67
The investment and acquisition are not only the
culmination of bilateral business relationships
but also the culmination of the deep and exten-
sive culture exchange between two countries
37
.
A certain symmetry between investment level
and cultural understanding can also be obser-
ved. Semi-business programs such as the Si-
no-European Sister City Relationship
38
are a
good starting point and communication channel
between different countries, both at the busi-
ness level and the culture level.
“Porter’s Diamond Model for the competitive
advantage of nations”
44
analyses the competi-
tive position of a nation in global competition
based on four interrelated factors in a self-re-
inforcing system. The German market is a
geographically large and strong economical
region within the EU, supported by a well set-
up political and system that ensures a fair
competitive market. The government employs
higher production standards, stimulates early
demand for advanced products, and focuses
on specialization and the creation of clusters
that encourage competition. These positive
reinforcement between all these interlinked
factors has resulted in the attractiveness of
German companies on the global market, es-
pecially in the mind of Chinese investors who
are also in the critical stage of gaining a com-
petitive edge in their industry.
A clear vision as how to close the desired stra-
tegic competence gap, sincere and direct com-
munications, strong and solid financial results, a
light touch on the acquired company’s manage-
ment and a proper interest alignment are all im-
portant factors to ensure a successful M&A
deal. It is important to note that Mergers & Ac-
quisitions follow a process rather than a single
transaction. This can be examined in “The Five
Step Model” by Sudarsanam
45
, who examined
two current Chinese M&A cases in Germany:
Lenovo, an international brand of Chinese origin
acquired Medion, a strong German company fo-
cused on Western Europe and Sany, a Chinese
entrepreneur company focused on developing
cost effective product lines, who acquired Putz-
meister, a high-end German brand with more
advanced technology, know-how and better ac-
cess to sales networks for high-end products.
The summarized critical success factors of the-
se two M&A cases are listed below in Table 2.
All of these are however deeply rooted in the
business operations of the target company in
EU and thus cannot be easily exported to China.
Many recent M&A cases showed that Chinese
investors actually expanded the business and
especially the R&D facilities in the EU after the
acquisition
33
. Germany plays a significant role
in the improvement of Chinese technology, par-
ticularly in the context of the “Made in China
2025“
34
and the „One Belt One Road”
35
Chinese
national objectives. Provinces like Hessen and
Bavaria in Germany have a strong first mover
advantage in attracting Chinese investments
36
.
foreigners” sub-factors were ranked rather
neutral or even close to negative for all selec-
ted countries by the survey participants, even
though statistics showed that Chinese invest-
ment in EU resulted in reasonable good social
welfare and shareholder value
32
. Cases of va-
cuuming out the technology after acquisitions
were rather rare, as the main objectives of Chi-
nese investment in the EU are the improve-
ment of technological know-how, the access
to qualified international talent and the brand
recognition in the market.
Table 1: Summary of the survey results pertaining to the business attractiveness of the four chosen countries
43
CM September / Oktober 2018
