AS China moves in to buy up firms from Germany’s famed “Mittlestand” of mid-sized manufacturers, German politicians are nervous that Chinese owners may take their vaunted technology and move jobs abroad.

    But one of the first prominent mid-sized German engineering firms to sell out to the Chinese says such fears are overblown.

    When Putzmeister, a 58-year-old maker of pumps for concrete, was bought by its Chinese competitor Sany for 360 million euros (US$402 million) in 2012, its workers protested outside the factory gates, fearing job losses.

    Four years on, however, the company’s employment in Germany has held steady and it has promised to maintain it at least until 2020. Sales are up by nearly a third, the brand is still intact and established relationships with suppliers have been left in place.

    With the Chinese back for more acquisitions, the four-year-old merger is again drawing attention, this time as an example of how to sell out while safeguarding operations at home.

    In headlines from the latest Chinese shopping spree, home appliance maker Midea Group made a US$5 billion bid for German robot maker Kuka last month, and Fujian Grand Chip Investment Fund agreed to pay 670 million euros for semiconductor manufacturing equipment maker Aixtron.

    German Economy Minister Sigmar Gabriel signalled politicians’ unease last week, saying he would like to see a rival offer for Kuka from a German or European firm.

    Putzmeister executives remember similar worries. Before their company went up for sale, sales had only begun recovering from the 2009 global financial crisis.

    The suitor, Sany, from China’s Hunan Province, had itself overtaken Putzmeister as the global market leader for concrete pumps, mostly by selling cheaper pumps to Chinese customers. It was easy to imagine the Chinese firm following the merger by taking German designs and shedding German jobs.

    But Putzmeister’s German chief executive Gerald Karch insists that was never the plan.

    “The strategy was and is the strict preservation of brand and corporate identities at both firms,” he said.

    Since the takeover, rather than shift production to China, Sany has divided up the market, selling its own pumps in China and the German firm’s pumps in the rest of the world. Putzmeister pumps still come with German-engineered parts sourced from its previous suppliers. The German firm acts as the global distribution hub for the combined company.

    “There are positive impulses there,” said Frank-Christian Raffel, Munich-based partner in boutique advisory firm MelchersRaffel, which specializes in merger and acquisition deals between German-speaking and Asian countries. “Evidently it is being well run by the Chinese.”

    With employment at the firm’s factories in Germany holding steady, the workers who picketed against the merger four years ago now say they are more fortunate than they might have been had a buyer arrived from elsewhere.

    “I think if it were an American company, it would be a lot worse for the work force,” said Joerg Loeffler, head of the works council at Putzmeister.

    Nevertheless, although the merger appears to have been mostly a success in terms of sales and employment, the company acknowledges it may still take years to unite two very different corporate cultures and realize all the benefits of linking up.

    Putzmeister, whose name means “plaster master,” is an example of how Germany’s small and medium-sized manufacturing sector produced “hidden champions” that excel as world leaders in niche markets, a path that turned Germany after World War Two into Europe’s powerhouse of export-led manufacturing.

    The company’s colossal truck-mounted cranes helped build the world’s tallest building, the Burj Khalifa in Dubai, and were sent to pump millions of liters of seawater to cool Japan’s tsunami-wrecked nuclear reactor in Fukushima in 2011.

    But it was hit hard by the financial crisis, when sales plummeted from 1 billion euros to 440 million, allowing Sany to snatch the crown of world leader in 2009.

    One aim of the merger was for Putzmeister to help Sany gain a technological edge over rivals by improving quality at its own production sites. To this end, joint projects were set up and engineers exchanged to facilitate the transfer of know-how.

    Following the takeover, the companies also expressed a desire for some co-operation in the procurement of parts, and raised the possibility that Sany could supply some of Putzmeister’s components.

    But while Putzmeister has helped Sany purchase some parts, such as hydraulic components from German supplier Bosch Rexroth, it has kept its purchasing strategy and supply chain unchanged to maintain its reputation as a premium brand.

    Concerns about a deterioration in quality due to Putzmeister’s new owners were allayed by intensive PR work with customers, according to Cora Jungbluth, from the Bertelsmann Stiftung charitable foundation, who carried out a case study on Chinese takeovers of German firms.

    Over in China, the firms initially operated a two-brand strategy. However, Putzmeister has since removed its pumps from the Chinese market, saying Sany’s products enjoyed a “good reputation” there. Putzmeister said it continues to take advantage of Sany’s distribution network to sell its concrete-spraying machines, which Sany doesn’t have in its portfolio.

    By agreeing last year to guarantee jobs until 2020, Sany also managed to win over Putzmeister’s workers. The German firm’s global work force has remained stable at 3,300 and there have been no noticeable changes for those working in its German factories. (SD-Agencies)