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Chinese plastic machinery enterprises have become new operators and stepped onto the international stage

2016-11-21  293

China Chemical Group has a lot of resources, 37 billion euros in sales, and is the ninth largest chemical manufacturer in the world. It can make acquisitions on such a scale. It is a global enterprise with machinery, rubber, chemical and other businesses. As the owner of industrial machinery enterprises, the background is not bad. China is gaining a greater position in the global industry and is more commensurate with its market size. The success of the acquisition may be premature, but it marks China's efforts to move towards the high end of manufacturing.

Recently, China Chemical Group acquired Krauss mafi group of Germany, which has greatly changed the position of China's plastic market, and the international position of China's plastic machinery industry has obviously been greatly improved.

China has strengthened its position in the global plastic machinery market through the acquisition of Kraus mafi group of Germany by CHEMCHINA. Since then, China has not only become the world's largest plastic machinery market, but also become an important developer and operator of some of the world's leading technologies. This is a potentially huge change. I think it is the natural evolution of China. The country has become an important market for Klaus mafi, as well as other global plastic machines. Therefore, it is understandable that China expects to get a place in technology development.

China also has local technology, but mainly in non high-end markets. There is a gap between Chinese made machinery and imported high-end machinery. Chinese industry executives regard the acquisition as an important measure for industrial internationalization. Zhu Kangjian, President of China Plastics Machinery Industry Association, also said it is worth celebrating. For them, this is not just a business acquiring another business. It has national significance. Klaus mafi can also benefit and expand the Chinese market. Despite the current troubles in China's economy and the controversial withdrawal of some manufacturing industries from China, the country's main trend is growth.

Frank stieler, CEO of Klaus mafi, said on the conference call that China's current dilemma is a process of structural adjustment, from low-cost labor to higher quality and automation. In a sense, Klaus mafi's technology meets the needs of this adjustment. Higher end global technologies can perform better than the depressed overall market in such an adjustment period.

Frank stieler also said that CHEMCHINA has also opened many doors in China: "as the owner, CHEMCHINA group can bring us a customer base and join the strategic discussion, which we couldn't get before."

In 2007, China produced 16% of the world's plastic machinery. In 2011, thanks to rapid domestic growth and foreign investment, its production of plastic machines accounted for 30% of the world, surpassing Germany and becoming the largest manufacturer of plastic machines. These figures come from Haitian International Holding Co., Ltd., China's largest injection molding machine manufacturer.

Greater China accounted for 30% of global polymer demand in 2013, while NAFTA accounted for only 17%. Plastic processing enterprises in Greater China account for 34% of the world. Therefore, the attraction of the market is obvious.

China National Chemical Corporation and Klaus mafi said at the press conference that Klaus mafi will continue to operate normally. They said that operations and headquarters would remain in Europe, and their joint Labor Council welcomed new owners. They said that China National Chemical Corporation will maintain Klaus mafi's strengths in Europe and operate from the perspective of long-term investors. However, Chinese state-owned enterprises are indeed newcomers to the global plastic machinery business.

State owned enterprises do not play a great role in China's plastic machinery industry. The Chinese government has not given the plastic machinery industry the same strategic status as the chemical or automobile manufacturing industry. Most members of China's plastic machinery industry are private enterprises, private or listed. Interestingly, the acquisition was made by state-owned companies, not private enterprises. Most of them are too small to buy Klaus mafi. However, even those large enough enterprises, such as Haitian, do not plan similar large-scale overseas acquisitions. They did not comment specifically on the deal, but generally speaking, they saw too many risks in integrating the business and not enough return on investment.

They also admit that it may not be easy to manage such acquisitions, and state-owned enterprises do not rely on return on investment like private enterprises. At the press conference, Ren Jianxin, chairman of China National Chemical Corporation, said that the acquisition will contribute to the made in China 2025 plan to enhance China's industry. This government led initiative calls for greater automation and efficiency, as well as value chains. I don't know whether these goals will conflict with the needs of operating business in the highly competitive global plastic machinery industry over time.