Institute for World Society Studies
Chinese Foreign Direct Investment in Germany.
Strategies - Processes - Consequences
Funded by: German Research Council (Deutsche Forschungsgemeinschaft (DFG)
Project Coordinator: Prof. Dr. Ursula Mense-Petermann
Members of the Project Team: Christoph Seidel, Junchen Yan
Project Duration: 01.03.2016 - 01.10.2018
Beginning with the opening up of the Chinese economy in the 1970s, Chinese foreign direct investments (FDI) have steadily been rising. During the past decade, however, China´s FDI have developed extraordinary dynamically and Chinese investments have become one of the largest sources of FDI in emerging economies. Nowadays, the advanced industrialized economies of the West increasingly become targets of Chinese FDI, too. Chinese firms do not see themselves as extended workbenches for MNCs from the USA, Western Europe and Japan anymore. Many of them - state-owned enterprises as well as private-owned enterprises - have become `global players´ themselves and their globalization strategies drive Chinese FDI to ever higher levels.
The largest proportion of Chinese FDI in Europe goes to Germany. In Germany, Chinese FDI mostly targets the mechanical engineering and automotive supply industry. Mergers and acquisitions (M&A) are regarded as the most suitable means to acquire production technologies, management knowhow and access to European markets and global brands.
International business and management literature has labeled Chinese FDI "emerging market firms´ globalization", pointing to the fact that acquisition of firms in advanced industrialized home countries by firms from emerging economies is quite a new phenomenon and cannot be analyzed with the theoretical frameworks developed from Western MNCs´ globalization. Scholars have pointed to the specific challenges for Chinese firms acquiring Western firms, namely their lack of international experience and management knowhow as well as cultural differences and imagined hierarchies (post-colonialism) that may lead to conflict. Post-merger "task integration" and "human integration", hence, were expected to cause substantial conflicts and were deemed prone to failure.
While the Chinese M&A activities in Germany were first considered very skeptical, press articles and research on Chinese acquisitions in Germany surprisingly reported smooth negotiations, well-functioning collaboration and a high degree of mutual respect and recognition between the two parties in most of the cases. However, existing research mainly relies on survey data or on single interviews with top managers. There is no in-depth investigation into the day-to-day operations and collaboration and into the post-merger processes of "task integration" and "human integration" at the shop-floor and office level. Our research project aims to filling this gap. Adopting a case study approach targeting M&As in mechanical engineering, automotive supply and the photovoltaics industry we aim to delivering "thick descriptions" of the post-merger processes and thereby also intend to contribute to theory building on ?emerging market firms globalization".