Chinese firm stands on shoulders of German giant

"If an American company buys a German one, nobody cares two hoots. But if a Chinese company does, everyone is very worried all of a sudden," says Hubert Becker, the CEO of Waldrich Coburg, who has been with the firm for over 40 years.

Beijing No 1 took over Waldrich Coburg in October 2005. The medium-sized company belongs to Jingcheng Holding, which in turn belongs to the Beijing city authorities. So, Becker points out, Waldrich Coburg "is basically a Chinese state-owned company".

At the beginning, he admits, there was plenty of skepticism among employees, customers and also the general public but when the takeover took place, Cui Zhicheng, the head of Beijing Number One, reassured German employees that Waldrich Coburg would remain Waldrich Coburg.

"Our director compared Waldrich Coburg to a hundred-year-old oak tree that could only continue to grow on German soil. We also promised that no-one would be made redundant," recalls Qu Xiangjun, the only Chinese member of the four-person management team in Coburg.

Significant profit jump since takeover

This promise was more than fulfilled. "In 2005, we had about 500 employees and now there are 750 of us," says Becker. "Our profits have gone up enormously. We invested over 30 million into the company. The situation could not be better."

Profits have tripled to 170 million euros. Even in 2009 – the year of global crisis – the company had a growth rate of 20 percent, whereas overall in Germany the machine tool industry fell by 30 percent.

"We had Chinese-like growth rates, which makes us an exception in the machine tool industry in Germany. Our situation cannot be found elsewhere. We were able to breathe during the crisis and implement our customers’ requests better than in 2008," Becker enthuses.

Two firms complement each other very well

The Coburg factory has enough work to keep it busy until 2012 at least. The company has gained new contracts thanks to its cooperation with Beijing Number One.

Moreover, because Beijing Number One gets contracts in the lower price bracket, while world market leader Waldrich Coburg dominates the higher price range, the two complement each other very well.

"Waldrich Coburg is at the top of the pyramid, worldwide. Beijing Number One is in the middle of the pyramid," explains Qu Xiangjun.

"Standing on the shoulders of a giant"

However, Beijing Number One also hopes to get to the top, although it does not intend to step on Waldrich Coburg’s toes. "700 big milling machines are built every year. Waldrich Coburg’s capacity is about 30 or 40 machines a year. That leaves enough room for Beijing Number One," he says reassuringly.

"We decided to buy Waldrich Coburg for strategic reasons. We wanted to become a global player. Now we’re practically standing on the shoulders of a giant."

A few years ago, the giant was close to collapse. Today, the German company sees its takeover by a Chinese firm and the fact that it is free to continue working as before as a blessing and the key to success.

Author: Danhong Zhang / act
Editor: Thomas Baerthlein