Chinese Cross Border Mergers & Acquisitions In Germany:A Study Of Cultural Critical Success Factors

Chinese M&A in the US and Europe have been steadily increasing in recent years and by now China is a major player in the global M&A market who?s ODI have surpassed inflowing FDI in early 2015.One of the countries which is of particular interest for China is Germany with its unique industrial landscape of small and medium sized companies which often are technology leader in their field called “hidden champions”.The traditionally high failure quota of M&A is further increased by the added cultural complexities of cross-border M&A resulting in a high percentage of failed cross-border M&A of 50% and more.This is particularly true for Chinese M&A which suggested failure quota of 67% is even higher compared to the international average leading to a significant destruction of wealth.Challenges which are directly and indirectly related to cultural barriers have been identified as major obstacles during the pre-and post-merger process.To better understand and identify those underlying challenges of Chinese cross-border M&A in Germany an in depth cultural analysis between the two countries based on the research of Hofstede and the Globe study is conducted.This research showed several cultural dimensions in which both cultures had a significant cultural distance of various degrees.Through an extensive literature review based on an innovative holistic approach to cultural factors influencing the pre-deal and post-deal M&A process of Chinese M&A in Germany and an exploration of new concepts such as pre-deal corporate due diligence,a list of 13 potential critical cultural success factors(CCSF)is proposed.Guided by these factors as a foundation for analysis a mixed methods research of primary qualitative research as well as a secondary quantitative research via a questionnaire survey with a data pool of Chinese and German Manager is conducted.The case study objects of Sany/Putzmeister and Midea/Kuka are cases which are highly representative for Chinese M&A activities in Germany in regard to target industry,overlaying Chinese strategy(Made in China 2025)and volume etc.The in depth analysis of these case studies provided a profound understanding on the influence of culture on the pre-and postmerger process.It further investigated the preferred integration model of Chinese acquirers who in most cases grant managerial autonomy to their German targets and in many cases job and location guarantees.Both case study objects evoked high public interest in Germany and the very recent case study of Kuka and Midea,despite being successful,resulted in a significant shift in public and political opinion about Chinese M&A activities in Germany towards a more restrictive and skeptical attitude.The questionnaire survey is of particular interest since it uses a data pool of German and Chinese Managers which in some cases have been active in the acquiring(Chinese)and the acquired(German)company and therefore have uniquely valuable opinions about the list of proposed potential critical success factors.A comparison of both research results confirmed 9 of the original 13 proposed cultural CCSF,identified 2 new potential CSF and provided valuable insight which could form the basis of further research.The dissertations contribution to theory lies in the application of mixed methods research as well as it?s holistic approach to the role of culture in cross-border M&A and it?s profound analysis of cultural differences between China and Germany based on wellknown research and through the sample groups of the quantitative research.A strong focus also lies on the practical contribution for decision makers and managers engaged on highly complex cross-border M&A endeavors.By providing insight into the complexity of cultural integration as well as a list of clear cultural success factors practitioners can improve the cultural integration process ultimately resulting in a higher probability of success for their cross-border M&A.The dissertation closes with a multitude of suggestions for further explanatory and exploratory research.