China companies see Germany as EU springboard

Increasing numbers take advantage of the country's renowned factory know-how and global networks to gain wider access to the valuable Europearn market

As two of the world's top manufacturers, China and Germany bear a strong resemblance to each other. But what is also important, is they complement each other well.

What cannot be ignored is that last year Chinese companies scooped a number of their German counterparts in gaining access to either know-how or the global sales network, and the trend looks set to continue.

Although some people may not be comfortable with China's ambitions, few should doubt the significance of the country's mergers and acquisitions (M&As) in rescuing companies in Europe's largest economy amid the European debt crisis as well as providing a boost to own economy.

"It's a noticeable trend that more Chinese companies cooperate with their German counterparts through M&As," said Wang Weidong, commercial consul-general at the Chinese Consulate in Frankfurt.

"They (both countries) need each other. We can say that China obtains the know-how from Germany, but for many German companies that have been struggling for capital and expansion in Asia, China is the best choice for partnership."

As Europe's largest economy and home to many small and medium-sized companies and manufacturers specializing in technological know-how, Germany is increasingly attractive to cash-rich Chinese enterprises.

As the largest direct investment by a Chinese company in a German firm, in August Chinese industrial manufacturer Shandong Heavy Industry Group took a 25 percent stake in Germany's Kion Group, the world's second-largest forklift maker, for 467 million euros ($619 million).

Four months later, Shandong Heavy said it had obtained the option to increase its stake in Kion Group to one-third, further tightening its grip on the company.

It's not only about Shandong Heavy. Last year, Chinese companies bought a number of their German rivals, in which they could gain access to technology, distribution and branding.

In early 2012, Changsha-based Sany Heavy Industry Co Ltd announced the spending of 360 million euros to buy German concrete pump maker Putzmeister, and in March last year, German car parts maker Kiekert said it was being bought by Chinese peer Hebei Lingyun.

In April, China's Xuzhou Construction Machinery Group agreed to buy a majority stake in privately held German concrete pump maker Schwing.

"We expect more Chinese purchases in Germany in the coming years, and the high-end manufacturing and processing industries and high-tech machinery industries will be highly targeted," said Wang.

"It's already a trend that is irreversible and unavoidable."

China is becoming an important investor in Germany. According to Germany Trade and Invest, 158 Chinese firms launched investment projects in Germany in 2011, compared to 110 from the United States, 91 from Switzerland and 53 from France.

A recent survey by PriceWaterhouseCoopers showed China's investment in the European Union by value in 2011 surpassed that from the European Union into China. And Germany, among the European countries, was the hottest spot for Chinese investors.

Chen Yongwu, general manager of Zoje Europe GmbH, said, "We expect the Chinese investment wave in Germany still to be there in the next five to 10 years."

As the world's leading industrial sewing machine maker, Zhejiang-based Zoje has completed two acquisitions deals in Germany, and is considering another new deal there.