Merger Success

When Dürkopp Adler's 1,750 employees heard in 2005 that their sewing machine company had been bought out by the Chinese Shang-Gong Group (SGSB), many feared for their jobs. Their alarm was founded on other cases of Chinese conglomerates buying up long-standing German companies -- and gutting them to make a nice profit.

But the 150-year-old sewing machine maker not had to slash jobs, and it's been in the black since the take-over for the first time in years.

"The number of employees at Dürkopp Adler has increased worldwide by around 50," said Reinhard Kottmann, the company's head of accounting and controlling.

Production in the western city of Bielefeld hasn't changed and neither has the management, except for several Chinese representatives on the board.

Subsidiary kept afloat

Following the acquisition, SGSB pumped money into technological innovation at Dürkopp Adler. The financial support was desperately needed for the company to maintain its technological edge on the global playing field.

A massive 3.5-million euro ($5.1-million) order from the automotive branch -- for 800 industrial sewing machines to make car seats -- helped keep the company afloat. It also made it clear that the Chinese were capable of doing business, and not just buying up shares.

Landmark case leaves long-lasting fears

Despite the fact that Dürkopp Adler's stock price has doubled since the beginning of 2006, recently meeting its all-time high, not all concerns have been quelled as memories of other foreign investment companies taking over German firms remain.

The Taiwanese company BenQ's acquisition of Siemens' mobile phone division in 2005. After less than a year, BenQ cut off funds, declared bankruptcy and laid-off thousands of former Siemens employees.

Kottmann admitted that he couldn't exclude the possibility of a similar outcome at Dürkopp Adler. However, there is one significant difference between the two formerly German companies: BenQ wasn't able to dam the tide of ever-swelling loss, while SGSB has brought its struggling subsidiary into the black.

Acquisition was a win-win deal

Indeed, Dürkopp Adler is no stranger to change. Within 30 years of its founding in Bielefeld in 1860, the "Adler" name had become world-famous. Company founders tried their luck in a variety of branches -- from typewriters to bicycles to cars -- and finally settled on industrial sewing machines. Near the end of the 1970s, the company relocated production abroad as the sector struggled to keep its head above water.

It was the reputable Adler name and German technology that the Shang-Gong Group needed to break out of the discount sector.

"By becoming the majority stockholder, we gained Dürkopp Adler's brand advantage and development capabilities," said Chinese management board member Zheng Ying.

While Bielefeld serves as a less expensive research center for the Shang-Gong Group, Shanghai is Adler's financial backer, market outlet and gateway into other Asian countries.