Overseas M & A is an important way for Chinese enterprises to go out, go in and go up. Thanks to the rapid development of China’s economy and the increasing strength of enterprises, in recent years, the scale of overseas M & a market of Chinese enterprises has expanded rapidly, the annual compound growth rate and the number of transactions are also increasing, and more and more enterprises begin to go out and buy.
In contrast, China’s machine tool industry is relatively calm in overseas mergers and acquisitions. Although there are occasional acquisitions, the overall scale is small and the asset value is low. Why?
In fact, more than ten years ago, China’s machine tool enterprises had a crazy history of “buying”. Large machine tool enterprises including Shenyang machine tool, Dalian machine tool, Qinchuan machine tool, etc. went to sea one after another, setting off a wave of overseas M & a upsurge of domestic machine tool enterprises. However, this upsurge did not last long, but with the development of China’s machine tool industry gradually calmed down.
01. There was an upsurge of overseas M & A in machine tool industry
In the first decade of the 21st century, due to the dividend of the rise of China’s manufacturing industry, China’s machine tool industry has experienced the stage of capacity expansion, price war and extensive development, and some machine tool enterprises have a strong capital base. These enterprises are eager to gather strength to expand their market share and enter the global market competition. As a result, the machine tool enterprises represented by state-owned enterprises have started their overseas M & a journey.
The following are some well-known overseas M & A cases of machine tool enterprises at that time:
Shenyang Machine Tool Group Co., Ltd. merges German heath company: on November 15, 2004, Shenyang Machine Tool Group announced that it has completed the mergence of German heath company, the top enterprise in the world’s major CNC machine tool equipment production.
At that time, heath company enjoyed a high reputation all over the world. It mainly developed core manufacturing equipment such as major CNC gantry milling machine, floor type boring and milling machine and vertical CNC turning and milling machining center. Its technology has always been at the highest level in the field of machine tool manufacturing in the world.
With this merger and acquisition, Shenyang Machine Tool Group has realized a significant change from local operation to transnational operation.
Dalian Machine Tool Group has completed three mergers and acquisitions in a row: in 2002, 2003 and 2004, Dalian Machine Tool Group has carried out three transnational mergers and acquisitions in a row.
In 2002, Dalian Machine Tool Group successfully acquired Ingersoll company, and in 2003, it successfully acquired Ingersoll crankshaft processing system company. After the M & A of Ingersoll’s five axis milling machine system core company was blocked, in 2004, it launched a series of attacks, aiming at the world’s leading milling and boring technology enterprises, and successfully acquired and controlled German Zimmerman company.
In the successful merger and acquisition of these companies, Dalian Machine Tool Group also owns 96 proprietary technologies, 9 patented technologies and technology development forces of these companies, as well as intangible assets such as company goodwill and trademarks.
Harbin Measuring & amp; cutting tools Group Co., Ltd. signed a signing ceremony in Germany on March 30, 2005.
According to the merger and acquisition contract, Harbin Measuring and cutting tools Group Co., Ltd. invested 9.5 million euro to acquire German Kaishi company. In addition to obtaining more than 30 sets of world advanced equipment such as Kaishi’s CNC machine tools, machining centers and testing instruments, haliang group will also obtain 21 patented technologies including two major inventions, as well as the exclusive right to use Kaishi’s trademark in the world and Kaishi’s global marketing network. Harbin Measuring Tools and cutting tools Group Co., Ltd. is the largest measuring tool manufacturing enterprise in China. Kaishi company is a famous measuring instrument manufacturer in Germany. Its brand enjoys a high reputation in the international market and has a perfect marketing network in the European and American markets.
The acquisition of Kaishi company by haliang group is the first cross-border acquisition in Heilongjiang Province.
Beijing Yiji’s merger and acquisition of German Coburg company: on October 24, 2005, Beijing Yiji successfully acquired Adolf Waldrich Coburg company of Germany, the world’s leading machine tool company, making it a 100% holding subsidiary of Beijing Yiji. After the acquisition, Beiyi not only owns all the intellectual property rights of Coburg, but also can use this ready-made channel to gradually occupy the German market.
This successful acquisition of Kebao company has aroused strong repercussions from the machine tool industry at home and abroad, and is one of the most successful examples of overseas M & A of Chinese enterprises. Coburg’s sales continued to grow year after year, its profit increased to 5 times of that at the time of acquisition, and its order contract was 10 times of that at the time of acquisition. Coburg’s employees increased from 500 at the time of acquisition to 700, with a growth rate of 40%, and achieved great economic benefits.
In addition to the above enterprises, at that time, other enterprises including Qinchuan and spark also followed suit and actively went out to sea, opening up foreign markets by means of acquisition and acquiring more advanced technology and management mode.
Moreover, the business situation of these acquired enterprises is also very good. According to the statistics of China Machine Tool Industry Association in 2006, among the nine acquired overseas machine tool enterprises, six are profitable, two are flat, and only one is at a loss.
02. Why is the M & a boom in machine tool industry calm?
In the face of such a good situation, why is the upsurge of overseas M & A in machine tool industry gradually calming down?
There are two main reasons.
On the one hand, overseas M & A is becoming more and more difficult.
With the development of China’s economy and the continuous development of China’s manufacturing industry, western countries feel more and more pressure. In order to prevent greater threats to their own economy, some countries have strengthened the blockade, and controlling the export sales of their enterprises is one of the important means. Both Japan and Europe have introduced corresponding policies. This also increases the difficulty of acquiring machine tool enterprises.
Moreover, the cost of M & A is also rising. At the end of 2008, Tianshui spark acquired soma, France. Taking advantage of the western economic and financial crisis, spark won 81% of soma’s shares with only 2 million euros, which is not even able to buy a high-end CNC machining center at ordinary times.
However, with the recovery of the western countries from the financial crisis, Chinese enterprises no longer have the opportunity of “bottom hunting”, especially in the field of science and technology, the cost of M & A is extremely high.
On the other hand, it is the internal cause.
Since 2010, affected by the global economic downturn, the development of China’s machine tool industry has been slow. Dalian machine tool and Shenyang machine tool, once the leading enterprises, have been bankrupt and restructured one after another. A large number of enterprises are facing the pressure of operation. Therefore, overseas M & A, which is full of risks, makes many enterprises flinch. There are many enterprises with ideas in overseas M & A, but few do.
Of course, it has to be mentioned here that the different management modes and management concepts of Chinese and foreign enterprises are also important reasons for hindering machine tool enterprises from acquiring overseas enterprises. It is understood that the acquisition of many machine tool enterprises is not successful. The important reason is that the westerners are difficult to adapt to the management of the Chinese leadership due to the different management methods between China and the west, and the enterprises are unable to make profits. The acquisition has become a failure case.
03. The significance of overseas M & A
In a word, from today’s point of view, the M & a boom in the machine tool industry has its value, such as improving the international competitive position of China’s machine tool industry at that time, improving its international competitiveness, obtaining a ready-made international marketing network, borrowing ships to go to sea, improving its operation and management ability, and cultivating international management and technical and technical talents.
However, in the long run, the development of China’s machine tool industry still needs to be based on itself and independent innovation. Therefore, overseas M & A is more rational than calm. At the present stage, the brand strategy of China’s machine tools is to take the comprehensive market competitiveness as the guarantee, and finally use this strength to promote the value-added of the brand, and finally form a virtuous circle system.
Editor in charge: yyx