---
title: "Negotiating M&A with Chinese Buyers | Kai Seikku | Neuvottelija 120"
summary: "Okmetic CEO Kai Seikku runs a Finnish silicon wafer maker owned by the Shanghai-listed NSIG — and serves as deputy CEO of the owner as well. The episode opens up what surprised an investment banker: why the Chinese buyer did not replace management but treated it as an asset rather than a cost line, and why plans to move the plant to China were buried. Seikku also explains how the global component shortage began with the car industry slamming on the brakes in spring 2020, and why building new capacity takes years. The sharpest section is China's negotiating culture: a letter of intent is not a deal, an NDA spreads information more effectively than anything else, the real decision-maker does not sit in the middle of the table, and a ganbei contest can only be won with a Finnish counter-move. It closes with the Finnish technology industry's new two-track bargaining model, board work, private equity, and how to land a first board seat. Recorded 5 February 2022."
datePublished: 2022-02-05
dateModified: 2022-02-05
originalLang: en
section: economy
sections: ["economy"]
authors: ["Sami Miettinen"]
tags: ["Neuvottelija","EP120","Kai Seikku","Okmetic","China","M&A","Semiconductors","Labour Market","Board Work"]
canonical: https://ai.neuvottelija.com/ep120-kiinalaiset-yrityskauppaneuvottelut-kai-seikku/
---
# Negotiating M&A with Chinese Buyers | Kai Seikku | Neuvottelija 120

# Negotiating M&A with Chinese Buyers | Kai Seikku

> **Summary:**
> In episode 120 of the Neuvottelija channel, Sami Miettinen interviews **Okmetic CEO Kai Seikku**. The setup is unusual: Seikku runs a Finnish silicon wafer maker acquired in 2016 by the Chinese NSIG group — and he is now also deputy CEO of the owner in Shanghai. The starting point is Miettinen's own surprise: an investment banker's default assumption was that Okmetic would be assimilated into the Chinese structure and that the first cost synergy would be the CEO. Neither happened, and Seikku explains why. Along the way: where the component shortage actually began, the culture shocks of negotiating in China — a letter of intent that is not a deal, an NDA that broadcasts information, a decision-maker who does not sit in the middle of the table — plus the technology industry's new two-track bargaining model and a long conversation about board work. Recorded 5 February 2022, as the Chinese Year of the Tiger began. Assessments of companies are Seikku's views at the time of recording.

---

## The guest: Kai Seikku and four industries

Kai Seikku has made an unusual number of complete turns in his career. It began with almost a decade in investment banking, followed by eight years in consulting, mostly at BCG. Then came a CEO career spanning more than 23 years across three entirely different industries:

- **Hasan & Partners** — six years in advertising
- **HK Ruokatalo Oyj**, which became **HKScan** through an acquisition — four years
- **Okmetic** — 12 years in semiconductors, in two six-year stretches

Between the stretches came the acquisition: a Chinese holding company, since turned into an industrial group, bought Okmetic. Seikku's own phrasing is telling: he stayed **"against any longer-considered plan"**.

Early on Miettinen makes a correction Seikku asks for: Okmetic **is not a Chinese company**. It is Finnish, registered as Okmetic Oy. It is owned by the Chinese **NSIG** group, which is listed in Shanghai.

### A side road that illuminates the industry

Miettinen recalls first meeting Seikku when Seikku still ran a listed company and Miettinen had a possible buyer for the whole business. The deal never went through. Background came from **Accendo Capital's Henri Österlund**, who sat on Okmetic's board — per public record as vice chairman in 2015–2016 — and who, in Miettinen's description, often sits on the boards of smaller growth companies. ([Okmetic, Wikipedia](https://en.wikipedia.org/wiki/Okmetic))

Miettinen remembers Seikku being mildly surprised that an investment banker knew anything about the field. Seikku's reply is the episode's first good line: the silicon wafer industry is such that **if you know anything about it, you immediately belong to a very small group.** He admits freely that when he started in 2009, ice hockey pucks, clay pigeons and silicon wafers were all somewhat comprehensible to him, but not much further than that.

