To deal with the issues, the group came out with several measures, Li said, including steps to retain the existing and experienced management team. "This helped stabilize the company after the acquisition."

To gain trust and avoid forcible intervention, Lingyun decided to adopt a decentralized approach by delegating more powers to the existing management, rather than appointing someone from the Chinese company to run the show.

"We knew that the existing talent was more than capable and qualified in their respective fields. Our strategy was to let them do the job, "said Li.

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To further dissipate tension among employees, Lingyun decided to press ahead with the 'employees first' strategy, rather than the conventional 'shareholders first' method. Needless to say the approach was well-received by the Kiekert employees, he said.

"Lingyun has helped strengthen our international business, and shown us a new approach to success," said Uwe Hohndorf, chairman of Kiekert Labor Union.

"What this has really done is to instill in the employees our core value of quality in processes and products, Hohndorf said.

"They are constantly aware of their special responsibility and put this into action in everyday work. " Lingyun, as the holding company, also held regular talks with Kiekert's suppliers and clients, to ensure continued cooperation.

Li, however, said that real benefit for Lingyun came when the German unit played an integral role in overall revenue and profits. By the end of May, 45.3 percent of Lingyun's revenue and 36.6 percent of profit for this year came from Kiekert, he said.

In the first five month of 2014, Lingyun generated sales of 4.9 billion yuan, with sales up nearly 20 percent and profit up nearly 60 percent over the same period last year.

"We are confident of sustained growth and in being a key player in the global auto parts industry," said Li.

Lingyun, part of China North Industries, a State-owned business, was a defense equipment maker from 1971 onwards. During the 1980s, the company shifted to civilian automotive parts and plastic pipelines as defense orders dwindled.