66
2. have business activities that are highly sus-
tainable – all three of the examined compa-
nies generated continuously rising profit
margins over long periods of time
3. ensure that the essential components of their
value chain (innovation, research, produc-
tion, marketing and headquarters) are loca-
ted or take place at the company’s home
base of operations – all three of the exami-
ned companies produce and develop all es-
sential elements in Coburg
4. exploit international niches – all three com-
panies generate more than 65 % of their
turnover abroad
5. have strong ownership structures, often
being family-run – only Waldrich Coburg was
not family-owned but run by the Chinese
company Beijing No1
6. operate as the worldwide market leader or a
top three company in their respective indus-
try/niche – all of the Coburg companies are
worldwide market leaders in their niches.
Results
The following sections present the key fin-
dings of the two aforementioned studies, ana-
lysing in more detail the factors that contribu-
te to the increased levels of Chinese FDI in
Germany and Europe as a whole, as well as
the main drivers towards internationalization
and Mergers & Acquisitions of German small-
and medium-sized firms.
Reasons for Chinese-German Mergers &
Acquisitions
The results of the survey indicate that Germany
is clearly the most preferred investment choice
for Chinese investors by the survey group in the
categories of “Economics” and “Technology”
among the four selected countries and was
ranked very closely with UK in the “Political” di-
mension. As indicated in Table 1, Germany was
only ranked less favorable to the UK with re-
gards to “Culture”, most notably in the “Lan-
guage” category.
An additional major finding from the survey re-
sult was that both “Compatibility with Chinese
culture” and “Overall society feeling toward
for metal forming, powder metallurgy, building
materials (LASCO), precision centers and ma-
chines (Waldrich Coburg) and compressors,
compressed air products (Kaeser GmbH). Un-
like LASCO, Kaeser and most German Hidden
Champions, Waldrich Coburg is no longer a fa-
mily-run business, but was sold already in
1986 for the first time to the American milling
machine manufacturer Ingasoll, which was ta-
ken over in 2005 by the Chinese company Bei-
jing No1. Beijing No1 is wholly owned by Jing-
cheng Holding, which in turn is owned by
Beijing’s municipal government. Nonetheless,
all three companies exhibited a strong presence
in China and Asia as a whole.
The three companies were chosen as examples
because they exhibit all characteristics of a ty-
pical Hidden Champion in Germany – characte-
ristics that make them particularly attractive to
Chinese investors. In line with the definition of
Prof. H. Simon
30
, Hidden Champions tend to:
1.be located in smaller towns or on the out-
skirts of major regional centers – Waldrich
Coburg is for example located in Coburg, a
city of 40,000 inhabitants 90km away from
the regional center of Nuremberg, so to say in
the province
31
located in Germany (the highest national num-
ber of such companies in the world), that gene-
rate an average of over € 400 million euro an-
nually, achieving growth rates of almost 10%
each year (see Figure 6). Hidden Champions
can be considered major drivers in both the na-
tional and regional economies, with just 221
HCs generating for example 29% of the Bava-
rian GDP and employing 26% of the Bavarian
workforce.
28
In order to understand what makes Hidden
Champions in Germany so successful and in or-
der to determine why they are attractive targets
for Chinese M&As, a second study on the suc-
cess factors and mindset of the HCs was con-
ducted in parallel to the aforementioned survey.
The study aimed to not only find out what ma-
kes the Hidden Champions successful, but also
to examine the role that internationalization
plays for such companies. The three participa-
ting companies, LASCO Umformtechnik GmbH,
Waldrich Coburg GmbH and Kaeser GmbH are
worldwide market leaders in their respective in-
dustries and have had a track record of interna-
tional success for years. The companies opera-
te in sectors that have been the main target of
Chinese investments, particularly the produc-
tion of machines, tools, automation technology
Autor
Prof. Dr. Kai-Uwe Wellner
ist Professor für International Management an der Technischen
Hochschule Nürnberg Georg-Simon-Ohm, Faculty of Business.
E-Mail:
Figure 6: Development of Hidden Champions in Germany 1995-2014
29
Hidden Champions