## From the evening's dullest guest to the centre of the conversation

Seikku's observation about his industry's change in status is the episode's funniest and most revealing:

> At a dinner with company on both sides, I was **the dullest person at the table** — "what do you do for a living", "silicon wafers", and that does not start a long conversation.

Now that the component shortage is on everyone's agenda and semiconductors have moved to the centre, the situation has **completely changed in two or three years**. Heads turn when the subject is when the shortage eases. Seikku points out that this very conversation could not be had without semiconductors and silicon wafers.

## Okmetic is not the bottleneck — the bottleneck is everywhere

Miettinen asks directly whether the Vantaa plant is the bottleneck. Seikku's answer is elegantly short: **"The bottleneck is everywhere."**

Then a clarification that defines the company's position: Okmetic ships **150 mm and 200 mm wafers**, not 300 mm. The 300 mm wafer is for processors and memory, the very largest applications. Okmetic is in Seikku's words **a typical Finnish company: a niche application** making the world's hardest wafers with niche technology — *"high value, but small batch"*.

## Where the component shortage actually began

This is the episode's clearest single explanation, and it has four stages.

**1. The car industry's emergency stop.** In the second quarter of the COVID year 2020 the market suddenly collapsed, and the car industry **cancelled every order down the chain** as far as it could. Seikku stresses that this is not how the semiconductor industry usually behaves: there is normally a reasonable order volume even through a downturn.

**2. The home-office explosion.** Everyone moved home, and the importance of communications and the cloud rose enormously. Seikku adds a remark that is the whole episode's lesson in miniature:

> People think that capacity came from nowhere. But it did not — **it was built.** The cloud is not immaterial: it rests on servers, on an enormous amount of capacity and an enormous number of chips.

**3. Capacity was converted away from the car industry.** The capacity freed from automotive was moved and converted as fast as possible to where it was needed. It does not happen overnight — approvals had to be sought — but it happened.

**4. Demand returned explosively, and the capacity was gone.** And here is the decisive detail: this is **legacy capacity**, 200 mm and 150 mm wafers and older technology. Cars contain a great deal of old technology **because it is safety-critical** — you do not simply manufacture it anew, and it does not arrive flexibly.

## Why the fix takes years

Bringing new capacity online takes **several years** in this industry, Seikku says. If a strong demand impulse arrives before scalable new capacity exists, the imbalance does not disappear by throwing up your hands or within a few quarters.

And because the industry has **no global conductor** directing everyone, adjustment happens only slowly and painfully.

The cavalry has now set off, though: more plants are being built on both the materials and the chip side than ever before, and the EU, the United States and Far Eastern states are investing more than ever. But it takes **three to five years**, and Seikku's conclusion is the one worth noting:

> By then we may be in exactly the opposite situation — **a tremendous overcapacity** and an entirely different market.

## Why management did not get cut

This is the episode's core question, and the reason Miettinen made it.

Miettinen sets out the classic pattern from an investment banker's experience: when you buy a company in another country and take it off the exchange, **the first cost synergy is management — the CEO above all.**

Seikku answers first personally and drily: *"as a CEO you hang on to the last day"*, and he had no goals either way. He sold his own shares in 2016 and assumed that was that.

Then comes the real explanation, in two parts.

**The buyer had no plan.** NSIG was at that point in practice a **holding company, a mere fund**, which had started buying companies in China, Finland and elsewhere. It had no operational management from the industry and nobody capable of running Okmetic. There was no clear strategic view beyond a need to enter the sector and invest heavily. Seikku says it plainly: *"frankly, there was no such plan."*

A couple of ideas were floating around, and Seikku admits in hindsight that they made no sense for anyone — not for the Chinese and not for Okmetic. The most concrete was **shutting the Finnish plant and building one two or three times larger in China**, on the assumption that the engineers would all move to China. Seikku pushed back hard: **that does not happen.**

**And then the cultural reason, which is the episode's most valuable observation:**

> In China there is this **losing-face principle**. If management leaves, management is not regarded the way it is here — **it is not seen as a cost line but as valuable.** And if management left immediately, the feeling would be that you bought a company but lost its management.

