FJ CTS Group: Strategic Restructuring for Turnaround

This case describes how Fujian CTS Group, a state-owned company in Fujian Province, China, transformed from a company suffering from three consecutive years of losses to a profitable conglomerate through strategic restructuring. This case focuses on the whole process of strategic restructuring, including the background of the restructuring, the formulation and implementation of the strategic restructuring plan, as well as the results of the restructuring.FJ CTS group was founded in December 1949 as “Xiamen Overseas Chinese Service”, known as the first travel agency of PR China. After 60 years of development, Fujian CTS Group has developed into a conglomerate with core businesses of travel service, hotel, and tour bus. With the rapid development of China's tourism industry and quick change of business environment, Fujian CTS Group faced fierce competition from many domestic and foreign tourism enterprises, and the company had suffered from three consecutive years of losses since 2003. At the end of 2005, in order to get the company out of financial difficulties and achieve profitability, the board of directors of the group started to work on strategic restructuring program. At the end of 2006, the restructuring plan was completed. In early 2007, the group began the implementation of restructuring plan. Since then, with two years' great efforts, the restructuring of the group had been completed successfully. The company's overall revenue rose steadily, operating performance greatly improved. Until the end of 2009, the total assets of the group reached 13.52 billion Chinese yuan and the three core businesses (travel service segment, hotel segment, and tour bus segment) of the group all achieved good financial performance. The group has achieved turnaround through effective restructuring.