No longer poles apart as ties increase

Updated: 2013-10-08 07:31

By Du Juan (China Daily)

  Comments() Print Mail Large Medium  Small 分享按钮 0

In addition, Poland has almost the lowest manufacturing and labor costs in Europe. The payment of employees at Liugong Machinery (Poland) Co Ltd equals around one-sixth of that of Germans in the same line of work and only 1.5 times Liugong's Chinese employees.

In return, Liugong also helps the Polish company in many sectors, including reducing costs, improving production efficiency and expanding its sales markets.

"In addition to technology communication, Liugong has a well-established global distribution network that Dressta can make use of to increase its overseas sales," said Lestaw Holysz, chief executive officer of Dressta.

"We need more dealers and Liugong has them," he said.

Since Liugong started its "go overseas" strategy in 2002, it has built up a distribution network with more than 400 dealers in 130 countries and regions globally and two overseas manufacturing plants outside China.

Unlike many other Chinese companies, Liugong tried hard to infuse its concepts, culture and management into its overseas plants in addition to making money.

"We want to send a message to the Polish government and local residents that we are not only buying their technology through the takeover. We are also bringing our best technology and products here," said Zeng. "Plus, we will definitely continue our investment and Poland will become Liugong's manufacturing center in Europe."

Challenges ahead

Among hundreds of big and small outbound takeovers by Chinese companies in recent years, integration after transactions is the most challenging and crucial part.

China's largest outbound takeover in history was the acquisition of Canada's Nexen Inc by China National Offshore Oil Corp Ltd, the country's biggest offshore oil exploration company, which was finalized last summer.

Yang Hua, vice-chairman of CNOOC's board, said during a previous interview that a smooth integration determines the future development of the company but it takes time - from several months to three to five years - depending on the scale.

Even though Liugong has experienced a smooth integration after the takeover, it has also met many obstacles.

At present, the number of employees at Liugong Poland accounts for 12 percent of Liugong's total figure while they only contribute 3 percent of Liugong's overall revenues, according to Wu Yindeng, executive vice-president of Liugong Machinery (Poland) Co.

The reasons for this are many.

The European market for Liugong is not as big as the Chinese one and production efficiency at the Polish plant is much lower than it is in China.

Li Mingsheng, production manager of Liugong Poland, said the company has sent many Chinese engineers to Poland to work with local counterparts in order to raise efficiency.

"In Liugong's plants in China, every seven minutes there is one machine completed from the production line. However, only five to six machines can be completed in one day at its Polish plant," said Li.

In 2012, Liugong Poland sold about 400 machines, but had sold only about 200 machines by October this year, according to Li.

Zeng said the whole industry is facing a tough time because of the gloomy economy.

'The challenge is to bring the two cultures together," said David Beatenbough, vice-president of Liugong Machinery.

From the production side, Poland is very different from what we do in other parts of the world, he said.

"From the R&D side, Chinese engineers are young and passionate with less experiences, while the Polish engineers are very experienced and logical, but very hard to change in terms of their working methods," said Beatenbough.

At present, the company has 12 R&D teams in Poland with one Chinese and one Polish engineer in each, aiming at bringing the two cultures together in a smooth way, according to Beatenbough.

Facing the challenges ahead, Liugong will continue to expand its investments.

Beatenbough said Liugong has an ambitious plan for its global marketing.

In addition to existing overseas markets including South Africa, the Middle East and Russian-language areas, it will expand its North American market, which accounts for only about 1 percent of Liugong's total sales volume at present. Meanwhile, it will continue to work very hard inside in China.

"We have been investing in long-term and careful bases," he added.