Sany faces takeover hurdles

Sany Heavy Industry, a leading Chinese construction machinery manufacturer, is likely to encounter myriad management difficulties in the acquisition of German concrete pump maker Putzmeister Holding GmbH due to a lack of trust and other cross-cultural conflicts, an expert told the Global Times Tuesday.

"Before venturing out, the Chinese companies must upgrade their cross-cultural management skills and hire more executives with international experience. The bosses themselves need to have a more international mindset," said Liu Shengjun, deputy director of CEIBS Lujiazui International Finance Research Center.

Soon as Sany announced the deal to acquire a 90 percent stake in Putzmeister for 324 million euros ($427.6 million), hundreds of workers gathered to protest in front of Putzmeister's headquarters Monday, fearful of job losses and furious that they had not been told about the takeover in advance, the Financial Times reported.

According to the local German-language media, Sany verbally promised the employees that there would be no layoffs, but the workers were questioning why the company could not give a written assurance, Ruth Fend, a correspondent for the Financial Times Deutschland, told the Global Times in a telephone interview.

The lack of communication and transparency, which is not uncommon among the Chinese firms, contributes to the mistrust in the local communities, Fend said.

"We will not fire a single worker, and will create more jobs and recruit more foreign workers for Putzmeister through efficient division of labor and expansion of product lines," Xiang Wenbo, president of the Changsha, Hunan Province-based heavy machine company, said during a media conference Tuesday at its headquarters, news portal sina.com reported.

Zhou Na, the company's spokeswoman, said yesterday that Xiang was not immediately available for further comment.

"It is the right time for Chinese enterprises to acquire distressed assets in Europe, helped by the appreciation of the yuan, robust corporate finance and the need to shift competitive strategies," Liu said.

"Sany is a typical case," Liu said, "It's a fast-growing, highly profitable company, but there is a huge gap in management styles between Sany and Western companies." First of all, both Xiang and the company's chairman Liang Wengen speak little English, which creates an obstacle for them to build trust among the German senior executives, he said.

It is hard for Chinese companies to earn respect in the Western communities because of their spotted track records in employee care, environmental protection, corporate governance, product quality and intellectual property rights, both Liu and Fend noted.

The buyout is expected to be completed by the end of March and is still awaiting regulatory approvals, Sany said Tuesday.