While some companies choose to move their headquarters from Leverkusen to Shanghai in order to be closer to their customers in one of the world’s leading markets, others cannot think of anything more remote than to give up their German location that first attracted their new Chinese owners to them. During the “KI Group Polymer Summit K 2016”, which took place on 20 October, both views – each with its own legitimacy – were presented. A total of 240 visitors came to listen to the presentations given at the fairground’s CCD Süd.

While for Torsten Bremer, CEO of automotive supplier Boge Plastics & Rubber (Damme / Germany; www.boge-rubber-plastics.com) the new Chinese ownership brings with it a lot of questions posed by the financial authorities, a certain disorganised disorder, and immense language barriers, there is no denying that the country China and an association with it brings a lot of benefits – of which the high automation at Boge’s proposed new plant in the country is just one. The German company was acquired by Zhuzhou Times New Material Technology (TMT, Zhuzhou, Hunan / China; www.trp.com.cn) in 2014.

Opportunities abound, said Stanley Chu, chairman of “Chinaplas” fair organiser Adsale (Hong Kong; www.adsale.com.hk). And now just because of China’s decision to do away with its one-child policy – meaning more future consumers – or because of the country’s ageing population. Another benefit of operating in China is the high education level of the local workforce. The number of university-educated staff has risen six-fold in the period between 1990 and 2010, Michelle Jou, president of Polycarbonates at Covestro (Leverkusen / Germany; www.covestro.com) said. The German company was a frontrunner in terms of its China activities, and now runs its global PC business headquarters from Shanghai. Harald Biederbick, CEO of film manufacturer RKW (Frankenthal / Germany; www.rkw-group.com) also detailed his experiences in the market. The company in 2015 commissioned its first plant in the country, producing backsheets for absorbent hygiene products, and is now aiming to conquer this highly fragmented market.

Another lesson for activities involving Germany and China is that the Chinese acquisitions are not necessarily always initiated by the companies themselves, but by the blueprints outlined in Beijing’s Five Year Plan. Over the course of the past 10 years, the targets of these acquisitions have changed dramatically. While Chinese buyers once focused on snatching up foreign competitors that could be acquired cheaply – potentially as a result of financial duress – today other criteria have become more important. The buyers have also become increasingly professional, said PriceWaterhouseCoopers’ (PwC, New York / USA; www.pwc.com) Alexander von Friesen. The key determinants for an acquisition, he added, are market access (62%), technology and knowhow (58%) as well as brand name (36%). “Cheap buys have become virtually non-existent,” he said.

The consultancy estimates that 2016 will become a record year for Chinese M&A activity in Germany – both in terms of number and in terms of volume. More than EUR 7 bn have already exchanged hands in deals for 37 companies. That is a great figure considering that in the preceding years, the total amount of M&A deals ranged between EUR 500m and EUR 1 bn, and came to 10-20 transactions. Its activities in Germany have placed China in rank three of the countries with most M&A activity in Germany so far in 2016 – behind the US and Switzerland, but ahead of the UK, France and Japan.

Most of the deals, however, are of a size that pales in comparison to the big fish like Medea’s purchase of Kuka or ChemChina’s acquisition of KraussMaffei (KM, Munich / Germany; www.kraussmaffei.com). Karlheinz Bourdon, responsible for the integration of ChemChina’s machinery activities within KM, also painted an interesting picture of the different cultural approaches to business. The German group is now working on ways to meet its new owner’s goal of instilling “the robust German Industry 4.0 gene and the manufacturing tradition of craftsmanship.”

At the end of the day, and all different experiences considered, during the Q&A session the speakers agreed that while a lot may get lost in translation, there is no denying the numbers. Chinese M&A activity abroad is rising, and – whether we like it or not – we will increasingly be working together in the future.