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What Chinese entrepreneurs should look out for when buying into German companies.

Schindler Parent > Blog > German-Chinese Economies

For years, German managers have read culture manuals to understand how the Chinese think. Increasing numbers of Chinese entrepreneurs are now going to Germany on a shopping trip. Find out here what they should be looking out for in Germany.

It must have been around the end of the 1990s and increasingly at the start of the 2000s when western – and that included many German – entrepreneurs packed their bags to go and open up a branch in China. You couldn’t do it without a site in China. A vast market had opened its gates and retailers flocked in. Some got a bloody nose. Not because they had nothing to offer, sell or produce, but because they ran aground due to the cultural differences.

Since then, there have been a lot of changes: German companies are no longer as naive when they go out to China, culture manuals continue to be in great demand and there is an increased understanding of their Chinese counterparts. Another thing to change is that this increased understanding is no longer being used in the Far East; rather it is being increasingly used in Germany, in their own companies. And when the new owner, the new partner, the new major investor from China comes knocking.

In 2010, there were six takeovers and investments by Chinese investors in Germany; the following year it was up to 25. After some more ups and downs, the number rose in 2016 to 44 and was still impressively high in 2017 at 39 – as stated by the Institut der Deutschen Wirtschaft (Institute for German Economic Research) in January in a ‘IW Kurzbericht’ (short report). The original fear that Chinese investors may reduce production sites, syphon off knowledge and cast themselves as the masters of business has given way to the view that instead, as well as safeguarding jobs and gaining expertise, the new owners can listen and do want to understand. Thus, the German newspaper Frankfurter Allgemeine Zeitung (FAZ) stated in an article in 2015 that there was ‘no longer any fear of China’, even among medium-sized companies in Germany. On the contrary. Many feel that they are in good hands with the Chinese – particularly after the turbulent financial crisis in 2008. Even if, as in the case of Kuka, emotions still run a little high sometimes.

So conversely, since more Chinese companies come to Germany than go to China, the question arises: What do the Chinese need to know when they come to Germany? What must they be prepared for? What works? And what really doesn’t work? In short, what’s the best way of dealing with new German employees to be successful in the market and actually achieve the common goal?

And how do you communicate this attitude? Within the company? Out in the market? Those are elementary questions about company communication, which often determine the success of the brand and the employer brand. A manual is not enough on its own. Neither is an interpreter. For the question is simple: How do you moderate current processes and communicate results? Large agency networks are an option – for large corporations. For medium-sized companies and family companies, it is advisable to use networks of independent agencies, who maintain close contact with companies on site. One of these agile networks is the E3 network of owner-managed agencies, which Schindler Parent, Germany, and Brandigo, USA and China, also belong to.

For both agencies, it is common practice to ask the relevant partner agency what is possible, permissible and successful in their domestic market when a customer is looking to branch out there. ‘International marketing is an issue for us, of course. Most of our customers operate internationally,’ says Michael Meier, Managing Partner of Schindler Parent. ‘And many of them have a site in China – or commercial representation – as well. Here, for campaigns that are rolled out globally, it is essential to check in advance whether the images, texts and core messages will also prove effective in the Chinese market. After all, the local agencies and marketing teams have first-hand knowledge of the market and the consumer behaviour. They can be a great resource in every respect.’ On the other side of the world, customers are increasingly asking Mike Golden, President of Brandigo, China, about what to consider when entering the European market.

Both agencies have presented ‘The Chinese way of marketing’ to Germany companies at E3 Network’s customer events; now it is more about making companies from the Far East aware of the cultural idiosyncrasies of typical German central Europeans. The prerequisites for this are favourable because for the Chinese, too, the first shot of integration has emerged in the business centres of Beijing and Shanghai following intensive international interaction with western companies. ‘The fact is that the Chinese are consistently seeing the lengths German entrepreneurs are going to in order to behave in accordance with Chinese etiquette,’ explains Brandigo boss Mike Golden. ‘But experiencing the Germans in their own country also means encountering them where they behave as they would do at home – that can sometimes appear a lit bit strange even for people who are familiar with German culture..’ – ‘In actual fact, we,’ says Michael Meier of Schindler Parent, ‘are the ideal contact partners to support them communicatively in an integration process like this. So, together with our partner agency Brandigo, we can now help Chinese entrepreneurs in the same way we have done for many German family companies – and still do.’

For more information, please contact:

Christoph Siwek

Creative Consulting / Group Head Text