"The Chinese company should be very careful about German management, including the executive management, normal staff and the works council," said Axel Neelmeier, a lawyer with the Hamburg-based law firm Schulz Noagk Barwinkel.

The law firm advised a Shanghai-based company on its takeover of a listed German company, the first case in Germany.

According to Cui Zhicheng, general manager of Beijing No 1 Machine Tool Plant, building up mutual trust between local employees and the top management, and localization are critical for the success of a cross-border acquisition.

The company took over Germany-based Waldrich-Coburg in 2005. Three years after the acquisition, the German company's staff, including both management and workers, is 100 percent German and its payroll has increased 40 percent. There are only three coordinators from China.

The company's profit, Cui said, is more than four times higher than before the acquisition.

But the first step for a successful M&A, said Neelmeier, is to find the right target.

"Chinese enterprises usually look for enterprises close to insolvency or already insolvent. However, such companies in the EU are not good choices for a potential M&A, as Chinese companies are not familiar with the local situation," said Neelmeier.

"I would suggest Chinese companies seek (financially solid) companies. Though the purchase price will not be cheap, it is more likely to be a successful investment," he added.

According to Germany Trade and Invest, Germany has been the top destination for Chinese enterprises' investment in Europe since the outbreak of the global financial crisis in 2008.

In 2011, a total of 827 enterprises from 33 countries made investments in Germany, among which 158 were from China - the biggest single investor.

The automotive, industrial machinery and equipment sector have accounted for more than a quarter of all investments since 2003.

"Moreover, what is particularly important for a Chinese company is to establish a good relationship with a German bank to finance the target company after the M&A. And an effective way to achieve that is to submit a convincing business plan to the German bank after the acquisition," said Neelmeier.