"Lookout": The revelation of Sany Heavy Industry's acquisition of Putzmeister

Source: 2012 No. 7 Outlook Hermann Simon

When it comes to world records in the field of concrete pumps, Putzmeister is always mentioned. Putzmeister's concrete pumps were used in the construction of the world's *5661 Burj Khalifa, and were used in the response to the Fukushima nuclear power plant accident in 2011 and the Chernobyl nuclear power plant accident 25 years ago.

On January 28, 2012, I was shocked by the news that Sany Heavy Industry had acquired Putzmeister. How did this happen? A few years ago, we could have never imagined such an acquisition.

The deal began with the 2009 financial crisis, when Putzmeister's sales plummeted by nearly 50 percent, while Sany Heavy Industry's sales soared by about 50 percent. Since then, Putzmeister has lost the world's leading position in the field of concrete pumps, and Sany Heavy Industry ranks first in the world at this time. In fact, however, it all started much earlier.

In 2009, when I visited China, I visited Sany Heavy Industry's concrete pump factory in Changsha. At that time, Sany Heavy Industry was still an unfamiliar name to me. But I was very impressed by that visit. "We always use the best parts in the world"; "We want to be a *5653 company, so having a good production base will play an important role in the world." This is the answer to why Sany used Mercedes-Benz and Volvo truck chassis and why it chose to build a factory in Germany, where labor costs are expensive.

In the 90s of the last century, Putzmeister and Schweiying occupied 2/3 of the market share in the field of concrete pumps in China. However, by 2004, the share of these two German companies in the Chinese concrete pump market had dropped to 5%, and they had been basically squeezed out of the Chinese market. According to Putzmeister's 2004 annual report, its sales in East Asia fell by one-third. Today, 60% of the world's concrete use is in China. Therefore, if a company loses China, the world's most important market, it will not be able to win in international competition.

This lesson of Putzmeister should not be underestimated. All companies that lose their dominance in the world's most important markets (no matter where the market for this product is) will lose their leading position in the entire world market in the long run.

The acquisition is not a bad thing for Putzmeister. The two companies are a good combination, and if the managers can coordinate well, then it could become a model for successful cooperation between Chinese and German companies.

The deal also contains another possible portent: the impact of the financial crisis on most businesses is just beginning to be felt. If so, then the cases of Putzmeister and Sany are just one example, and more similar deals are to come. Chinese and Indian companies will play an important role in future acquisitions. The train has now changed direction, or rather, is moving in both directions at the same time.

It can be seen that in 2009, when the impact of the financial crisis was significant, Sany Heavy Industry surpassed Putzmeister and became the world's leading concrete pump field. No one dared to imagine that a Chinese company could become a global leader in a certain field in a short period of time, but Sany Heavy Industry, a company from Changsha, China, has realized the world dream of this Chinese company with its high-quality products.

Sany Heavy Industry's acquisition of Putzmeister also reflects another aspect of the development of Chinese enterprises. Chinese companies, especially in the core areas of machinery, engineering and technology, are currently competitive competitors for German companies. What's more valuable is that Sany Heavy Industry has always maintained a cold sobriety: they believe that although Sany Heavy Industry has been a sales * 5656 in the concrete industry in the world, it cannot be said to be a technology * 5656. Focusing on the field of concrete pumps, Putzmeister is still the world's leading company in technology, and through this strategic merger and acquisition, Sany Heavy Industry will be able to become a global *5656 in the construction machinery industry.

Not only that, after decades of development, Putzmeister has established a global service and sales system, with the help of which Sany Heavy Industry can accelerate its own pace of internationalization, and the global competition pattern may change as a result.

It has also proven that Chinese industrial companies, such as Sany and Zoomlion, have been far more successful in internationalization than those that sell cheap consumer goods.