effort we make must positively impact this distinctiveness. Whether it’s new partners or our existing businesses, everything we do must reflect the value of capital securitization benefits and demonstrate how, after undergoing capital securitization, these assets return to the real economy. Only then can we truly embody Feishang’s unique character. Otherwise, we’ll fail to reap the rewards of Feishang’s advantages and won’t be able to put into practice our cultural philosophy of mutual value creation and win-win outcomes.

　　(3) Competing with people

　　Our greatest strength stems continuously from our people. Competing on people means competing on the capabilities of our team—on our willingness to take responsibility and our ability to do so effectively. What kind of “carriers” does Feishang need? First and foremost, we need people who dare to take responsibility, who have the right mindset for it and the skills to do it well. When we compete on people, we’re competing on precisely this—not on our labor costs or on our incentive programs. Only incentives that align with our values are truly positive incentives; we must avoid incentives that skew in one direction or another. In the coming years, Feishang will undoubtedly engage in many more mergers and acquisitions, and we’ll be playing an increasingly important role as “carriers”—helping others move forward. As a member of the headquarters management team, I’m a carrier myself. And the headquarters management team, in turn, serves as a carrier for each of our member companies. Only then can our partners, our employees, and our entire team fully reap the benefits of Feishang’s soaring growth—and only then can we truly put into practice our cultural philosophy of mutual value creation and win-win outcomes. Everyone talks about the boss talking a lot about our cultural philosophy, but what exactly does “mutual value creation and win-win” mean? What does “value creation” really entail, and what does “win-win” actually mean? Without value creation, where would win-win outcomes even come from? There’s no such thing as a free lunch in this world. The only things that truly add value to our lives are those that continually nurture and hone our capacity for value creation. Once you’ve developed that capacity for value creation, you’ll always be able to achieve win-win results—though the specific partner you win with may vary. If you team up with a pig-like group, you’ll end up becoming just like them; but if you join forces with a godlike team, you’ll rise to godlike heights yourself.

　　Next, let’s start by implementing a win-win strategy, beginning with our headquarters and existing teams. Some members deserve bonuses, while others deserve higher salaries. For instance, at the headquarters, management teams—such as those in human resources and strategic management—that focus purely on management will undoubtedly receive high salaries. I need talented individuals to help us brainstorm ideas and assist us in mitigating risks; these roles aren’t about bonuses. On the other hand, departments like our financing team and investment team—those directly involved in business operations—sorry, you’ll be on lower salaries but eligible for higher bonuses. If you fail to deliver results or make meaningful contributions, sorry—you won’t get any bonus at all. That’s how it works at our headquarters. Every core team member who successfully completes a project will share in the added value generated from our capital securitization efforts. In the years ahead, Feishang Future will certainly have more than one company ready to go public—or already listed. We’re confident in this, and we sincerely hope that our headquarters and human resources department can quickly put into practice our philosophy of “pooling talents and working together.” We want to identify and select teams at every level—teams that are both willing and capable of taking responsibility—and turn them into our partners, our driving forces. You could say that every platform at Feishang is ultimately a platform for our partners. First and foremost, it’s your platform as partners; only then does it become Feishang’s platform. We have this lofty vision and broad-mindedness: only when we help you succeed can we ourselves achieve success. Conversely, if we possess such generosity and openness, why would we ever worry about lacking partners? That’s precisely why we must pool our talents and work together to enhance our skills and boost our value-creating capabilities. At the heart of Feishang’s culture lies value creation, and win-win cooperation is the inevitable outcome. In the future, Feishang will seize the right timing, leverage favorable conditions, and unite people through collaboration—willingly acting as the pushers, leaving the stage open for those more capable, and shining the spotlight on others. Let us serve as the backdrop; when the enterprise finally reaches the pinnacle of victory, even though the spotlight shines only on our happy backs, we’ll feel immensely fulfilled as long as the enterprise and its partners have seized the commanding heights.

