Interview: Chinese market magnet for German companies: attorney

The acquisition of German robot maker Kuka AG by China's Midea Group is wrapping up soon. "The market in China is the main motivation for German companies," said Dr. Hermann Meller, partner of Dentons Europe LLP in Berlin Office.

"The broad sector of middle-sized companies in Germany need Chinese partners because they cannot develop the access to Chinese market on their own," Meller, an experienced attorney working on Chinese investment in Germany over these years, said in an exclusive interview with Xinhua.

"Chinese companies also gained access to redeveloping the top quality of their products and services with the help of investment," he added.

"China is currently the fourth-largest trading partner of Germany. It will be the main trading partner of Germany in a few years. Among the other big markets, China is very stable," said Meller. "That's why a number of German companies actively pursue a partnership with Chinese companies."

The "Made in China 2025" plan is an excellent fit with German "Industry 4.0" strategy. "The German and Chinese governments seem to be in agreement on all major issues of the mutual relationship. It's extremely beneficial for economic growth for both sides," Meller stressed.

Talking about concerns over intellectual property (IP) rights protection in Germany, he said such concerns are not justified because IP is not something you can just take and export, rather something that essentially requires the assistance and cooperation of people.

"Chinese owners can rely on German companies to further develop and improve their IP, so it's beneficial to leave it where it is," said Meller.

Citing Midea acquiring Kuka as an example, he said they entered into an investor agreement, allowing independent operation of Kuka and keeping all the jobs for its employees through a long-term commitment to 2023.

"They built trust and confidence by entering into this kind of agreement and doing something that is in the best interest of the German company," he said.

"I think Midea will keep Kuka as a subsidiary in the best way in which the Chinese owner can do it. That is something I see with many other German companies acquired by Chinese companies," said Meller.

"Chinese companies allow a great deal of independence to the management of German companies," he stated.

Because of such a large degree of independence given to local management, impacts of cultural differences on post-closing integration, as a common issue in transnational investments, are minimized.

"Integration into the Chinese group is not such an issue as it is for other countries," said Meller.

He also referred to communication as another issue in the post-merger integration, "It's simply a matter of language proficiency. It leads to lots of translation in communication between various levels in the group. But junior management speaks English very well. So it will no longer be an issue in five to 10 years."

"When you look at recent takeovers of German companies by Chinese companies, they all work very well," said Meller.

On July 21, Midea held 85.69 percent of stakes in Kuka. The final percentage of stakes acquired by Midea Group from Kuka AG will be secured on August 3 after the two-week extended offer period. Enditem