The Chinese influence on the global plastics industry is considerable. Go to any trade show and the Chinese pavilion is ever-present - a buzzing hub of deal-making and purchasing – while China-headquartered Haitian casts a long shadow over the injection moulding machinery halls.
Chess
As well as developing technology and enterprises domestically, the Chinese plastics industry’s strategy for growth is focused greatly on acquisition. KraussMaffei, one of Germany’s best-known plastics processing machinery giants, was bought by ChemChina for $1 billion in January 2016, breaking records at the time for a Chinese group’s acquisition of a German company.
KraussMaffei ChemChina
Ting Cai, CEO of the China National Chemical Equipment Co. Ltd. (CNCE), Frank Stieler, CEO of the KraussMaffei Group, and Chen Junwei, CEO of the ChemChina Finance Co.
The KraussMaffei purchase was a drop in the ocean for industrial mergers and acquisitions for China in record-breaking 2016 , which also included the takeover of Kuka by the Midea Group. In 2015, the country reached new highs for M&A with $677.5 billion invested, according to data from PwC, but this figure was smashed in the following 12 months, with $753.5 billion, dropping to $671.0 billion in 2017 – which is still nearly double the $370.4 billion recorded in 2014.
Industry, technology and materials are of significant interest to Chinese investors, spending $57.9 billion, $47.1 billion and $34.7 billion in M&A in these markets respectively in 2017, which were largely similar to the previous years’ data. One of the key differences was in 2017, there were fewer mega deals, while overseas regulators began to take a closer look at Chinese M&A, which in 2016 amounted to more than 2014 and 2015’s M&A investment combined.
Germany shored up its measures to step in and prevent unwanted takeovers in July of last year, with 80 deals being explored since the government tightened its investigation of these purchases and this week the government’s decision to block the takeover of North Rhine-Westphalia-based Leifeld Metal Spinning by Yantai Taihai Group made headlines.
The decision follows a government review looking into the negative impact of the sale, concluding the purchase would ‘raise national security concerns’.
Angela Merkel
German Chancellor Angela Merkel
The company is a leading producer of metals for the automotive, aerospace and nuclear industries.
Deputy Director at the Mercator Institute for Chinese Studies in Berlin was quoted as saying that “Germany is well aware of the threat” China poses in terms of its ambitions to lead the world in advanced manufacturing under its Made in China 2025 programme.
Germany is following the likes of Canada, the UK and the US, where the Trump government’s manifesto has been unsentimental in its mission to pull the ladder up from China’s grasp.
Head of Berlin’s DIW economic institute Marcel Fratzscher was quoted by Bloomberg as saying that blocking the Leifeld purchase was “probably the right move”.
“You have to ask yourself why Chinese companies with no foothold in Europe are willing to pay so much more than other competitors to buy up these firms?”
