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In depth interpretation: Liu Gong ate the largest construction machinery manufacturer in China and Europe

in depth interpretation: Liu Gong ate the largest construction machinery manufacturer in China and Europe

China Construction machinery information

Guide: how to eat the largest construction machinery manufacturer in China and Europe, so that cross-border mergers and acquisitions do not become a management nightmare? In the dazzling journey of globalization of Chinese enterprises in the past 10 years, China's construction machinery industry is a relatively silent sample. From 2001 to 2011, there were only 3 overseas M & A cases

how can cross-border mergers and acquisitions not become a management nightmare if we eat the largest construction machinery manufacturer in China and Europe

in the dazzling journey of globalization of Chinese enterprises in the past 10 years, China's construction machinery industry is a relatively silent sample. From 2001 to 2011, there were only three overseas mergers and acquisitions. Now, they can add another wonderful stroke to this magnificent history. The latest case is that on January 31, Guangxi Liugong (13.01, -0.45, -3.34%) Machinery Co., Ltd. purchased 100% of the equity of the civil construction machinery Division I of Huta stallowa Wola company (hereinafter referred to as HSW), the largest construction machinery manufacturer in Central Europe and one of the seven manufacturers with complete bulldozer production lines in the world, and its wholly-owned subsidiary dresstta100% for 170 million zloty (about 335 million yuan). This is Liugong's first acquisition in overseas markets and China's largest investment project in Poland so far

at first glance, it seems that this is a story of purchasing the declining European aristocracy by virtue of the will of the state. Liugong, established in 1958, is a traditional state-owned enterprise in the field of construction machinery in China. HSW, a 74 year old Polish company that once monopolized a quarter of the global bulldozer market, is also a state-owned enterprise. From the digital level of acquisition, the marriage between the two has not produced a great eye effect. However, the fact is that Liu Gong participated in the privatization reform of Polish state-owned enterprises with his own strength, and it is also one of the few successful cases of overseas mergers and acquisitions of Chinese enterprises

thanks to the rapid development of China's economy and the repeated fermentation of the European debt crisis, Chinese construction machinery enterprises are accelerating the pace of overseas mergers and acquisitions. In 2001, Zoomlion (9.82, -0.18, -1.80%) successfully acquired the 100 year old British baolujie company with 10million yuan. In 2008, Zoomlion invested 271million euros to acquire 100% equity of CIFA in Italy. The climax came this year. In January alone, Sany Heavy Industry (Weibo) (14.20, -0 to promote the integration of new materials into the high-end manufacturing supply chain) "- 27, -1.87%) acquired Germany's Putzmeister for 324million euros, and Shandong heavy industry 374million euros acquired 75% of the controlling stake in the global luxury yacht giant Italian Faraday group

however, most Chinese enterprises going out have not yet learned how to deal with the rules of the game with trade unions. Not long ago, in 2004, Shougang Peru Iron ore acquisition, once dubbed the first case of overseas acquisitions by Chinese steel companies, also ended with Shougang's withdrawal 12 years later. In 2009, SAIC finally spent 4billion yuan to buy a lesson of M & A from Ssangyong automobile of South Korea

Liu Gong is not optimistic. HSW company was founded in 1937, and its products are mainly sold to the former Soviet Union. However, with the disintegration of the former Soviet Union and the impact of the global financial crisis, HSW then fell into the embarrassing situation of loss, and the contradiction between its management and trade unions became increasingly prominent. What's worse, the European enterprise trade union, which has always appeared at the negotiating table of Chinese enterprises with a tough posture, is unwilling to accept the price offered by Liu Gong, who has a sincere four-and-a-half-year employment security period. Liu Gong's premise is to implement the performance appraisal system and eliminate unqualified employees every year

Liu Gong obviously has another card to play if he dares to take the risk of acquisition failure. Zeng Guangan, President of Liugong, told Global Entrepreneur, "Liugong understands the overseas market no less than any company." Liugong has 236 dealers and agents, 11 subsidiaries and 38 offices in the overseas market, and has business in 115 countries. Its overseas market has maintained an average rapid growth rate of 40% for six consecutive years. In terms of marketing strategy and overseas price system formulation, Liugong is an enterprise leading the whole industry

