Midea Group China: The Acquisition of German Robotics
(8 pages of text)
Case (Pub Mat)
In January 2017, the Midea Group Co. Ltd. (Midea), a China-based large manufacturer of electrical appliances, completed its acquisition of German-based KUKA AG (KUKA), a large manufacturer of industrial robots. To ease concerns about technologies falling into foreign hands, Midea entered into an alliance with KUKA that ensured KUKA’s independence until 2023. However, within less than a year, KUKA experienced problems in its European and Asian markets. In China, it needed to lower costs. In Europe, a price war slowed down the orders, and the company had insufficient workers to meet demand in the United States and Asia. Some German automotive clients were losing trust in KUKA, and German employees worried about their job security. How could the two companies operate sufficiently independently to maintain their clients' trust, while being integrated enough to improve their efficiencies? How should they be prepared for the expiration of the alliance in 2023?
The case is intended for an undergraduate- or graduate-level course on international market entry strategies, mergers and acquisitions, strategic alliances, competitive strategies of emerging market firms, or global business. After completing the case, students will be able to discuss the following issues:
- competitive strategies in emerging and developed markets;
- international market entry strategies in emerging but highly competitive industries;
- motivations and paths that emerging market firms can use to compete with global firms;
- the forming and managing of international strategic alliances;
- post-acquisition financial and integration strategies;
- the legitimacy of emerging market multinational enterprises investing in developed countries; and
- the role and strategies of emerging market governments in driving the upgrade of local industries.
Germany; China, Large, 2018
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