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China companies see Germany as EU springboard

By Ding Qingfen | China Daily | Updated: 2013-02-26 13:25

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.

Securing know-how

Tao Bailiang, consul-general at the Chinese Consulate in Munich, said: "China is facing unprecedented investment opportunities in Germany and around Europe, but Chinese companies need to be rational and clear in mind.

"They are not encouraged to make any decision before they are sure the deals can bring what they want," he said.

Since the financial crisis, Chinese companies have been aggressive in expanding abroad. In 2012, China's overseas direct investment in the non-financial sector grew by 29 percent year-on-year to $77.2 billion.

In their hunt for overseas assets, Chinese firms are increasingly targeting those owning strong research and development capacity, well-known brands and established global distribution networks.

Wang said,"China cannot compete with Germany in manufacturing. China needs to learn from Germany and to catch up with it. It will take at least two to three decades." Germany is the most powerful manufacturer worldwide, as well as the second-largest manufacturer.

Despite the economic slowdown, investment on research and development in Germany rose by 14.8 percent in 2011, twice the global average growth level during the same period, and compared with the growth of 5.4 percent in the European Union, according to German statistics.

By 2030, Germany will add investment worth 350 billion euros to develop the new-energy industry.

Wang said,"The period when China promoted its manufacturing by merely leveraging the low cost is becoming history now, and the new era of Chinese companies enhancing R&D and branding is coming."

Liang Wengen, chairman of Sany, said recently that the company expects to expand its exports and global sales network through the deal with Putzmeister. The company aims to see 40 to 50 percent of its sales revenue coming from abroad in five years, compared with 15 percent in 2012.

Zoje is now in talks on a wholly owned acquisition deal for Germany's PFAFF Industriesysteme und Maschinen AG, one of the world's leading sewing-machine makers, who failed to reshuffle its assets when its capital chain broke due to the financial crisis.

"Why did we enter and will continue to invest in Germany? It's very simple. We need to enhance the innovation capacity, especially in the high-tech sector. We need to gain access to the global market. We need to promote the brand, and we need to improve the management. Germany can meet all the demands," said Chen.

But, "anyway, I am confident it's only a matter of time before 'made in China' stands for high quality and premium brands".

Contact the writer at dingqingfen@chinadaily.com.cn

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China companies see Germany as EU springboard

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