Sany buys Putzmeister, Weichai buys into Kion: these two major investments by Chinese industrial companies this year are not the only ones. What attracts them to Germany?
When a company travels 8,000 kilometers, exposes itself to a totally foreign culture and risks millions of euros in the process, then there must be a very good reason for doing it.
If you had asked a Chinese businessman that question at the Business and Investors Forum China 2012, which recently took place in Cologne, then the unanimous answer would have been: "It's the technology." That's Germany's main selling point. "It is a great brand," said Jiang Xiangyang, deputy chairman of the board for Sany Heavy Industries. "It not only sounds good; it also has real value: first class research and development, plus top customer service," he added. Those are qualities that are still missing from the "Made in China" brand, Jiang told Deutsche Welle.
Being the world's factory is no longer enough for China
China became the global leader in manufacturing and exports because it is the world's factory, but that is no longer enough to satisfy the Chinese. They are increasingly investing in key industries and hope to close the gap to the world's top technology leaders as quickly as possible. Nevertheless, the "Made in China" tag is often associated with cheap goods and shady dealings, especially when one thinks of all those products which are simply copied by the Chinese.
Petra Wassner, executive director of NRW.Invest, a group that promotes foreign investment in the German state of North Rhine-Westphalia, thinks that people don't really recognize the qualities of Chinese products. "For that reason, it is very important that China positions its high-quality products here in Europe," she said. There are good examples from the recent past, Wassner told DW: "Huawei, for instance, is working to establish its brand in the IT sector and has earned recognition. For the computer maker Lenovo it's the same," she added.
Then there is the construction machinery manufacturer, Sany. The company started out in a garage in the late 80s, and first made a name for itself in southern China, then in Latin America and for some time now here in Europe.
About a year ago, the European headquarters of Sany was set up in Bedburg near Cologne. It cost the Chinese company 100 million euros. Then, they forked over a further 360 million euros earlier this year to buy the highly respected German engineering firm, Putzmeister, the global market leader for cement mixers and pumps. "This is something you cannot seek to do because you cannot plan it," said Sany manager Jiang. "For the very beginning, Putzmeister was our big role model. Now, we have reached a certain size and Putzmeister was available. You just can't pass up a chance like this."
A fast connection
The whole affair took just ten days – from the arrival of the Sany managers in Aichtal, in Baden-Württemberg, to the complete takeover. Since more than half of all cement pumps sold in China are made by Sany and 40 percent of all pumps sold outside of China come from Putzmeister, the two together form an unbeatable combination.
Padded by a comfortable financial cushion from the parent company, Putzmeister recently swallowed, Intermix, which makes cement mixers trucks, and expanded its product line.
For its part, Sany is glad to have such a highly valuable "made in Germany" brand. "This value consists mostly of the trust that worldwide customers have put in Putzmeister for decades. We bought this brand and with it the global market," says Jiang, who has been living in Aichtal for the last four months and is responsible for coordinating contacts with the parent company.
Chinese investors with different approaches
Chinese companies are trying to shorten the climb to the top. The first investors from the Far East already came at the turn of the last century, generally setting up a commercial establishment in order to market their products "Made in China." This was followed by companies who started producing here so as to benefit from German know-how. For three or four years now, they have also been keen to make takeover bids.
While some small and medium-sized enterprises in Germany are grappling with the financial and economic crisis, Chinese companies are swimming in money, as Petra Wassner of NRW.Invest confirms: "Firstly the Chinese state has large currency reserves, and then private companies in China too also hold plenty of capital, and that now enables them to not only buy firms but also offer them a good perspective."
This means the added value and the jobs stay in Germany. In addition, Chinese investors have created over 8,000 new jobs in North-Rhine Westphalia alone, according to Wassner, with 750 Chinese companies having set up shop in what is Germany's most populous state - that's about three quarters of all Chinese investors in Germany. That's partly thanks to NRW.Invest, which offers free services to Chinese partners.
Established by the state of North Rhine-Westphalia, it already has three offices in China. Wassner says the state has benefits for Chinese partners: "First of all it's in a central position in Europe, then it has a perfect infrastructure - from a logistical point of view you have the ideal setup here." She adds that North Rhine-Westphalia has well-developed economic structures: "There's our chemical industry, our mechanical engineering, our automotive supply industry and last but not least renewable energies."
More Chinese on the way
These are precisely the industries that the central government in Beijing considers the key to its future. Participants of the 2012 Business and Investors Forum China agree that the influx of Chinese investors in Germany has only just begun.
Even if it will take time until "Made in China" becomes as prestigious a label as "Made in Germany," the impact of globalization can also be felt in this context. While a growing number of Chinese companies are producing in Germany with German components, the proportion of German components is declining among the German companies who have shifted their production to China. The question will soon be: where does "Made in China" end, and "Made in Germany" begin?