　　Today, many drivers who are attending the Group’s recognition ceremony for the first time—including General Peng, Dean Wang, General He, General Zhang, and others—I hope that in the future, the spotlight will shine brightly on all of you. I firmly believe that if we work together with one heart, seamlessly integrating our strengths and forming powerful alliances, we’ll surely achieve remarkable results—though it may just take a bit longer or shorter. The title of “King” bestowed upon Feishang was earned on the battlefield, not handed down by others. We’re not “second-generation heirs”; we’re the first generation, true fighters. We ourselves are courageous, willing to take responsibility, and adept at stepping up to the challenge.

　　II. Macroeconomic Situation

　　I’ve always attached great importance to the macroeconomic situation—and I still do. In the past two years, I was rather pessimistic, but now I’m starting to lose that pessimism. After the 19th National Congress, a new phase of stable and robust macroeconomic growth is bound to arrive. This is because we Chinese are simply too hardworking. With over 1.4 billion of us each harboring the dream of getting rich, we’re all like a pack of fierce, determined warriors. As long as we have a stable environment—after several years of frustration caused by policy constraints—we’ll surely roll up our sleeves and go all out. Therefore, our macroeconomy is bound to experience steady growth. Whether it’s tough or exhausting, we’ve all gotten used to it; once you get used to something, it no longer feels tiring.

　　The international situation has indeed changed, especially since Trump took office. Once the upward trend of the U.S. dollar is interrupted, the price increases we’ve seen in commodities could very well continue—and we might even see another round of surges. This has significant implications for our traditional industries, such as coal and copper processing. The stock market isn’t much better or worse either; it’s likely to improve only after the 19th National Congress. Before that, at best we’ll see a few brief periods of mild sunshine—but major plunges are virtually ruled out, because the state has already taken control of this market. The “national team” has become the biggest player, essentially dictating whether prices go up or down as it sees fit. As I just mentioned under the heading “Tian Shi,” the overall macroeconomic situation is roughly as I described. Of course, deleveraging remains an ongoing process, and banks themselves are undergoing transformation. To make good use of external capital, we need to carefully consider our own strengths and the capabilities of our team.

　　Finally, let me touch on our key priorities for 2017. Due to time constraints, I won’t go into too much detail here—just the highlights. First, at our headquarters, we need to build up our capabilities in driving growth and in risk prevention—covering financial risks, business risks, and other types of risks. As I just mentioned, our driving capabilities encompass three key areas: strategic planning ability, compliance capability, and capital management capability. These are precisely the tasks that our headquarters must focus on. Second, for our subsidiaries—such as General Manager Peng’s business segment—this year, no matter what, we must kick off the process of securitization and re-securitization, ensuring that General Manager Peng’s “carriage” can soon set off on the path to prosperity. Similarly, although Huikou Hospital hasn’t yet reached the three-year mark since its major shareholder change, it’s already fully prepared and strategically positioned. Likewise, Dahé Medical should also aim to start counting from a compliant fiscal year as soon as possible. All of our capital market platforms have specific tasks this year—including the listing of Tongye, which we’ll push forward as quickly as possible. After all, you already meet the requirements: you’ve been profitable for several consecutive years, with annual profits consistently exceeding 20 million yuan. For any company reaching that threshold of 20 million yuan in profit, I’ll make every effort to get it listed as soon as possible—listing first and foremost, so we can seize the best timing in our battle for market dominance. As for Huasheng Technology, we’ve been delayed by policy changes. Let’s see if we can get lucky this year and successfully navigate the hurdles, returning smoothly to the main board in 2017. Third, regarding our existing business segments, we need to think carefully about how to meet the contractual requirements, avoid holding the group back, and even turn them into a vital driving force for the group—preparing us for our next round of secondary capital operations and enabling us to smoothly achieve Feishang’s strategic transformation.

　　Finally, I’d like to encourage all employees and partners across the entire group: First, have confidence; second, remain humble and maintain a strong work ethic—keep pushing forward with optimism and positivity; third, everyone take good care of your health.

　　Thank you, everyone!