Chinese M&As in Germany by Jan Y. Yang & Lei Chen & Zheng Tang

Author:Jan Y. Yang & Lei Chen & Zheng Tang
Language: eng
Format: epub
ISBN: 9783319994055
Publisher: Springer International Publishing

6.3.5 Integration of Culture and Management

Integration hinges on cooperation in many ways. “In the integration phase, we recognized the potential risk of disagreements because of cultural and managerial differences. Therefore, it was important to build trust between us. The best way to solve problems is by understanding one another and communicating. Sometimes, you have to be able to compromise.” As the representative of Joyson Electronics on the Preh management team, Cai Zhengxin has lots to say about the challenges the company tackled during the integration.

Shortly after the acquisition, Joyson Electronics suggested that Preh should shut down the production site in Romania, reasoning that production costs in China would be much lower. However, the Preh management team insisted that one should not only look at the numbers. There were other factors that should be considered. For example, the Romanian plant was logistically easy to reach and close to the R&D sites in Germany. The communication cost was also much lower, as many Romanian engineers were fluent in German. Moreover, Romania-made products could be labeled with the quality seal “Made in Europe”. These arguments convinced Joyson’s board. Not only did Preh keep the site, the production has since scaled up remarkably, with headcount shooting up from 100 to about 800.

The two sides did have conflicting opinions of the right strategy for China. Preh thought annual double-digit growth in the Chinese market was not realistic and that they should be more cautious with market expansion, which, in turn, had impact on allocation of resources and talent recruitment etc. “We said that we would prove it to them that our China strategy was realistic.” said Guo. “In fact, even our plans were too conservative in hindsight. Preh wanted to hire a set number of employees for China according to the conventional business plan, the way that they were used to in Germany. However, China has its own peculiarities. It is a rapid developing market compared to Germany and in large cities, such as Shanghai and Beijing, staff are much more prone to change jobs. We insisted that we needed to hire extra people to factor in the potential churns and even agreed to bear the additional costs to appease Preh in the end. Time tells that we were right.”

The German media and other companies were accusing Chinese investors of only being interested in getting their hands on German technology. Ran Peng, technical director from Joyson Preh Electronics refuted, “In many technological fields, Chinese firms are less advanced than German firms, but the Chinese market has immense and growing potential. Although Germany has advanced technology, its market is at a saturation point. The application of German technology should not be classed as a “transfer of technology”; we consider it unleashing the due potential of the German technology in the Chinese market.” Following the acquisition, the German and Chinese R&D departments of Preh and Joyson Electronics have been working closely with and learning from each other and strengthening cooperation.

To support product development, particularly for electric vehicles,

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