Relations between Italy and China, on a commercial and production level, take on ever new, ever more intense nuances.
Italian companies are driven into China by strategies of penetration of a now strategic market, not so much and not only for the reduction of labor costs, but increasingly for the presence of customers with enormous potential (Vianelli, 2011). Statistics and analyzes speak of over 2.000 companies with production and commercial establishments in China (Mutinelli, 2010).
On the other hand, looking at Italy, the strong Chinese entrepreneurship developed in the district areas has long since gained competitive advantages by entering niches and production specializations. There were more than 58.000 Chinese entrepreneurs in our country in 2011. They represent 12,27% of non-European entrepreneurs, and Chinese employment in the manufacturing sector reaches 32,52% compared to other ethnic groups.
The micro-enterprises set up in Italy have been joined for some time by Chinese multinationals, driven and supported by the policy of GoGlobal (Spigarelli, 2009). This article, which updates and integrates a previous contribution on Firstonline, presents some quantitative data that allow us to understand the scope and dynamics of the phenomenon (Spigarelli, 2011).
The data that we will see help to better define the framework of the connections between Italy and China and the related production systems, which take on multiple facets, with interesting implications on the dynamics of the competitive advantages typical of national productions. There are, as seen, now consolidated signs of a Made in Italy…Made in China, with leading national companies in the sectors of Italian excellence that make part of their production in China. Added to this is a Made in Italy….Made by Chinese, with Chinese micro-enterprises crowding some district areas, contributing to the realization of significant phases in the production of goods which are then exported all over the world. Finally, companies with Chinese capital, the result of recent acquisitions or investments in Italy in the wake of GoGlobal, participate in the creation of a Made in Italy, by Chinese firms.
It is above all this latter trend that insistently attracts the attention of the media and researchers, given that it makes Italy discover a new face of China, which some do not expect and which many ignore: that of strong innovation, of the drive towards globalization , of the thirst for Western knowledge and skills, while enhancing Chinese roots and traditions.
Thus, after the controversies and debates of the Made in Italy made in China and Made by Chinese (as in the case of the Prato district), this new form of integration is also starting to raise different debates and positions, not always positive. According to a survey conducted by the BBC World Service in March of this year, Italy ranks first among industrialized countries in terms of "fears" related to the growth of Chinese investments in the West, with a notable intensification of such negative sentiment, compared to 2005 (The Economist, 2012).
In this context, know the phenomenon of the enterprises of GoGlobal it is important, also to understand the strategic purposes, approach and motivations that drive Chinese companies to invest in Italy and correctly evaluate the implications for the Italian production system and industrial fabric.
Investments in the West: the new records of global China
To better understand the Chinese presence in Italy, it is useful to start with an examination of the general trend of investment flows resulting from the policy of GoGlobal, within a panel of macroeconomic indicators that allow us to understand the rhythms and records of Chinese growth, also in the light of the financial crisis.
As known, the pace of Chinese economic development has been slowed down in recent years, although it remains strong and intense: GDP is expanding at a rate of 8% in 2012 (after 8,9% in the last quarter of 2011 and 9,2% in 2011), with inflation close to 3%. In 2011 the positive commercial performance was maintained, albeit weakened compared to the previous year: cumulative import and export grew by 25% and 20% per year in 2011. The result was a declining surplus, in 2011 , of 156 billion dollars (-15% compared to 2010).
On the direct investment front, the number of incoming transactions also fell. The crisis in Europe and the climate of uncertainty in the USA, as well as the more stringent Chinese regulations on foreign investments, meant that the value invested in China in the first four months of 2012 was around 9 billion dollars, far from the average of $15 billion found in the quarters since 2005.
Instead, it is precisely on the front of investments from China that growth is clearly continuing. The $14,7 billion disbursed in the first quarter of 2012 corresponds to 149 deals, mainly related to high-tech industries in Europe, as well as the energy, natural resources and food sectors in America and Australia (EU- China Economic Observatory, 2012).
In the last 5 years the initiatives have more than tripled, through a large number of small greenfield investments but above all acquisitions and mergers. The latter represent more than 60% of foreign investments since 2009, directed above all to the electronics, software and IT sectors.
Investors are attributable both to subjects under public control and to private individuals, even of medium size. China Investment Corporation, the sovereign wealth fund Chinese, has promoted the acquisition of shareholdings, even minority ones, in sectors such as energy and raw materials, as well as the financial sector. Public enterprises, on the other hand, have focused mainly on natural resources, infrastructures and public utilities. Private companies have, for their part, acquired small and medium-sized companies in search of skills, markets and technologies.
Made in Italy by Chinese firms
Although Germany, the UK and France have catalysed the attention of Chinese companies in recent months, Italy also plays a significant role in the strategies resulting from the GoGlobal. Particularly attractive are the industrial agglomerations characterized by specialized productions such as mechanical engineering, textiles, clothing, household appliances and the automotive sector. The possibility of absorbing high-value intangible resources, owned by our companies and our territories, is strategic. Image, brands, research, innovation are essential to grow rapidly, establish itself on western markets and contrast the image of producers low cost and of poor quality. The small size of the target companies and the strategic location for accessing European markets are also decisive factors in stimulating the interest of the Chinese.
To date, investment initiatives are growing strongly: in March 2012 there were over 100 companies with Chinese participation in Italy, when in 2007, these were less than 30.
Geographical distribution of Chinese FDI in Italy
Table at FIRSTonline.info
Source: database created by us
Methods of entry by Chinese companies into the Italian market by sector
Table at FIRSTonline.info
Source: database created by us
The data collected and aggregated using various sources - from ICE, to Reprint, to Invitalia, to the specialized press - specifically reveal the presence of 114 companies with Chinese-controlled capital in Italy. The Lombardy Region attracts most of these initiatives, concentrated above all in the Milan area, particularly interesting for companies in the services sector, especially financial, but also consultancy - both in support of the globalization processes of Chinese companies.
Another leading region of Chinese interventions is Piedmont, thanks to its traditional specialization in the manufacturing andautomotive in particular. Similarly, it is the "white goods" sectors that emerge in Veneto, machinery in Emilia Romagna and logistics in Campania and Liguria. On the contrary, the lack of productive specializations and skills in traditional sectors, combined with obstacles to private initiative, make the southern regions still not particularly attractive. The presence of localization advantages, linked to the strategic position in the Mediterranean, has however pushed Chinese companies also to the south, as shown by investments in the ports of Naples and Taranto. Precisely in the port of Taranto, after years of stalemate mainly due to bureaucratic problems, the infrastructural works should be completed which will allow the reception and handling of over four million containers a year, thanks to the relaunch promoted by the Chinese.
In line with what happened in other European countries, Chinese-controlled Italian companies mainly carry out commercial activities, linked to market analysis, positioning and product studies, marketing for the target group, exploration of the Italian and European context. The objective market-seeking of investments appears evident, but the positioning of commercial companies on the Italian market could also be read as the first step of a broader internationalization strategy, in which brands, knowledge and technologies are the real and ultimate strategic objective. There are also examples of acquisitions aimed at projecting Chinese companies to world leaders in the related business sectors, consolidating the activity of the Italian acquirers and leveraging mutual integration advantages. In these cases, on the one hand, Italian excellence and skills favor a upgrade of Chinese productions. On the other hand, they launch Italian companies into a global context and into new, very large markets.
Some stories of Chinese companies in Italy, reported below, allow us to fully grasp these aspects.
