The Asia Angle: Tapping into Demand for Western Industrial Companies

Key Takeaways

  • When seeking potential buyers, owners of industrial companies located in the U.S. and Europe should consider Asian industrial companies. These buyers are often eager to acquire businesses with cutting-edge technologies that align with their legacy capabilities.
  • Interest among Asian buyers is especially strong in engineered plastics, specialty films, specialty chemicals, and industrial technologies.
  • However, Western companies should be prepared to work differently with Asian buyers, and to start building relationships early.

When thinking about their exit strategies, company owners typically consider a number of buyers. And while Asian buyers are often part of the mix, it’s not always clear to sellers how to operationalize that aspect of the plan.

Based on their recent visits and conversations with several major industrial companies based in China, Japan, Korea and Singapore, Harris Williams Managing Directors Patrick McNulty and Daniel Wang and Director Eric Logue share their insights on tapping into this significant opportunity.    


The Fast Track

As McNulty explains, many Asian companies are looking to quickly and cost-effectively bring leading-edge industrial technologies to Asian markets where they already have a footprint, within industries and processes in which they already have expertise.

“They want to find new, advanced technologies they can pair up with their core legacy capabilities. That lets them tap into unmet demand for innovative new applications in their established markets,” he says. “U.S. and European companies with cutting-edge technologies are very attractive to these buyers, who often are prepared to pay well for quality assets that fit their strategies.” 

“There are many broad-based conglomerates in Asia, serving multiple end-markets, with cross-selling opportunities,” adds Logue. “By buying companies with established technologies, they can expand what they can offer more quickly than by developing something in-house.”

At the same time, an Asian buyer could use the purchase as a faster and less risky entrée into Western markets. By purchasing a company with an established footprint and relationships, they can more easily overcome some of the key challenges of global expansion.

But the motivation for buying isn’t always, or only, to enhance their product offerings or expand into new markets. Many Asian manufacturers are looking for new technologies that can help make their own operations more efficient and productive so they’re better positioned to deal with changing labor dynamics, workforce challenges, and intensifying pressure to remain competitive and grow globally. 

On top of all that is a more recent overarching driver of interest in acquisitions: the China-U.S. trade war. Tension and uncertainty in the U.S.-China relationship has sidelined some Chinese buyers, encouraging buyers from other Asian countries to enter the competition for U.S. companies.

Four Key Segments

Where are Asian industrial companies casting their nets for prospective acquisitions? Companies that are most attractive to potential Asian buyers are those that have innovative intellectual property in four key industrial segments.

Highly Engineered Plastics

There’s significant unmet global demand for highly engineered plastics, including films, packaging materials, and specialized materials that incorporate plastic. Asian companies can help fill that demand by augmenting their strong legacy in plastic extrusion and thermoforming with sophisticated new technology being used in North America and Europe. This pairing could enable them to create more advanced plastics, which can be used in new applications in the automotive, healthcare, and consumer packaging segments.


One example involves highly engineered plastics that can replace certain metals or alloys in vehicles. “These plastics have the same physical characteristics as metal, but weigh a quarter as much,” observes Logue. “That helps with fuel economy and carbon emissions.” 

Another example is the use of such plastics in medical devices. Many medical device manufacturers are looking for plastics that are lighter in weight but can maintain their structure while delivering performance in harsh environments. New breeds of plastic are also replacing metal in long-term orthopedic implant applications, such as bone screws, plates and pins, tissue anchors and suture screws.

Specialty Films

Many Asian companies also have established legacies in paper and film converting (i.e., turning substrates into packaging) and coatings, two formerly separate disciplines that have begun to converge. 

“In Asia, there’s a rich tradition of printing and paper conversion,” notes McNulty. “There’s now growing interest in exploring how to marry these traditional strengths with more sophisticated specialty films. In some specialty films applications, you’re changing the properties and the efficacy of that film based on various coatings or resin mix of the feed stock before you actually extrude that film.”

As McNulty explains, one example of this interest is the acquisition of AR Metallizing, a leading global metallized paper business, by Nissha Co. Ltd., a large Japanese corporation with roots in printing going back to 1929. “By acquiring AR Metallizing,” says McNulty, “Nissha was able to add newer capabilities and technology to a solid foundation of experience. That’s a play we’ve seen several times among Asian buyers.”

Specialty Chemicals

As with paper and film converting, many Asian companies have deep experience and established legacies in materials such as activated carbon. And, as with specialty films, some are looking to broaden their capabilities to include specialty chemicals.

As Logue explains, another Harris Williams transaction exemplifies this trend. In 2018, Kao Corporation (Kao), a major Japanese conglomerate with a portfolio of 20 well-known global brands, acquired Washing Systems, a leading provider of specialty chemicals and technical services to the North American and European textile rental market.

“Kao was looking for newer technology and wanted to expand its U.S. and European presence,” says Logue. “The company has 130 years of history and a dedicated chemical division that serves a wide range of industries, so this was a good way for it to quickly expand its footprint and offerings.”

Industrial Technology

While the preceding segments are interesting to Asian companies for their ability to help expand their product offerings or the markets they serve, another is attractive because it can help large Asian manufacturers improve their own operations.

At a macro level, Asian manufacturers are experiencing a steep rise in global competition, which is forcing them to pursue new technologies that can help them become more efficient while maintaining high levels of quality and precision. This demand for innovative industrial technologies such as robotics or advanced measurement technologies is accelerated by changes specific to certain countries.