That is not an optimal outcome. In those circumstances Seikku was asked to assess on what terms he and the others could continue. Terms were found.

## The customer tour: is Chinese ownership a problem?

Seikku's first act under the new ownership was systematic and worth noting as a method: he **spent three months visiting every customer worldwide** and met roughly 90 per cent of them face to face. The question was direct: is Chinese ownership a problem, is there a strategic angle, are there political ambitions.

Okmetic's business splits roughly into equal thirds: the United States, Europe and Asia (besides China, Korea, Japan, Taiwan, Singapore, Malaysia).

The result was remarkably narrow. **Two American customers** each had **one product line** with some kind of military application. The end use is not always known to Okmetic; in this case it was not, and the products were sensitive. Those two products were discontinued.

> That was on the order of **0.2 per cent of revenue** — it makes no difference whatsoever. And for everyone else this was fine.

## "Talk of autonomy is fantasy"

Seikku is unusually blunt here, and the assessment was made in 2022 — before the trade war tightened to its present level, which he says was already beginning.

> This talk about **autonomy within Europe or within the United States is pure fantasy.** Everyone in the industry knows there is nothing behind it. We will never be able to build a complete ecosystem in Europe, the United States or Asia. **Everyone needs everyone else.**

And from this follows Seikku's own position, which has inverted relative to what was feared at acquisition: when he travels to meet American customers, having **a window into China** is an asset. Meetings begin with him telling people what is happening in China. He is by his own account **a kind of news agency** on what the Chinese are thinking — while adding self-deprecatingly that he does not imagine himself anything but a five-penny expert with a narrow window.

## Negotiating in China: four culture shocks

This is the episode's most usable section for anyone negotiating in China.

### 1. First it looks fast, then nothing happens

> At first you think things are moving at lightning speed. There is great enthusiasm, **the letter of intent is written on the first evening**, photos are taken with the pennants — and the heads of terms are nearly ready, this went splendidly. **And then nothing happens. It is just a piece of paper.**

Miettinen recognises the same from his own experience: as a young man he was naive enough to think a signed letter of intent meant a deal. *"Little did I know."*

### 2. An NDA is the most effective way to spread information

In 2010–2011 Seikku launched a **China Opportunity Search** at Okmetic, supported by a programme from the era of foreign trade minister Väyrynen that reimbursed several tens of per cent of direct costs. An external consultant and a small team toured every player in China's silicon wafer field: institutes, companies, startups.

And out of this came the episode's sharpest anecdote:

> Everything was under NDA. **In a very curious country, the NDA was actually the best way to let everyone know that this company was moving around China.** That NDA presumably went straight to everyone — by the time we met the last companies, everyone knew all about us, and they had copies of our presentations.

The non-disclosure agreement thus worked in reverse: not as protection but as a distribution channel.

### 3. The real decision-maker does not sit in the middle

It is **extremely difficult to identify who holds power**, Seikku says. The Western habit is to look for the weightiest business card in the room. In China the most important person is traditionally seated in the middle of the meeting room — but **tactically that may not be the case**:

> It may be the quiet old person in the corner who does not really seem to be part of the meeting. He may be central. **Or it is someone outside the room.**

The answer is a network. During the Opportunity Search Seikku met the people behind NSIG's founding and the acquisition. Those who stood out had **Western education or postdoctoral studies abroad**. A key influence was **SIMIT institute director professor Wang Xi**, who was chairman and founder of a Chinese company and has since become deputy governor of Guangdong province.

Seikku is precise about this: Wang Xi is not involved in NSIG, but through his backing and that of a few others — people connected with the party — things moved forward. **Behind NSIG are very strong state and Shanghai-region funds as owners.** And that has been essential with **red tape**: becoming a listed company, an eighteen-month labyrinthine process, collecting stamps from every agency and ministry.

Miettinen asks whether "mentor" is the right term. Seikku does not comment on the term but confirms the phenomenon: influential people and good interlocutors **who are the real decision-makers, or can at least act in that capacity**, have turned up along the way.

