Over the past 20 years or so, Sanpower has witnessed a meteoric rise to a global corporation that is worth more than a hundred-billion RMB. However, the group has experienced an unprecedentedly liquidity crisis throughout the last two years. Despite the external factors, the crisis was also largely caused by internal elements. I have to admit, my personal desire for greatness and success has resulted this crisis. I did not notice the gap between my vision and the reality. I failed to adapt my mentality to the development scale and the speed of the group, and my management and operation abilities were inadequate. Over the past two years, I’ve reflected day and night, and felt ashamed. I acknowledge my mistakes, and I am correcting them.

As the world is changing and the country’s economic structure is transforming and improving, we should work in line with the general trend and make strategic adjustments within our group. In the past, we ran too fast to take a breath. Now, restructuring brings us a new opportunity to slow down our steps and streamline administration. By doing so, we can carry out solid and meticulous operations and achieve stable progress. A fresh Sanpower identity will be built in the new era.

Therefore, every challenge can be regarded as the best opportunity. We must learn from our past mistakes, and we have to suffer to achieve better future. Like the old Chinese saying, “happiness only comes in the wake of suffering”.

Our Changes

After thoroughly introspection, we have already made many changes in the past two years:

In terms of operations, we should steer clear of scale-oriented targets. Profit-driven, being professional and strong are our top priorities. Over the past two years, we’ve taken active measures to streamline our administration structure, dispose of non-core health business assets. At this moment, the group no longer has any unprofitable business. In addition, the group was downsized and the Headquarters outlays dropped by over 70% compared to those before the crisis. Under the leadership of the Debt Committee, we will continue streamlining administration and eliminate inefficient assets as necessary. The policy of one employee taking multiple roles will be further carried out to ensure information consistency at all levels. Redundant jobs, departments, and organizational structures will all be eliminated.

The Management Committee, which is Sanpower’s top decision making committee, was set up to ensure every department has a voice rather than a sole individual. We will further promote a flat management style and shift our focus to business itself. In order to create a more professional environment, the top management of subsidiaries will join the group’s Executive Committee and 6 professional committees have been established to provide advice on major issues. Our past experience has taught us to the importance of a strong compliance department. We have set up the Strategic Management Department at the Headquarters, covering functions such as strategy, budget, compliance review, auditing, investment, organization, and performance to truly serve subsidiaries. Quarterly Business Review Meeting must be held on time to ensure an action-oriented and figure-centered development path. In the future, each subsidiary should submit a weekly business report. Meanwhile, the Strategic Management Department should collect all reports and deliver them to the Management Committee. Every member of the Committee should be proactive and brainstorm new approaches to solve problems for subsidiaries. Otherwise, they are not qualified to be leaders!

We should further promote the digital transformation within the group. This has been my dream all along, which was proposed for years but never achieved.

First, the operation should be transformed digitally. Our umbilical cord blood samples stored account for half of the world’s total. We have a large amount of newborn data as well as data from 20 million senior citizens. In addition, our Findgene, Tianwen, and department stores also boast a large amount of customer data. Inestimable value will emerge if all the data are synergized and well managed.

Secondly, management style must also be digitally transformed. Information systems and data systems between different companies must be interconnected. When the time is ready, we will set up an online anonymous community, where employees can share their complaints about me, about the management or anyone in the group, either anonymously or with their real names. Everyone can have access to it. The Assistance Office will share the complaints with me every week.

Our Persistence

There is a saying, “Persistence doesn’t consist in belief, but belief in persistence.” We could not understand the importance of persistence more deeply after these past two years. Even during the “darkest hour”, we, whether new or old to the group, have all stood fast with tenacity.

Our restructuring team has repeatedly communicated and negotiated with relevant government departments, strategic investors, debt committees and creditors to push forward the debt restructuring work ceaselessly. Now, the Sanpower debt restructuring plan has been laid out, pending the votes of creditors.

In terms of operation, due to the impact of the group’s crisis, our subsidiaries have encountered unimaginable pressure. However, our management teams and subsidiaries have lived up to expectation. Together with the group’s top management team, we deeply appreciate your hard work.

The bank accounts of Wuxi Optical Cable were all closed down or suspended. To ensure production, delivery, and the completion of their business objectives, employees took the initiative to lend their own money to the factory for raw materials.

Xuzhou New Health Hospital, which was successfully opened this year, has cost a total over 1.6 billion RMB until its construction. However, the project was halted half way due to underfunding. The management team at the hospital lent their money to the group twice to finish the hospital’s construction. At that time, there wasn’t sufficient fund for equipment or decoration. For the hospital to pass the acceptance inspection, the management and employees raised a fund once again. Eventually, the hospital was officially opened in December of last year.

