Selling Germany's hidden champions

This news item is especially interesting because there ARE some Germans who have some understanding of what it requires to build a company that makes a critical piece of the industrial infrastructure (see the bold-face below).  Unfortunately, in this case the company in question was "owned" by a doddering old fool who cannot remember what it took to make "his" company worth so much and so he sold it to the Chinese.

Take it from an citizen of USA, this sale was a monumental mistake on the part of the Germans.  One would hope that the Germans would know better—but unfortunately, this is not true here.  One can hardly fault the Chinese—they are simply trying to advance out of their current stage of screwdriver industrialization and if the Germans want to sell their trophies, why wouldn't they buy them?

Buying Germany's Hidden Champions
Takeover Could Signal New Strategy for China
By Nils Klawitter and Wieland Wagner   02/09/2012

Concrete pump manufacturer Putzmeister is the first top-tier German company to be acquired by a Chinese company eager to get its hands on Western know-how, but it is unlikely to be the last. The acquisition could be the start of a new strategy as China tries to transform itself into a high-tech economy. And the Germans might even benefit too.

Is there a greater insult for a business owner in Germany's famously house-proud Swabia region than being told its facilities are too dirty? If there is, it would have to be the accusation that he has sold his life's work to the communists.

Karl Schlecht has had to live with this verdict since the Friday before last. Schlecht, 79, has sold the company that he founded, the concrete pump manufacturer Putzmeister Group, to its rival Sany, a construction machinery giant from the southern Chinese city of Changsha.

The deal, hammered out in secret, has triggered a "state of shock" at Putzmeister headquarters in Aichtal near Stuttgart, says a member of the company's works council: "Not even the supervisory board was informed." On Monday of last week, 700 Putzmeister employees gathered in front of the factory gates to protest the sale to the Chinese.

In the meantime, company founder Schlecht went on a tour of China, at the invitation of the purchasers. A butler attended to his needs in a luxury guesthouse in Changsha, and Sany Chairman Liang Wengen put one of his four Maybach limousines, complete with a chauffeur, at Schlecht's disposal. The German guest was also flown in the company helicopter to the birthplace of the former Chinese dictator, Mao Zedong.

'Monumental Stupidity'

Schlecht cannot understand the consternation of his employees in Aichtal. He calls their reaction "monumental stupidity." After touring the Sany plant, Schlecht is convinced that what Sany is doing in China is "something we can only dream of," and that the takeover was the best thing that could have happened to Putzmeister. The Swabian native was also impressed by the Chinese facilities. "It was as clean as a whistle there," he says.

Back in Aichtal, people are more skeptical. The sale of such an important brand is "a disaster for industrial policy," says Sieghard Bender, the head of the local office of the IG Metall metalworkers' union in Esslingen near Stuttgart. He described the deal as a "Götterdämmerung" ("twilight of the gods"), a German expression that means the violent downfall of a system.

Indeed, the sale of the concrete pump maker marks a turning point. The Chinese are no longer just buying up nearly bankrupt consumer electronics manufacturers or second-class solar companies, as has been the case in recent years. Instead, they are now setting their sights on the "hidden champions," the low-profile global market leaders that are typical of German industry.

Putzmeister had, however, lost its global market leadership in recent years -- to Sany. The company made billions in the construction boom unleashed by China's communist leadership. Established in 1989 as a small manufacturer of welding materials, Sany employs 70,000 people worldwide today.

Copying Western Technology

The Chinese company sells a broad range of machines that have German manufacturers shaking in their boots. Sany recently began making tunnel-drilling machines, a specialty of Herrenknecht, a mid-sized company from the town of Schwanau in southwestern Germany. Its founder, Martin Herrenknecht, is pursuing a different strategy than Putzmeister founder Schlecht. He has built a production plant in China to satisfy demand in the country. Last Friday, German Chancellor Angela Merkel and Chinese Premier Wen Jiabao visited Herrenknecht's plant in the southern Chinese city of Guangzhou, during Merkel's visit to China. more