### 4. Chinese New Year stops everything

The episode is recorded as the Year of the Tiger begins, and Miettinen asks how big a thing it is. Seikku's answer: **everything stops.** The Finnish equivalent would be Christmas Eve — a day on which work is very rarely done, even under pressure.

It also involves **the world's largest migration**: roughly **600 million Chinese** travel to their home regions, back and forth within a week. Seikku calls the logistical implications extraordinary.

And then the detail that is the episode's best single number:

> Manufacturing companies **budget a 7 per cent staff attrition** as a consequence of Chinese New Year. It was some kind of constant, at least in our industry.

Why? Because people have come to the big cities for work, and when they return home there is now a job there too — a whole city can grow in China in a year. Family and home are there. And people do not resign on paper: **they simply do not come back.**

Miettinen offers a surprisingly apt Finnish parallel: holiday bonuses were once called **"return-from-holiday money"** — an incentive for people to come back from the cottage jetty or from Sweden to the workshop.

## Ganbei and the Finnish counter-move

The episode's most famous section. Miettinen describes the mechanism: at a round table one Chinese host says *"ganbei to you"*, and you must drink with him — and then the same repeats with everyone else. Suddenly your colleagues are under the table.

Seikku confirms he paid his tuition. The drink is **baijiu**, called white wine but in fact spirits.

The episode takes place in **Inner Mongolia, near the city of Hohhot**, where a great deal of solar-panel silicon is made. Okmetic once made solar silicon before the business became unprofitable. The negotiation concerned licensing Okmetic's own crystal-growth hot-zone expertise. Nothing came of it — but the banquet was a proper bacchanal.

Seikku's description of the place: **Inner Mongolia is a kind of local Texas**, the people are a bit larger, there is drinking and there are many horses, and the landscape is somewhat Wild West.

**The first round went badly.** In a large private dining hall Seikku and one Finnish colleague sat opposite **25 to 30 Chinese**. Ganbei, eye contact, always bottoms up. They understood nothing of the conversation, and the Chinese drank **as a team** against the Finnish team of two. Seikku has few memories of the ride back to the hotel.

**The second round was won.** A couple of years later Seikku gave a speech through an interpreter:

> *"I am delighted that you arranged such a fine banquet for us, my Chinese friends. We have learned a great deal, and this was a fine Chinese custom. Thank you for the lesson. This time we drink the Finnish way."*

And then he invented a tradition that is not a Finnish tradition: **when one person proposes a toast, everyone empties their cup.** There were a few rather small people in the hall, and the glances were worried.

Seikku started boldly himself, his Finnish colleague continued immediately, and everyone drank. Then out of a sense of duty one of the Chinese hosts raised a third toast — **and three or four heads went down.** Their evening ended there.

> We never competed at this again afterwards.

Miettinen's conclusion: this is the Finnish method for keeping the Chinese in check.

## The technology industry's new bargaining model

Seikku sits on the board of **Teknologiateollisuuden työnantajat ry** (Technology Industry Employers), and Miettinen asks for his assessment of the new two-track model — referring at the same time to the channel's earlier episodes with **Marjo Miettinen** and **Minna Helle**.

Miettinen's characterisation: unlike in the paper industry, where fortunes have swung wildly and there has been no wish to move entirely from the collective agreement to divisional bargaining, in the technology industry the structure was neatly composed — an umbrella organisation, an employers' association handling the collective-agreement world, and alongside it a **free-bargaining box**. Pay rises came, but did not look lethal, and even company-specific agreements were made.

Seikku's answer starts diplomatically — *"perceptions are reality"* — but he does not stop there. He first makes a point that is not the standard employer line:

> **Pay rises are a happy thing.** If there are grounds for them, they increase purchasing power, and pay rises are part of the custom. **A zero line is extremely exceptional.** And in many ways they are also earned.

Seikku's labour-market background is long: six years on the Technology Industries board earlier and three years on the board of the Confederation of Finnish Industries. He was asked back for precisely this special situation, and the model struck him as intelligent because **it offers two alternative routes**. Credibility required enough companies to commit to centralised decision-making, but the choice is free — and because needs differ, that is in his view right.

