M&A transactions are significantly more complex processes than the mere purchase and sale of goods - SMEs can quickly find themselves in unfamiliar territory - especially when it comes to multi-layered activities with players from completely different cultures, especially from China, as Germany's largest foreign trade partner. The need for knowledge in practice is correspondingly great. This edited volume therefore brings together, on a theoretical basis, the practical knowledge needed for the successful planning, implementation and integration of German-Chinese corporate takeovers in the SME sector. After a compact presentation of the economic background, cultural aspects of negotiation and regulatory framework conditions, the course of corporate transactions and their German-Chinese peculiarities are dealt with in detail. The book concludes with a guide to the core aspects of such transactions and an exemplary presentation of case studies. In generally understandable language and well illustrated, the success factors as well as possible stumbling blocks are revealed. A clearly structured and cleverly formulated handbook that every player should have at hand.
Author(s): Daniel Graewe
Publisher: Springer
Year: 2023
Language: English
Pages: 142
City: Wiesbaden
Foreword
Preface
Contents
1 Introduction
References
2 Macroeconomic Background
2.1 Internationalization of the Chinese Economy as Part of the Political Realignment
2.1.1 New Silk Road
2.1.2 Made in China 2025
2.2 Economic Factors for Chinese Investments in Germany
2.2.1 Market Entry Forms
2.2.2 Germany as a Focus of Chinese Investments
2.2.2.1 Perspective and Reaction of German Politics
2.2.2.2 Societal Reservations and Experiences with Chinese Investors
2.3 Economic Factors for German Investments in China
2.3.1 The Economic Location of China
2.3.1.1 Development of the Chinese Economy
2.3.1.2 German Investments in China
2.3.1.3 Economic Location China—Opportunities and Risks
2.3.2 The Chinese Aviation Industry
2.3.2.1 Assessment and Development Opportunities
2.3.2.2 German Investments in the Chinese Aviation Industry
References
3 Target Companies as Portfolio
3.1 The German M&A Landscape
3.2 Core Industries for Chinese Investment
3.3 Company Size
3.3.1 SMEs in Germany
3.3.2 Foreign-Controlled Companies in Germany
3.3.2.1 Anchoring of Foreign-Controlled Companies
3.3.2.1.1 Economic Sectors of Foreign-Controlled Companies
3.4 German Labor Market
3.4.1 Industries Particularly Relevant for Chinese Investments in Germany
3.4.1.1 Automotive Industry in Germany
3.4.1.2 ICT Sector
3.4.2 Chinese M&As in the Different Federal States
3.5 Design of the Transactions
References
4 Regulatory Analysis
4.1 Regulatory Framework Conditions for German Investments in China
4.1.1 Participation Requirements in China
4.1.1.1 Types of Business Organization
4.1.1.2 Business Field Restrictions
4.1.2 Registration and Approval Requirements in China
4.1.3 Start-up/Acquisition Financing and Collateral
4.2 Regulatory Framework Conditions for Chinese Investments in Germany
4.2.1 Participation Requirements in Germany
4.2.2 Notification and Approval Requirements in Germany
4.2.2.1 Cross-Sectoral Examination
4.2.2.2 Sector-Specific Examination
4.2.2.3 Merger Control
4.2.3 Registration and Approval Requirements in China
4.2.3.1 National Development and Reform Commission and the Chinese Ministry of Commerce
4.2.3.2 State-owned Assets Supervision and Administration Commission of the State Council
4.2.3.3 Chinese Securities Regulatory Commission
4.2.4 Start-Up/Acquisition Financing and Securities
4.2.5 Taxes
4.2.6 Employees
4.3 German-Chinese Investment Protection Agreement
References
5 Cultural Analysis
5.1 Chinese Culture
5.1.1 Cultural Dimensions
5.1.1.1 Power Distance
5.1.1.2 Individualism vs. Collectivism
5.1.1.3 Masculinity vs. Femininity
5.1.1.4 Avoidance of Uncertainty
5.1.1.5 Long-Term Orientation
5.1.1.6 Indulgence vs. Restraint
5.1.2 Cultural Values
5.1.3 Communication and Behavior in China
5.1.3.1 Principles in Communication
5.1.3.2 Nonverbal Communication
5.1.3.3 Relationship Maintenance
5.1.3.4 Business Culture
5.1.4 Corruption and Bribery
5.2 Negotiations
5.2.1 Negotiation Characteristics
5.2.2 Strategies During the Negotiation
5.2.3 Negotiation Phases
5.2.3.1 Preparation Phase
5.2.3.2 Opening Phase
5.2.3.3 Further Course of Negotiations
5.2.4 Conflicts
5.2.5 Common Mistakes in International Negotiations
