China companies see Germany as EU springboard(2)

Benefits for Germans

There have been a spate of Western reports saying that China will "gobble up" Europe through purchases, and doubts over Chinese companies cheating their European high-tech counterparts, but for Chinese companies, the arguments don't make any sense.

"For the German companies, joining hands with their Chinese peers is a must and a wise choice for a better future. And I believe many are realizing the importance," said Chen.

Amid eurozone debt woes, many German companies find a lack of capital is the biggest bottleneck to expansion and even survival, and China can provide the capital they need, said Chen.

At the same time, for the German manufacturers, the Asia-Pacific region led by China, the largest economy in the region, is an "enticing consumption market" that enjoys comparatively higher expansion.

"So Chinese and German manufacturers are highly complementary to each other. We cannot see any reason for them (German companies) not to welcome the Chinese investment, can we?" said Chen.

The experience of Zoje, Chen's company, also provides proof. Zoje made its first foray in Germany early in 2008, buying a German embroidery machine producer.

In the same year, a joint venture named Kaiser Lutra Textilmaschinen GmbH announced it was spending 10 million yuan ($1.6 million) on establishing a factory in Pinghu in East China's Zhejiang province, manufacturing embroidery machines branded Kaier Lutra.

In 2010, Zoje acquired a 29 percent stake in Germany-based Durkopp Adler AG, and later set up another factory in Wujiang, Jiangsu province, to make industrial sewing machines.

"The partnership provides our German counterparts with quick and easy access to the Chinese and Asian market, helping them cut their costs," said Chen.

According to Wang, there have been misunderstandings among the German government and enterprises opposed to Chinese investment proposals.

"They believed China bought their assets only to obtain technology, fearing that Chinese companies would fire local staff and destroy the management and business model when deals were signed," said Wang.

But such concerns are unwarranted, and Chinese companies' performance in many recent deals in Germany could clear their minds of doubt, he added.

Putzmeister, a family enterprise whose concrete pumps helped build the world's tallest building in Dubai and the Panama Canal, has been in pursuit of capital and increased international expansion since the financial crisis.

Cooperation with Sany provides the solution. As part of its 12th Five-Year Plan (2011-15), China said it will especially develop industries such as high-end manufacturing equipment, information technology, alternative energy, biotechnology, advanced materials and environmentally friendly technologies.

Xiang Wenbo, president of Sany, said Putzmeister would transfer part of its manufacturing capacity to China with the help of Sany, in an attempt to reduce cost and raise profits.

Sany also promised to maintain the original Putzmeister team, and the company's CEO will sit on Sany's board.

Xie Wei, financial manger of Jinsheng GmbH & Co KG, said, "There is huge potential for Chinese high-end manufacturers to make forays in Germany. China could provide all they (German companies) desire - capital, market, cheap laborers, and what is also important, business growth."

In 2010, Jiangsu-based Jinsheng acquired a 50 percent stake in a leading machine tools maker in Germany, EMAG Holding. Since then, the German company's business has grown by 30 percent annually. "This is a big surprise for them," Xie said.

"We don't exclude the possibility of more purchases in Germany," he said.

As the largest and second- largest manufacturers worldwide, China and Germany weathered the eurozone crisis, although their economic growth has slowed recently.

But as the paymaster in the eurozone crisis and the largest economy in the region, Germany has to fight to strike a balance in paying for the crisis and seeing its own economy prosper.

Despite German unemployment falling to its lowest level since 1990, German Chancellor Angela Merkel warned that conditions in the country could be more difficult in 2013 than in 2012, while the European debt crisis is far from over.

"Nevertheless, we need to have further continued patience. The crisis is far from over," said Merkel in her New Year's address."And the economic environment will not in fact be easier but rather more difficult."

The market value of the eurozone's 50 biggest companies fell 17 percent in 2011, a drop of 380 billion euros, though they recovered by some 8 percent in 2012.

"A consensus reached among German industrial circles is that Germany and the whole of Europe must open up to foreign businesses," and Chinese investment in particular, as China's economic growth continues and China's investment in Germany is comparatively much lower, said Peter Loescher, chairman of the Asia-Pacific Committee of Germany Business and also president and chief executive officer of Siemens AG.