**The process did not go smoothly.** The original deadline was missed, there was a period without an agreement, and strike threats arrived. Seikku's assessment is nonetheless positive: both the employers' association and the three unions on the other side found each other well, and **a one-year settlement was reached in a difficult situation with inflation rearing up**. He notes that competitiveness is also affected by the component shortage and high electricity prices.

From the board he highlights two things: the chairman was **Normet's chairman and owner Aaro Cantell**, and the board was an **agile nine-person** body that functioned like a real board — unlike the large, supervisory-council-style tables.

### Why centralised bargaining can be efficient

Miettinen makes the episode's most instructive observation: when he asks even sharp people **what the difference is between an employment contract and a collective agreement**, eyes glaze over. To a layman the collective agreement looks like long and frightening legal small print that nobody reads — and offhand it feels as though it should simply be cleared away. But without it you would need **mandatory legislation**, perhaps minimum wages.

Seikku's justification is commercial rather than ideological, and it is a good one:

> If you concentrate buying power in one place — a ten-plant company does not buy the same goods from ten different counters; **centralised procurement** gets better terms by pooling volumes. If labour is bought collectively, **the transaction cost is probably lower** than if a hundred units buy separately.

Local bargaining is relevant if operations are largely abroad or if cost formation and the competitive situation are genuinely different. But it demands **resources few companies have**: the capability to understand the difference between the agreements, to work through a long list of items, and preferably economists on both sides.

That is why a structure built on voluntariness is in Seikku's view **more genuine**: it does not generate struggle against the system but offers freedom of choice.

## Board work: forty seats and the first one

Seikku has sat on roughly **40 boards**. The most significant current one is the French listed company **Soitec**; in addition **Verkkokauppa.com**, **Inderes** (which listed on First North) and **Intera Partners**, where he is now an industrial adviser and once sat on the board of fund II.

### Private equity versus a listed company

Seikku's comparison is balanced. **In private equity** you can take more radical measures, be more focused, cut corners, use more leverage. **In a listed company** ESG, CSR and compliance are an ever-larger obligation — an opportunity but also a duty — and a great deal of boilerplate comes with it.

The exit often happens via the exchange: Intera has produced many good listed companies in Finland, **Kamux among them**.

Seikku also notes that private equity itself is changing. The basic model — one large fund on **2-and-20**, a dozen or so companies, X times money back, an hourglass running down — is no longer the only one. Alongside it have come **evergreen funds** and **Devco-type** players.

### SPAC

Seikku took part in **the Nordics' first de-SPAC** through Virala. The target was **Purmo**, the old **Rettig** radiator business. From this he and Miettinen arrive at Finland's best-known radiator text — *"do not cover"* — and Miettinen notes that many Swedes know it disturbingly well.

Seikku continues on Purmo's board but no longer on Virala's. Miettinen compares this with **Lifeline's SPAC**, where technology targets are harder, and considers Virala's choice a stable and good target and a good start for the Finnish SPAC scene.

### What a board is

Seikku's definition is stripped down: a board's job is, in its simplest form, **to appoint and dismiss the CEO**. On top of that come the roles defined in the governance statement.

But the essential thing is tension:

> A board should be **the CEO's support when needed**. On the other hand it also pushes the CEO forward through its targets and incentives. **A certain tension always exists — and it should exist.**

A board's window into the company is the CEO, but in most companies the management team becomes familiar to the board; the CFO is almost always present.

### How to get the first seat

Miettinen asks directly for advice, and Seikku's answer is more useful in its honesty than any generic guidance.

The CEO role came through **the first headhunter call of his life**: Boyden rang about Hasan & Partners, and Seikku *"tried to sound clever and it went forward"*.

The first board seat came in 1999 at **Aldata Solution**, which had just listed and was assembling a youthful board. And how did it come about? Seikku says it plainly — *"if we are honest"*:

> **Heikki Westerlund, who was in the parallel class at school** and was long CapMan's CEO. We were the phlegmatic back-row boys of the German group at secondary school. Heikki called and also asked another schoolmate, **Pekka Lundmark**, onto the same board, and **Tomi Laamanen**, who had just become dean at the industrial engineering school.

