Dear Audience, rarely had the small Polish town of Stalowa Wola enjoyed so much of the political limelight. It was Saturday night, and the assembled dignitaries were holding a musical celebration of China’s biggest investment in Poland, on February 1, 2012, when China’s LiuGong group acquired the construction machinery manufacturing operations of Polish company Huta Stalowa Wola (HSW).
Eastern Europes Turn | Strategic Management
HSW is not just any company. During the period of socialist rule, it was a flagship of Polish industry, the country’s leading manufacturer of heavy construction machinery, artillery equipment, and armored personnel carriers. But the factory never really adjusted to the market economy after the collapse of communism: it plunged deep into the red, received one government bailout after another, and ended up as a subsidiary of a giant Chinese corporation.
Eastern Europe.s Turn | Strategic Management
“We were attracted by the technology and the outstanding quality of the finished product,” says Hou Yubo, 31, the vice president of LiuGong Machinery Poland. “It takes many years to develop products like these, but much less time to increase their profitability.” His company bought the factory for around EUR 70 million, and plans to increase its output from 300 to 3,000 machines in five years.
LiuGong Machinery, a global company which has some 14,000 employees worldwide, is one of a growing number of Chinese groups investing in eastern Europe …