China, strategic objectives and aims of the presence in Italy: some stories of companies
Banking and finance to support the internationalization of domestic businesses
The two structures of the Bank of China have settled in Milan, the first established in 1998 and the second opened in the heart of the city's Chinatown in 2010. Similarly, the Industrial and Commercial Bank of China (ICBC), the largest bank in the world in capitalized stock market terms, opened a branch in 2011, followed by China UnionPay, a relatively young Shanghai-based company specializing in credit cards. The offices of consultancy firms set up to assist Chinese companies investing in Italy are also concentrated in this geographical area. Among these, since 2007, China Milan Equity Exchange (CMEX) has been operating as the exclusive partner of the China Beijing Equity Exchange (CBEX) in Europe, providing comprehensive legal, tax, financial and organizational consultancy for Italian companies interested in the privatization process of Chinese companies, as well as acting as a contact person for Chinese companies in Italy.
Mechanics: brands, knowledge, technologies
In 2005, the Quianjiang Group, a Chinese manufacturer of low-engine scooters and motorcycles, acquired Benelli, a well-known Italian brand with a long tradition also in sporting competitions. Chongqing Lifan has opened the Italian branch in Rome to carry out commercial activities for its range of motorcycles. The automotive and motoring sector is then represented by Yuejin Motor Corp, a commercial vehicle manufacturer allied with Iveco, which is part of the historic Nanjing Automobile Corp. (Nac) group, by Chang'an Automobile (the fourth Chinese manufacturer, allied with Suzuki and Ford) and by the Jac Italy Design center (controlled by the Jinaghuai group, businesses of Pininfarina).
The search for strategic assets on the Chinese side is also linked to the conquest of localization advantages and the availability of know-how and specialist skills, in highly competitive sectors. This is the case of Haier and Hisense, among the main global players in the household appliances sector.
The search for specialized skills and the will to complete the business led Zoomlion, pioneer of the Chinese construction machinery industry, in the acquisition of the Italian Cifa and other companies of the group, specialized in the production of machinery for concrete. This operation is considered to be the largest acquisition in Italy to date and one of the largest in Europe.
In shipbuilding, at the beginning of 2012 the operation was made official which allowed the Chinese group Shig-Weichai to take over 75% of the world's largest manufacturer of luxury yachts, the Italian Ferretti. The Ferretti Group overwhelmed by a debt of 600 million euros was acquired with a 374 million euro operation.
Electronics and telecommunications: target is the market
For Chinese companies, Italy also represents a significant market for electronics and telecommunications products. Among the most important investments is that of Chint, a leading company in electrical products, which has launched its own European holding in Veneto. To this are added two telecommunications multinationals such as Huawei and Zte: the first, also known for its wi-fi sticks, in addition to having relaunched investments in broadband through an alliance with Vodafone, has decided to concentrate its research on microwave technologies, with the opening of a new center of excellence that collaborates with the Polytechnic and the University of Pavia. ZTE, on the other hand, has specialized in smartphones and has launched, together with Poste Italiane, a low-cost minimalist pad model.
Logistics and ports: Italy is a strategic bridge to Europe
If we look at the number of investments, another key sector is that of shipping and logistics, extremely attractive for Chinese investors given Italy's geographical position as a "gateway" to the Mediterranean. The conquest of port infrastructures and logistics networks is typically achieved through joint ventures with local partners, who have been successfully operating in the main Italian hubs for some time. In this case the Chinese players are multinational groups such as Coscon, China Shipping Company and CCS.
Renewable energies: the frontier
A new and important area of investment is that of alternative energy, the result of the strategic need, recognized by the current Chinese five-year plan, to reduce pollution through the use of renewable sources. Among others, the investments made in Puglia by the China Energy Conservation & Environment Protection Group in the clean energy and energy saving sector fall into this vein.
Clothing: opportunities for trade to and from Italy
Other cases of acquisition have been made in the clothing sector, where in 2007, Hembly, the main operator in the distribution of fashion products in China, acquired through the company H4T a historical Italian brand in sportswear, Sergio Tacchini, from time in economic difficulty. Also in the clothing sector, two greenfield initiatives have received particular attention: Jinjiang Nankai Garment operates in Rome in the wholesale trade and Zhejiang Xiongfeng Holdings in Milan in the design related to clothing. Also significant is the investment made by Qingdao King Street aimed at setting up commercial partnerships with Italian companies to distribute “Made in Italy” products in China.
Conclusions
Acquisitions made by companies from emerging countries, such as China, are often considered more of a threat than an opportunity for the domestic economic system. With the current economic crisis, many Western governments have begun to change their attitude, increasingly considering investment operations - especially if in the form of acquisitions - as an opportunity to relaunch mature sectors and companies. We have begun to understand how these operations can offer, if well planned and correctly set up, new opportunities for domestic businesses. In addition to vital liquid assets, the Chinese can guarantee immediate access to the Asian market, the most interesting and promising in the world. If read from the point of view of integrating mutual competitive advantages, acquisitions can consolidate and strengthen national companies, often too fragile and small to face global competition.
The main unknown, however, concerns the ability of Chinese companies to manage the acquired companies effectively and consistently with Western business logic: in addition to having to promote maximum integration between different cultures, lifestyles and ways of working, the Chinese must be able to absorb and adopt Western management models with which to be able to face world markets.
The setting up of the pre-acquisition phases and the planning of the integration processes of human resources and management tools become critical moments.
Putting aside preconceptions, suspicions and fears regarding Chinese "shopping" in Italy, the problem still remains of a country system that very often proves inadequate to welcome the opportunities offered by Chinese and, more generally, foreign investors, for usual problems related to lack of infrastructure and excessive bureaucracy, as well as the substantial absence of a clear and systematic management policy for investment opportunities from abroad.
REFERENCES
China Council for the Promotion of International Trade, Survey on Current Conditions and Intention of Outbound Investment by Chinese Enterprises, April, 2010
Mutinelli, 2010, "Italian investments: context, trends and prospects", Chinese world, no. 144
Spigarelli F., 2009, "Multinationals from emerging countries: the case of Chinese companies", Economics and Industrial Policy, no. 2.
Spigarelli F., 2011, "Investing in Italy: goal achieved for Chinese companies?", Firstonline, 26.7.2011
The economist (2011), Streaks of red Capital and companies from China are sidling into Europe (available at: http://www.economist.com/node/18895430)
The European Union's FWC COM 2011 (2012), EU-China Economic Observatory Issue n°15, June 2012 Final Report Contract N°2011/272280 (available at: www.trade.ec.europa.eu/doclib/html/149782.htm)
Vianelli D., 2011, Selling in China: challenges and opportunities, 23.10.2011
