Chinese companies should be familiar with foreign rules: analyst
A German robotics firm has agreed to consider an offer from Chinese electrical appliance manufacturer Midea, which includes a commitment to maintain the German company's independent operations and protect its business secrets, according to an announcement on Midea's website.
Kuka management has recommended the $5.2 billion Midea offer to its shareholders, yet it is not clear what Kuka's main shareholders will do.
Kuka Chief Executive Till Reuter viewed the agreement as "fair," but analysts said the agreement can be regarded as a compromise to Midea following German government resistance.
In May, Midea offered 115 euros ($ 129.52) per Kuka share to increase its stake from the current 13.5 percent to at least 30 percent.
Although the offer was 37 percent higher than Kuka's share price at that time, top German lawmakers and EU officials opposed the plan.
Kuka did not receive other offers, and Reuter said he would turn over half of his shares to Midea.
The agreement is valid for 7-and-a-half years.
Chinese companies have been stepping up efforts to "go global," yet some of them face increasing barriers due to different investment policies and environment.
Nevertheless, experts said improving technology is the key to making them more globally competitive.
German Minister for Economic Affairs and Energy Sigmar Gabriel said in May the government was searching for a suitable European bidder, including ABB and Siemens, to counter Midea's offer, and the efforts would continue, according to Chinese domestic news portal sina.com.
In response, Midea has promised not to take any action that would lead to the company's delisting from the Frankfurt Stock Exchange or reorganizing the German company.
German politicians were also concerned that the deal would transfer technology to China, media reports said.
Western countries are likely to overreact to acquisitions made by Chinese investors, but they are just normal business transactions, Wang Jun, deputy director of the Department of Information at the China Center for International Economic Exchanges, told the Global Times on Wednesday, adding technology transfer fears are "baseless."
Midea chose to invest in a German robotics company to promote its brand and improve its technology, in its bid to "go global," Zhang Jiayuan, an analyst at China Investment Consulting, told the Global Times on Wednesday.
Understanding foreign rules
Midea is in a better position than Tsinghua Unisplendour Corporation. In February, Unisplendour's offer to acquire 15 percent of Western Digital stock was junked after the deal came under U.S. national security scrutiny.
Similarly, Fairchild Semiconductor International also rejected a takeover bid from China Resources Microelectronics and Hua Capital Management Company in the same month. These came a month after the U.S. blocked Philips' $3.3 billion sale of Lumileds to Chinese companies.
Chinese companies are eager to expand their global presence even as they encounter barriers which include investment and environmental policies in regions and countries where they plan to invest, experts noted.
Foreign companies are definitely aware of Chinese investors because they are forced to share their market with China, Zhang said, "but they have to accept the newcomer under the sluggish global economic environment."
Chinese companies still have to find a way of blending with local industries, including localizing their products, Zhang said.
Wang also said Chinese investors are unaware of local laws and rules.
"Chinese investors are expected to know the market rules in foreign countries to facilitate their business," he said.
Chinese investors should consider what type of market they intend to enter, regardless of country, to determine their strategies, Zhang said.