Shanghai Findgene was also greatly affected by the crisis and witnessed a shortfall in their funding. Zhang Yuping, the current General Manager of Findgene, took charge of the company in the plight. She sought out business and management, and even paid employee wages by using her own money. Thanks to her efforts, great improvement has taken place in Findgene. She proves that women are just as capable as men.

These are all our lovely Sanpower people. Sanpower employees have the spirit to surmount a plethora of difficulties. This is the reason why we are deeply in belief of our restructuring and the future of Sanpower!

Our Confidence

We are full of confidence in the future. We are blessed with the support of provincial and municipal governments, the help of strategic investors, the understanding of creditors, and an invincible team. The lessons of the past are the wealth of today. And we should not forget that we do have many valuable and resilient assets.

Sanpower is the world’s largest umbilical cord blood stem cell storage and application company, with half of the world’s umbilical cord blood stem cells samples stored. Although the business was greatly affected by the pandemic last year, its performance only slightly decreased. We can conclude that this is the result of our employees’ hard work! The umbilical cord blood bank in Shandong had an annual profit of nearly 800 million RMB. Three banks in Beijing, Zhejiang, and Guangdong also performed beyond expectation. Cordlife, as the largest cord blood bank operator in Southeast Asia, conducted cord blood stem cell storage business in more than 10 countries and regions in Southeast Asia.

We have the world’s leading cellular immunotherapy drugs for cancer. Provenge, as the first cellular immunotherapy drug approved by FDA, is the only immunotherapy drug for prostate cancer in the world. It was launched in the US in 2010 with an annual profit of nearly 100 million US dollars. As Covid-19 rampaged in the US last year and we could not meet patients face-to-face, performance still outdid our expectations. We would like to thank our 700+ local employees of Dendreon in the US for their efforts. Provent, an early indication product for prostate cancer in development by Dendreon, is equivalent to a prostate cancer vaccine. The FDA has shown a positive response to its application. If this can be launched to the market soon, it will create more revenue streams to Provenge. We are also simultaneously promoting the registration and market entry of Provenge in China, the process has been smooth and positive as of the moment.

Moreover, we have the world’s leading home care service enterprise, serving over 20 million elderly people in China and Israel. With the influence of the pandemic, in the first half of last year, when the door-to-door business basically stopped for three or four months, more than 10,000 An Kang Tong employees spared no effort to do a good job in their work and performed outstandingly. In particular, I want to stress the hard work of our 9,000+ peers in Natali, Israel. Because of Covid, Israel has been locked down three times. However, they left no stone unturned to maintain the business’s stability. In addition to home care services, we will put great effort toward developing our long-term insurance business and institutional senior care business in the future, striving to reach a total of 20,000 beds by the end of this year.

Our advantages in health care resources have been recognized by local governments, many major state-owned enterprises, the top ten real estate enterprises in China, and all sectors of society. We have advanced cooperation between the healthcare industry and other parties with the light asset model that integrates our IP. The strategic cooperation agreement of the 2700-mu (c.180 hectares) Sanpower-Changsha-Zhuzhou-Xiangtan Urban Cluster (Zhaoshan) Healthcare Community Project has been signed. At the same time, scores of projects are already in progress.

We have two department stores in the core business district of Xinjiekou, Nanjing. After the pandemic seriously impacted offline retail, Cenbest Department Store took the lead in performance recovery, which was 3-4% faster than that of other department stores in the same region.

Meanwhile, we are the second largest shareholder of Wangfujing Department Store, which has a large number of commercial properties in all core areas around China.

They are the solid foundations for our restructuring, debt repayment and future development. As long as we can further enhance these core businesses, our restructuring will surely succeed. Therefore, I want to emphasize again the importance of performance! Performance! Performance! In principle, the annual performance targets set at the beginning of the year will not be adjusted. No one should look for excuses to adjust the indicators. Targets are determined.

Besides, the group is still in a difficult period and has not returned to normalcy. I hope everyone can overcome the difficulties with the group. Always be persistent. We guarantee our employees’ salaries, but the performance bonus of group leaders are reduced by 50%. Subsidiaries can make decisions based on their own situations. I hope everyone understands the plight we are undergoing. We will compensate everybody after the group recovers.

As the old saying goes, “the future is bright and the path to it is tortuous”. Not only we should be diligent, thrifty, and hard-working during this transition period, but we should etch this spirit into Sanpower’s genes even when the restructure is completed. As long as we have such genes and spirit, we are bound to hurdle forward and start with a clean slate. Thank you again to all the employees of Sanpower! We sincerely thank you for your hard work!