Machinery makers eye German takeovers
Mainland firms seek to gain technological edge with acquisitions in hard-hit EU member
Chinese machinery companies are increasingly seeking to acquire German machinery firms, but face challenges, analysts say.
"I expect a slow but steady growth of Chinese acquisitions in Germany," said Bernd Uwe Stucken, a partner at Pinsent Masons, an international law firm.
Ivo Naumann, managing director of AlixPartners, a US consultancy, said: "Chinese players show an increasing appetite for leading machinery technology and have already acquired several German machinery companies."
Because of the euro-zone debt crisis, many German firms are facing difficulties, while revenues enjoyed by machinery makers in China have grown by some 29 per cent a year between 2006 and 2011, Naumann said.
"China's machinery industry has posted tremendous growth in recent years, while German machinery companies only came back to pre-crisis levels in 2012," he said.
Germany's machinery revenue is expected to have grown 1.7 per cent to €234 billion (HK$2.37 trillion) last year, below its level of €242 billion in 2008, when the global financial crisis struck, according to AlixPartners. China's machinery revenue is projected to have risen 12 per cent to 631 billion yuan (HK$784.4 billion).
"Globally, China is now by far the leading player in the machinery sector after overtaking Japan as the world's largest machinery producer in the last one or two years," said Naumann.
But while China is the largest producer of machinery in the world, it operates at a lower technology standard than Germany.
"When you look at all this, it makes a lot of sense that Chinese companies will want to buy Germany machinery companies, because the Chinese companies want their technology," Naumann said.
Last year, Sany Heavy Industry - China's largest construction machinery maker - acquired 90 per cent of Putzmeister for €324 million. Putzmeister is the global leader in concrete pumps used in construction, Naumann said. "This will suit China's huge construction market."
A Sany spokeswoman said Sany has no plan for further acquisitions at the moment.
Naumann said it was too early to tell if the acquisitions will be successful".
"Are the Chinese overpaying? Success will depend on post-acquisition business integration and how those Chinese companies manage across cultures," he said. "In Germany, labour laws are very protective of employees. The jury is out."