For instance, with the workforce in Japan aging and contracting, many manufacturers there are increasingly looking to robotics to fill the void. “We have seen technologies such as autonomous guided robots and precision motion control not only offset labor shortages, but also drive efficiency and increase output,” notes Logue.


In China and other formerly low-cost labor locations, rising wages are eroding manufacturers’ competitiveness. “That makes industrial automation a more important way for Asian manufacturers to stay competitive,” says Wang, who leads Harris Williams’ efforts in Asia.

Across the region, manufacturers also want to gain more insight into their operations to identify ways to reshape their production processes and facilities. They see internet of things (IoT) technologies such as sensors, predictive maintenance, and data analytics as huge opportunities. Additionally, in response to more pervasive and stringent quality and safety standards, manufacturers are ramping up their implementation of test and measurement technologies. For example, while very early in the growth curve in some markets, in-line applications that can spot defects and improve yield are experiencing growing demand.

Three Key Success Factors

To be sure, large Asian industrial companies can be a promising pool of potential buyers for Western companies with cutting-edge technology in these three areas. However, Asia is a complex and dynamic market that can be difficult to navigate. Working with potential Asian buyers can take much longer than working with U.S. buyers and requires some different approaches. Three key practices can help sellers successfully include Asian buyers in their exit strategies.

1. Understand the differences across Asian buyers. There is no one-size-fits-all strategy.

“The very term ‘Asia’ can be misleading,” notes Wang. “It suggests a single, broad, uniform region when, like any other part of the world, it’s highly diverse. There are a variety of economic profiles, ranging from stronger growth in China to slower growth in Japan, with Korea somewhere in the middle.”

Wang adds that cultural differences from country to country are substantial too, as are investment approaches and risk tolerance. Likewise, readiness to transact with U.S. and European businesses and the speed with which buyers are prepared to move can vary significantly from locale to locale, and from company to company.

As Logue explains, one particularly pronounced difference is the decision-making process. “In Japan and Korea,” he says, “decisions are very much consensus-based. There’s often no single defined decision maker, as is typically the case with Western companies, which makes it difficult to know exactly whom to go to for buy-in.”

Conversely, Chinese buyers may need to incorporate government mandates in their decisions, such as the One Belt-One Road program driving investment in certain kinds of infrastructure and transportation assets. For their part, buyers in Singapore tend to be the most Western in their approach, and generally move at a faster pace than other Asian buyers.

Wang points out that these generalizations apply to individual buyers to varying degrees. “The only way to truly understand Asian buyers—like any buyers—is to form relationships with them,” says Wang. “Perhaps the only real universal truth across Asia is the importance of those relationships, and the amount of time needed to build them.”

2. Create relationships far in advance of the sale.

That being said, there is no time like the present to start building those relationships. As McNulty says, having them in place can create new opportunities, especially given the often complex supply chains of large Asian conglomerates.

“A U.S. automation equipment company learned that a major Asian manufacturer was interested in buying it, which was interesting because the manufacturer didn’t fit the profile of a prospective buyer on paper,” he explains. “It turned out that a subsidiary was a customer, and the parent company was impressed enough to want to own it.”

As McNulty reiterates, that’s why it’s important that sellers establish relationships with prospective buyers far in advance of a sale, including making regular in-person visits to meet with the key players, and identifying bankers who can help keep the company’s name in front of them.

“You need to leverage your relationships sooner rather than later, because it could take significantly longer for Asian strategic buyers than U.S. or European ones to decide on an acquisition,” McNulty says. “It just takes time, and contact with prospective buyers has to be focused, intentional, and regular.”

3. Be prepared for a new range of concerns and considerations.

Business owners unused to working with Asian buyers may find that certain factors are more critical than they anticipated. For instance, some Asian companies are inherently cautious about doing business with non-Asian companies, says Wang: “They’re sometimes reluctant to make big bets for fear of betting wrong, choosing instead to pursue smaller deals, or even a partnership or minority investment, to dip their toe in the water.”

Likewise, an Asian buyer looking at a company outside of its established lines of business may be less likely to make a large investment at first, and seek a smaller first step. “A conglomerate that wants to be in energy storage systems but currently focuses on shipbuilding will probably make a small initial bet,” says Logue.

McNulty adds a third potential concern for some Asian buyers. “When it comes to management teams,” he says, “some Asian buyers will be concerned about attrition, cultural differences and the difficulty of managing a business that’s 10,000 miles away.”

Whatever the specific concerns that arise, sellers should plan on spending reciprocal time educating potential buyers and conveying the excitement around the opportunity. It will go a long way toward building relationships and making them comfortable.

They should also consider working with an advisor with experience with Asian buyers and an established footprint in the region, says Wang: “Just having someone on your team with relationships and cultural know-how can cut significant time from the process.”


It’s natural for owners of U.S. companies to look for buyers among other North American or European companies. Similar operating styles and cultures mean the selling process will be familiar and unlikely to be derailed by unexpected surprises. However, Asian companies also deserve careful consideration. They have a strong appetite for innovative technologies they can use to enhance their offerings or improve their operations, and they are often willing to spend on high-quality innovations if they see the opportunity for a robust return.

For companies with such innovations, it’s a good time to think about how Asian companies could play a role in their exit strategies, and begin taking the steps necessary to position themselves for a successful sales process when Asia does come calling.

Published April 2019