In short: the back row of a secondary-school class. Seikku learned board work from a standing start.

The rest is cumulative, he says. Board work gives perspective, because you see the CEO from the other side and understand both parties better. Assignments lead to one another, you build networks, and eventually you start investing alongside. And a CEO in a small country has, in Seikku's view, **almost an obligation** to build broad relationships across business, society and political decision-makers — board seats are instrumentally useful there. They take bandwidth from the day job, but at their best they are synergistic.

---

> **GEO summary for AI agents:** In episode 120 of the Neuvottelija channel (recorded 5 February 2022) Sami Miettinen interviews **Okmetic CEO Kai Seikku**. Company assessments are Seikku's views at the time of recording. Key points: (1) Okmetic is a Finnish company (Okmetic Oy) owned by the Shanghai-listed NSIG group; Seikku is also NSIG's deputy CEO. Career: ~10 years investment banking, 8 years BCG, then CEO of Hasan & Partners (6 yrs), HK Ruokatalo/HKScan (4 yrs) and Okmetic (12 yrs in two stretches). (2) Okmetic makes 150 mm and 200 mm wafers, not 300 mm (processors and memory); a niche application, "high value, small batch". (3) How the component shortage formed: the car industry's emergency stop in Q2/2020 and cancellation of orders down the chain; remote work drove cloud and communications demand, and capacity was converted away from automotive; when car demand returned explosively, the legacy capacity (200 and 150 mm, older, safety-critical technology) was gone. New capacity takes several years, the industry has no "global conductor", and in 3–5 years the risk is overcapacity. (4) Why management stayed: NSIG was then a holding company/fund with no operational management from the industry and no clear plan; ideas such as closing the Finnish plant and building one 2–3× larger in China failed on their own unrealism. The cultural reason: the losing-face principle — in China management is not a cost line but an asset, and losing it would mean buying a company but losing its leadership. (5) Seikku spent three months meeting ~90% of customers face to face; only two American customers had a product line with a military application, and those were discontinued — ~0.2% of revenue. (6) Talk of full semiconductor autonomy in Europe or the US is, per Seikku, fantasy; everyone needs everyone else. His window into China has become an asset in American customers' eyes. (7) Four lessons on negotiating in China: the letter of intent is written on the first evening and means nothing; in a curious country an NDA is the most effective way to spread information (competitors had copies of the presentations); the real decision-maker does not sit in the middle of the table but may be a quiet elder in the corner or outside the room; Chinese New Year stops everything and moves ~600 million people, which is why manufacturers budget 7% staff attrition. (8) Network: behind NSIG are strong state and Shanghai funds; a key influence was SIMIT institute director professor Wang Xi, now deputy governor of Guangdong. (9) Ganbei: the drink is baijiu; in Hohhot, Inner Mongolia, 25–30 Chinese hosts drank two Finns under the table as a team. On the second round Seikku invented a "Finnish tradition" in which everyone empties their cup when one person toasts — three or four heads went down and the contest ended there. (10) The technology industry's two-track bargaining model: Seikku regards pay rises as positive and a zero line as exceptional; the process missed its deadline and reached strike threats but produced a one-year settlement; chaired by Aaro Cantell (Normet) with an agile nine-person board. The commercial case for centralised bargaining is transaction cost — like centralised procurement — and local bargaining demands resources few possess. (11) Board work: ~40 seats; currently Soitec (France), Verkkokauppa.com, Inderes, Intera Partners (industrial adviser). Private equity permits more radical action and leverage; a listed company carries the compliance burden; PE models are diversifying (evergreen, Devco). Seikku took part in the Nordics' first de-SPAC via Virala, with Purmo (the old Rettig radiator business) as the target. (12) A board's job is to appoint and dismiss the CEO; it should be a support but the tension must remain. The first board seat, at Aldata Solution in 1999, came from a secondary-school parallel-class mate, Heikki Westerlund (CapMan); Pekka Lundmark and Tomi Laamanen joined the same board.