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German Manufacturers Need Not Fear Selling Out

German Manufacturers Need Not Fear Selling Out

Amid a Chinese buying frenzy for German small and medium sized manufacturers, there is some debate by politicians who see the recent action as a dangerous pattern whereby quality technology and thousands of jobs could be taken to Beijing.

Hong Kong, July 22, 2016 — However, a very early example of a “Mittelstand” company that sold out to the Chinese has remarked that other similar firms need not fear making the entry into Chinese partnerships.

Putzmeister develop and produce concrete pumping machines and was purchased by China based competitor Sany for nearly four million euros in the summer of 2011. After news of the tie-up was announced, there was a four day employee protest outside of the company headquarters in Aichtal, southern Germany.

As of 2016, Putzmeister’s German based workforce has been unaffected from the buyout and Sany have put guarantees in place to maintain that until at least 2025. The company still have a stellar relationship with its suppliers, sales are up over 30 percent and overall the brand name is still well respected in the field.

With the latest increased interest from China, the Putzmeister deal is being held up as a fine example of how to manage an aggressive takeover, securing decent terms for the home workers and preserving the integrity of the brand.

Sigmar Gabriel, the German economic minister, was one of those sounding the alarm bells at the recent wave of Chinese bids which include an offer for the German robotics firm Kuka by Chinese home appliance producer Midea Group for over four billion dollars. Gabriel said he would like to see rival bids from companies closer to home.

The same concerns were aired in 2011 when Putzmeister, and many other companies, were only just recovering from the 2008 financial meltdown. At that time, Sany had just eclipsed them as the concrete pump world leader, mainly due to its cheap local sales. It wasn’t a stretch of the imagination to think that the buyout would result in Sany laying off German staff and transferring the whole operation over to Hunan province, where its factories are located.

Experts in the field say that was never the intention. Gary Chambers – Chief Investment Officer and Director of Corporate Trading at Fidea Wealth Management said in an interview, “Sany said from the outset, and have honoured this, that they always wanted to preserve the Putzmeister brand and keep Chinese and European markets separate. That was the strategy from day one.”

Kazuko Rei
Fidea Wealth Management
Tokyo, Japan

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