ChemChina acquires noted German manufacturing group

The successful acquisition by China National Chemical Corporation of the KraussMaffei Group, a rubber and plastics equipment producer that boasts a 178-year tradition, is expected to improve China's manufacturing industry.

China National Chemical Corporation (ChemChina), China's largest chemicals group and a leading rubber and chemical machinery manufacturing business that provides services to the world's top 10 tire manufacturers, completed the acquisition with all approvals on April 29.

The acquisition of the KraussMafei Group, which is also a global leading mechanical engineering company, by ChemChina was announced in early January, involving investment of 925 million euros ($1.04 billion), the largest from China in Germany, ChemChina said.

After the acquisition, the KraussMaffei Group will become the principal business entity in the operation and management of related machinery enterprises for ChemChina.

In addition, ChemChina's existing rubber machinery and related production businesses will integrate with the KraussMafei Group.

"The KraussMaffei Group will instill the robust German Industry 4.0 gene and the manufacturing tradition of craftsmanship into Chem-China's advanced manufacturing segment, so as to provide integrated solutions to more customers around the world, especially in emerging markets, thus complementing our shortcomings," said Ren Jianxin, chairman of ChemChina.

China has faced accumulating pressure in improving its industrial production facilities, a major reason to promote cooperation between Chinese companies and their European and American counterparts.

In 2015, Chinese companies made 36 acquisition offers to German companies, a record high, ChemChina said.

"I think this (the acquisition) embodies the true meaning of supply-side reform, because here lies huge market demand," Ren said. "ChemChina and the KraussMafei Group are ideally positioned for future growth."

The company also said the national Belt and Road Initiative has brought expectations of a larger market. Therefore, the acquisition would boost exports of products from Chinese industries, especially in the light industry sector.

Frank Stieler, CEO of the KraussMaffei Group, said:"The transaction will enable us to gain stronger access to the market of the greater China region. We intend to accelerate our growth in Asia and particularly in China, which will also strengthen our company both in Germany and in the rest of Europe."

Two weeks after the acquisition was completed, the two groups have started integration activities, including defining the activities needed to combine their businesses.

On July 1, KraussMaffei will assume operational responsibility for the rubber plants of ChemChina.

Ren said the move is not a simple meeting but a deep integration at various levels, and KraussMafei is leading the integration."We prize the company's vast management and technological expertise and believe we can use that for some of our subsidiaries in China."

According to KraussMaffei Group: "We have no common language and lose a lot of time to travel to all sites and between different societies and cultures."

Stieler said: "However, it's very encouraging to see the big efforts everywhere to bridge those gaps, making me very optimistic.

"Through our strong management and technology skills we will be able to develop several fields and strengthen them to compete within the international market."

ChemChina generated revenues of around 42.3 billion euros in 2015, with approximately 140,000 employees, of whom 48,000 are located outside China.

zhengjinran@chinadaily.com.cn