If you still think Chinese made goods are inferior to those made in the United States or Europe, it’s time for a rethink.
A Metz, Hisense Groenje, and General Electric. If you were asked what these three
Western consumer electronics brands had in common, how many of you would have guessed that they’re all now owned by Chinese companies?
But it’s true.
Hisense upped their share of Slovenia’s Groenje to over 95% in May 2017, acquiring a massive 62.5% of the company to go with the 33% stake it already held. Likewise, Metz was acquired by Skyworth in 2015, giving it high-end consumer goods such as washing machines, water puriflers and air conditioners to go with its stable of LED TVs.
As for Qingdao Haier, you may know it to be a Chinese refrigerator company, but did you know they own General Electrics’ Appliances division? That in itself is an interesting tale of reversal of fortunes, as General Electric once tried to takeover Haier in the early nineties, only to have their oﬀrer refused. (Haier later bought over General Electrics’ Appliances division in 2016 for US$ 5.6 billion.)
NOT A NEW PHENOMENON
At the recent IFA Global Press Conference 2019 in Andalusia, Spain, six companies took to stage on the first day to present their upcoming innovations for the year – Philips, TCL, Haier, Metz, Safera and Hisense Gorenje. All the speakers representing their companies were undoubtedly European, presenting from the perspective of a European company, but the bulk of them (four) were really Chinese owned, which really shouldn’t be that surprising considering how Chinese political and corporate leaders have been buying into companies across the world for the good part of the last decade.
Bloomberg reports that China has bought or invested in assets amounting to at least US$318 billion over the past 10 years, with approximately 360 companiestaken over. These range from Italian tire maker Pirelli & C. SpA to Irish aircraft leasing company Avolon Holdings Ltd., and of course technology companies like the ones mentioned above.
Yet, even that figure is likely only the tipof the iceberg. Bloomberg notes that the figures exclude 355 mergers, investmentsand joint ventures for which terms were not disclosed, as well as at least “four airports, six seaports, wind farms in at least nine countries and 13 professional soccer teams.” That’s certainly a wide net, and even though the deals seem to be slowing down, the point is clear. China has made its way into Europe and in a big way too.
WHAT’S THE DEAL?
Clearly China has taken the old adage “If you can’t beat them, join them” to heart. Only, they didn’t just join the leading companies in the industries they were interested in; they bought them. That didn’t necessarily mean a full takeover at the management level though. Take Geely Motor’s acquisition of Volvo in 2010 for example. Geely Group acquired Volvo Cars from Ford back in 2010, but Hakan Samuelsson remains the Chairman of the Executive Board (CEO).
The company continues to do all of its innovation and R&D in Gothenburg under extreme weather conditions with the aim of producing the safest car possible; with an emphasis on safety tech that Chinese consumers find especially important. Volvo has also added fancier models with new styling and technologies to match the requests from Geely chairman Li Shufu; slightly breaking away from tradition in the process, but otherwise the brand remains very much aligned with its core values.
Likewise, Chinese drone maker DJI supposedly acquired a stake into Hasselblad back in 2015*, providing the needed funding for the camera maker to push forward with its X1D camera en masse. The two companies have since teamed up to launch DJI drones with Hasselblad aerial cameras, thus pairing the know-how from each company perfectly. Importantly though, the core focus of Hasselblad has remained high performance medium format cameras – Hasselblad doing what Hasselblad does best.
*Various reports have surfaced around the internet that DJI has bought up more shares in Hasselblad, making it the majority owner, but neither company has confirmed or denied the transaction.
REPUTATION OVER RECOGNITION
In any case, both cases above serve as examples of how European companies have managed to retain their “soul” despite being bought over by a foreign company. Granted, there will certainly be cases like MLS’s investment and subsequent closure of German lightbulb manufacturer Ledvance’s manufacturing plant in Augsburg, but it appears the savvy Chinese companies of today are well aware of their reputation overseas.
For a good number of us, Made in Europe still holds greater value than Made in China. And that’s despite the fact that we know full well that China is where most of the components in our latest smartphone and laptop computer were manufactured, if not the entire device itself. Fair or not, “Poor knockoﬀ ” is a legacy that Chinese companies have had since the early days, and they’re well aware of it.
But the solution is simple. Instead of trying to enter a new market with a legacy you don’t have, when not just buy into the brands that do? You could say the recent European debt crisis left the door wide open to Chinese investment, as the governments of Greece, Portugal and Cyprus are well in need of investment capital.
GfK’s global market trends report for 2019 notes that China is becoming home to an increasing number of global brands, while high innovation rate and upmarket trends are observed in all their technical consumer goods. At the same time, consumers in Europe are expected to be more willing to pay a premium for high-end consumer goods. So, what better way to capture the global market than to have stakes in both fronts? Sooner rather than later, it won’t matter what the label says. Some part of everything will be Made by China.
REVERSAL OF FORTUNES
In the early 1990s, General Electric (GE) tried to buy Chinese manufacturer Qingdao Haier only to be refused by the much smaller company as Haier felt they didn’t intend to help them expand. In response, GE threatened the Chinese company with competition, saying GE were definitely going to enter the Chinese market, and their first goal would be to eliminate them.
Fast-forward to 2009, and Haier had then become the world’s top home appliance brand, buying its way into Japan and New Zealand by snapping up Sanyo and Fisher & Paykel in the following years. Around this point, GE decided it wanted out of the appliance game, finally accepting Haier’s bid of US$5.6 billion in 2016 for its appliances division.
Art Direction and digital imaging by Ashruddin Sani