Truking Technology Ltd, a Chinese pharmaceutical equipment company, acquired Germany's Romaco Group in April. It is not easy for a Chinese company to promote its brand amid the collision of Western and Eastern cultures and the course of integration and progress after an acquisition and merger. What is the strategic goal of Truking Technology and what are the prospects of the Romaco Group? Tang Yue, chairman and president of Truking Technology, answered these questions in the following interview.
According to some reports, Truking is good at learning based on experience. Acquiring Romaco Group from the hands of Deutsche Beteiligungs AG (DBAG) was a new practice. How will Truking give play to its accumulated advantages to realize its strategic goals?
As for Truking's strategic goals, we aim to realize annual global sales worth no less than 20 billion yuan ($2.9 billion) by 2025, including domestic sales of no less than 10 billion yuan. Also annual net profits will reach 3 billion yuan, market capitalization will hit 100 billion yuan and we will have 15,000 patents by that time.
It is one of our strategic steps to conduct cooperation with DBAG and Romaco because we can combine our advantages and complement each other.
Truking's cutting-edge product line is liquid formulation while Romaco specializes in solid preparations, so there is no conflict in business but only complementarities between the two companies.
Furthermore, Truking is mainly focused on the Asian market while Romaco's customer network lies mainly in the US and European markets. The two sides can complement each other's product lines and customer base, which will greatly promote the development of markets and enhance sales.
As the parent company of Romaco, Truking will increase investments in Romaco in various ways. For example, we will search for quality M&A targets and set up new plants with Romaco as the platform and remedy the shortages of Romaco's capacity, as it cannot cover its current markets.
We believe Romaco will realize more of its potential in management concepts and methods by integrating with Truking.
On the other hand, as a leading global supplier of processing and packaging equipment, predominantly for the pharmaceutical industry, Romaco has accumulated advantages in quality, technology, global supply and other aspects over more than a century of development. Its high-level brands will help promote and enhance Truking's brands.
Both the Chinese party and German party are highly assured that the acquisition of Romaco into Truking will produce a huge synergistic effect.
DBAG board member Dr. Rolf Scheffels said. "The sale successfully implements a 'buy and build' concept which we had worked out with management at the very beginning of our involvement… In Truking we have found a buyer that wants to invest in the group's global expansion and to further enhance Romaco's pharmaceutical profile."
The purchase of Romaco is a brand-new experience for us and we will strengthen each other's advantages in the future cooperation, and achieve our shared vision by practical actions.
German companies tend to hold a mixed attitude toward investments from China. They welcome such investments but meanwhile worry that the investors will walk away once they grasp the technology. As far as we know, the high-level executives of the German party trust Truking very much. How did Truking win such deep trust?
I think it's a natural fit for Truking and Romaco to cooperate. There are many coincidences, for example, the M&A signing date was the 17th anniversary of Truking's foundation.
Paulo Alexandre, Romaco Group CEO,has achieved in-depth accomplishments in mathematics. He said the number 17 can be generated by adding 8 and 9.
The number 89 conveys a significant meaning in German history because it was in the year 1989 that East Germany and West Germany reunited, injecting enormous vigor into the country.
I believe these interesting and nice specifics will become the topic people would like to chat about when we look back years later. And I also believe it is our common goal that gathered us together and we hold mutual trust toward each other.
Before our contact with Romaco, the German state of Hesse, where Romaco's former controller DBAG is headquartered, had built a friendly relationship with Central China's Hunan Province at the government level. In June 2016, an official business delegation of Hesse came to Hunan, through which they got to know Truking.
The delegation was very interested in Truking's 2025 vision and international strategy. And its service providers including its investment bank and law firm thought Truking was a fit for Romaco, for which DBAG was seeking a buyer, and then they quickly made the relevant arrangements.
Truking and DBAG then quickly entered the phase of substantial communication including paying mutual visits and holding exclusive negotiations.
The high-level executives of DBAG and Romaco came to Changsha, the capital of Hunan to pay an in-depth visit to Truking's park of over 400 mu (26.67 hectares), as well as our facilities and learned about our management in January this year.
They decided Truking was the one they wanted through this visit. And then they invited us to go to Germany to inspect every Romaco plant in a very open manner.
What do you think of the significance of mutual trust between China and Germany in terms of corporate culture integration and steady transition?
The acquisition not only involves cultural integration between China and Germany but also between the two companies. We believe both sides are mutually needed at the cultural level, based on which, there will be no frustration in the future integrating process.
As for Truking, we think highly of the cultural accumulation and mature value system of Germany where Romaco is located, besides its advantages in brand, technology and manufacturing. This culture and these values are very crucial for Chinese companies that are going through modernization and internationalization.
Given our mutual trust and needs, I think things will go smoothly in our cultural integration and transition period and bring more expected gains during our cooperation.