5.3 Corporate Governance
5.3.1 Corporate Culture
5.3.2 Organization
5.3.3 Strategy
5.3.4 Personnel Management
5.3.4.1 Recruitment of Employees
5.3.4.2 Binding of Employees
5.3.4.3 Further Education
5.3.4.4 Cooperation
5.3.4.5 Leadership Style
References
6 Process of Corporate Takeovers
6.1 The M&A Process
6.2 Pre-Acquisition Phase
6.2.1 Strategy Development
6.2.2 Determination of the Acquisition Strategy
6.2.3 Organization and Control of the Acquisition Process
6.2.4 Screening
6.3 Transaction Phase
6.3.1 Making Contact
6.3.2 Due Diligence
6.3.3 Company Valuation
6.3.4 Financing
6.3.5 Contract Negotiations
6.3.6 Public Law Implications
6.4 Integration Phase
6.4.1 Integration Strategy
6.4.2 Integration Concept
6.4.3 Integration Implementation
6.4.4 Integration Control
References
7 German-Chinese Transactions
7.1 Success Factors
7.2 Critical Success Factors in the Pre-Acquisition Phase
7.2.1 Problem Identification, Solution Strategy and Conscious Purchase Decision
7.2.2 Requirements Profile and Screening
7.2.3 Use of External Consultants
7.2.4 Special Success & Failure Factors in Chinese Participation
7.2.4.1 Success Factors
7.2.4.2 Failure Factors
7.2.4.2.1 Legal Hurdles
7.2.4.2.2 Transaction Preparation and Due Diligence
7.2.4.2.3 Negotiations
7.3 Critical Success Factors in the Transaction Phase
7.3.1 Careful Due Diligence and Deal Breaker
7.3.2 Accurate Company Valuation for Purchase Price Determination
7.3.3 Good Negotiation
7.3.4 Realistic Financing Plan
7.3.5 Special Success and Failure Factors in Chinese Participation
7.3.5.1 Success Factors
7.3.5.2 Failure Factors
7.3.5.2.1 Financing
7.3.5.2.2 Acquisition or Participation
7.3.5.2.3 Purchase Price
7.4 Critical Success Factors in the Integration Phase
7.4.1 Success Factors
7.4.1.1 Careful Integration Planning
7.4.1.2 Dedicated Integration Controlling
7.4.1.3 Communication and Culture
7.4.2 Special Success/Failure Factors with Chinese Involvement
7.4.2.1 Success Factors
7.4.2.2 Failure Factors
7.4.2.2.1 Culture
7.4.2.2.2 Language Barrier
7.4.2.2.3 Quality Awareness
7.4.3 Success Factors
7.4.3.1 Political Framework Conditions
7.4.3.2 German Corporate Landscape
7.4.3.3 Employee Involvement
7.4.3.4 Involvement of Trade Unions
7.4.4 Failure Factors
7.4.4.1 State Control
7.4.4.2 Societal and Political Mood
7.4.4.3 Closedness of the Chinese Market
References
8 Case Studies
8.1 Joint Venture Trimet Automotive Holding GmbH
8.2 Takeover of KUKA AG by Midea Group
8.3 Takeover of Leifeld Metal Spinning AG by Yantai Taihai Group
8.4 Acquisition of Parchim International Airport by Jonathan Pang
References
9 Guide for a Successful Cooperation with a Chinese Business Partner in M&A Business
9.1 Pre-Merger Phase
9.1.1 The Content of the Takeover
9.1.1.1 Who Buys the Company?
9.1.1.1.1 Why does the Buyer Want to Buy?
9.1.1.1.2 How does the Buyer Want to Buy?
9.1.1.1.3 What does the Financing of the Transaction Look Like?
9.1.2 Stakeholder and Target Analysis
9.1.2.1 Perspective of the Seller
9.1.2.1.1 What is the Seller’s Goal?
9.1.2.1.2 How can Intellectual Property be Protected?
9.1.2.1.3 What Information is Provided and When?
9.1.2.1.4 Which Confidentiality Obligations can be Implemented?
9.1.2.2 Buyer’s Perspective
9.1.2.2.1 What is the Motivation for Chinese People to Buy a German Company?
9.1.2.2.2 How do You Usually Proceed?
9.1.3 Environment Analysis
9.1.3.1 In Which Language is Communicated?
9.1.3.2 Which Legal Framework Conditions Must be Observed?
9.1.3.3 Which Realistic Outlook is Recognizable in Advance?
9.2 Merger Phase
9.2.1 The Chinese Buyer
9.2.1.1 How does a Chinese Investor Act in an Acquisition?
9.2.2 German Seller
9.2.2.1 How Should the German Seller Behave in Order to Carry Out a Successful Transaction?
9.2.3 Environment
9.2.3.1 Which Law is Applied?
9.2.3.1.1 In Which Language is the Contract Drawn Up?
9.3 Post-Merger Phase
9.3.1 The Integration of the Company into the Chinese Structure
9.3.1.1 How will the Integration of the Company Proceed?
9.3.1.2 What Positive Aspects Exist in the Context of a Chinese Takeover?
9.3.1.3 How will the Cooperation Look Like Afterwards?
9.3.1.4 How will Future Reporting Look Like?
9.3.2 Cultural Context
9.3.2.1 What Type of Cooperation Should be Maintained With the Chinese?
9.3.2.2 Which Cultural Properties on the Chinese Side Should be Taken Into Account?
9.4 Keywords for Successful Chinese-German M&A Transactions
References
References
