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Companies try to avoid corporate culture shock

Updated: 2012-09-18 07:56

By Hu Yuanyuan in Hamburg, Germany ( China Daily)

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Companies try to avoid corporate culture shock

The construction-equipment maker Sany Group purchased the German concrete pump maker Putzmeister in January in one of the biggest Sino-German transactions. More than a quarter of all Chinese investment in Germany since 2003 has been in the automotive, industrial machinery and equipment sectors. Nan Shan / for China Daily

What is the trickiest issue for Chinese companies when they take over a local company in a developed economy? The answer, most experts would say, is dealing with the staff of the acquired company.

The Chinese company Weichai Power Co Ltd emphasized that it will honor all existing agreements related to collective labor deals, bargaining and workers' participation in management in its deal with the German forklift truck maker Kion Group GmbH.

The deal, which was made on Aug 31, marked the largest Chinese direct investment in Germany to date.

Companies try to avoid corporate culture shock Weichai Power, which belongs to Shandong Heavy Industry Group, said it will invest 738 million euros ($967 million) in Kion Group. Besides paying 467 million euros to take a 25 percent stake in Kion Group, it also agreed to take a 70 percent stake in Kion hydraulics, a unit of the Wiesbaden, Germany-based Kion Group.

The deal is expected to close in the fourth quarter of this year. Kion's current owners are the private-equity arm of Goldman Sachs and the buyout firm KKR.

Kion Group is the world's second-largest forklift truck maker after Toyota Industries Corp, with annual sales of 4.4 billion euros and brands including Linde Hydraulics, OM Still, Fenwick, Baoli and Voltas.

According to Jens Assmann, deputy director of the international department of the Hamburg Chamber of Commerce, the key for a successful M&A by a foreign company in Germany is to maintain the qualified staff, R&D center and sales channels.

"Though the cost of maintaining those experienced craftsmen and middle management may be a bit high, you will find it's worth it," Assmann said.

Weichai's commitment will ensure the long-term job security of all employees of Linde Hydraulics worldwide. And all issues regarding the future partnership in the hydraulics business will be discussed with Kion employee representatives, according to their agreement.