Liu Gong is quite confident in his own management mode. Zeng Guangan said that any international management concept and method can be found in Liugong, which is essentially a public company worthy of the name. He said, "in 1999, we were the least profitable enterprise in the industry, even a loss making company, but in 2003, we became the most profitable enterprise in the loader industry. This is our secret." The challenge may be that this veteran of China's construction machinery industry how to replicate a Chinese management model in HSW

twists and turns of acquisition

on February 28, 2010, Liugong headquarters

early in the morning, Luo guobing, general manager of Liugong international marketing department, arrived at the office. Although he had read the materials about the sale of HSW company in Poland many times, he couldn't help but read it carefully again. As the head of Liugong international business department, he knows that the company's emergency office meeting to be held later will greatly affect the future of Liugong international business

in the loader industry, the Chinese market accounts for almost half of the global market share. However, technical bottlenecks, sales costs and the global layout necessary to become an international company require Liugong to make achievements in the overseas market as soon as possible. Obviously, the best way is overseas mergers and acquisitions. In fact, Liu Gong has formulated the three-step principle since 2003. First, do a good job in the domestic market, and then do a good job in the overseas marketing network layout. The third and crucial step is the overseas M & a plan

now, the opportunity is in front of us. At 9 a.m. that day, Liugong's decision-making level threw out the idea of preparing to contact HSW in the face of all senior executives above the director level in the headquarters ④ intellectual property protection. But unexpectedly, many people expressed concern and doubts about this. The core question is whether Liugong, who has no experience in overseas mergers and acquisitions, can digest HSW

but Liu Gong didn't have much choice. Overlooking the world, North America, Japan, China and Europe are the main construction machinery enterprises. The European debt crisis has given Chinese enterprises the opportunity to bargain hunting in Europe, but from the perspective of strategic matching, it is rare to find a company with a number of world-class technologies in a low-cost European core. Especially from the management mechanism to the factory structure, HSW is also very similar to Liu Gong before the rapid development. Obviously, the acquisition of HSW is undoubtedly Liugong's best choice. Once said, "if the two sides of the acquisition cannot coordinate strategically, it is equivalent to giving money to others."

with a try mentality, Liu Gong began to have formal contact with HSW. It was recalled that due to the fact that Poland is promoting the privatization of state-owned assets, and the national conditions of Poland and China were very similar before, the acquisition negotiations were advancing very quickly. In April, 2010, the two sides reached an agreement that the shrinkage rate of the basic acquisition framework increased; Design agreement

but problems follow. At that time, it was generally believed that the trade union of HSW enterprise failed to reach an agreement with Liugong on the issue of requiring Liugong to guarantee the five-year labor contract of the original employees and increase the salary by 5%. However, the real problem is that due to the rapid progress, the framework agreement signed by both parties does not involve the employee incentive mechanism and the acquisition of core assets, which embeds a comprehensive variety of product testing specifications and specific testing of unique goods into the operation after the acquisition, which must be specially designed! There is a big hidden danger. After learning this news, Zeng immediately arranged a negotiation team to slow down the negotiation process, and gave up the acquisition if it could not reach an agreement with the trade union

after several rounds of unsuccessful negotiations, Zeng Guangan decided to go out in person. In April, 2011, he personally led a four member negotiation team to make final efforts face to face with more than 20 representatives of the HSW trade union. The HSW trade union also maintained a consistent attitude, and put forward many conditions in terms of employee employment security, wages, bonuses, welfare, etc., the core of which is that personnel cannot move. Zeng Guangan asked the other party: is the core of enterprise change human change? If it is implemented according to your conditions, doesn't it mean that I take the money and you operate according to the current mode? After this view was recognized by the other party, Liu Gong spent another day training them on how to implement the performance appraisal system

but the two sides are still deadlocked on details. Once threw a card: "I'll leave by plane this afternoon. I'll give you half an hour to discuss. If you promise, I'll sign. If you don't promise, I'll never be here." With that, he got up and walked out of the conference room. It was very clear that after more than a year of negotiations, Polish domestic public opinion generally expressed strong welcome and support for Liu Gong's investment. Liu Gong had a better chance of winning this negotiation, both from the political and enterprise levels. The key is that the two sides should respect each other on the common goals of ensuring the employment of employees, improving the treatment of employees, and promoting the development of regional economy. The tough of the trade union and Zeng's departure are both gestures at the negotiating table. After some in-depth negotiations, on the premise of ensuring the healthy development of the enterprise, good news finally came out of the conference room

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