SHARE
COPY LINK

BUSINESS

China brings business to crisis-hit Italy

Centuries after Marco Polo showed how it was done, Italy is once again knocking on China's door. But rather than Italians going to China, today's pioneers are Chinese entrepreneurs heading to Italy in search of a holistic remedy for its economic ailments.

China brings business to crisis-hit Italy
Italian Prime Minister Matteo Renzi (L) speaks with China's Prime Minister Li Keqiang during the tenth Asia-Europe Meeting (ASEM) in October. Photo: Daniel Dal Zennaro/AFP

When Milan succeeds Shanghai as host of the Universal Exposition next year, an estimated seven million Chinese are expected to visit the city.

Organizers expect half of them will be business figures looking for an opportunity in a country where company bankruptcies are running at 16,000 per year.

Open for business

Already this year, Chinese companies have splashed out several billion euros acquiring stakes in or control of Italian companies ranging from a venerable old fashion house to some of its biggest energy companies as well as to the producer of a well-known olive oil brands.

That has vindicated Prime Minister Matteo Renzi's decision to send an "open-for-business" signal to Beijing after he came to power in February.

"Renzi had the intelligence to make China the first country that he visited, that was the signal they were waiting for," said Antonio Cianci, the organizer of a series of recent business-to-business gatherings including the China Italy Financial Summit and the China Italy Technology Forum.

"The Chinese were knocking on our door, but we were incapable of opening it," he said. "We were too busy navel-gazing."

Renzi, 39, is attempting to implement reforms designed to make the country more attractive to investors.

"We have to become more open," he said. In Rome last week he declared: "We must bring more China to Italy and take more Italy to China."

At the heart of Renzi's reform drive lies a shake up of the labour market, which should make it easier for employers to hire and fire, and an overhaul of the snail-paced legal system to ensure contracts can be enforced within a reasonable time frame.

Renzi's visit to Beijing in June was reciprocated this month by his Chinese counterpart Li Keqiang, who signed some €8 billion worth of trade and financial cooperation agreements in Rome.

China's central bank has this year acquired stakes in Fiat, Telecom Italia, insurer Generali, energy giant Eni and utility Enel.

Shortly after Renzi's Beijing visit, Italy sold a stake in energy grids holding company CDP Reti to State Grid Corp of China for €2.1 billion.

These deals have made few waves and even the transfer of more emblematic assets to Chinese owners have not unleashed much negative reaction among a recession-weary public.

Fashion and olive oil 

Krizia, the fashion house founded by one of the grand dames of Italian fashion, Mariuccia Mandelli, was bought by Zhu Chongyun earlier this year and the Chinese entrepreneur-designer has been warmly welcomed into the Milan fashion family.

Likewise, there were few murmurings of discontent when state-owned Bright Food acquired a majority stake in Salvo, an Italian group whose range includes Filippo Berio, an olive oil brand that is a market leader in Britain and the United States and now looks set for an onslaught on the Chinese market.

Among those with direct experience of Chinese-Italian business collaboration is Li Ning, the European boss of BGI, a bio-tech company that emerged from China's involvement in the human genome project.

Li was in Milan this month to sign contracts for the development of a genetic test for pregnant women, the latest in a series of partnership agreements with Italian specialists in the field.

"If you want your friends to treat you well, first treat them well," he said.

"I always tell my team to never complain about the local environment — it does no good."

Inevitably there will be some who fret about Italy being 'sold to the Chinese' but Cianci said it is up to Italy's own entrepreneurs to ensure a mutually beneficial relationship.

"What China brings is financial strength, not, I hope, to colonize Europe but to build relationships that allow us to do business together," he said.

"So it is up to us: if we put our heads up to be cut off, we will only have ourselves to blame."

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

BUSINESS

EU finds Italy’s Alitalia loans ‘illegal’ but airline free to keep money

The EU's antitrust authorities ruled Friday that Italy's 900 million euro loans to long-struggling airline Alitalia were "illegal", but cleared the country's new carrier to get state funding and avoid paying back the money. 

Ahmad AL-RUBAYE / AFP
Ahmad AL-RUBAYE / AFP

“Following our in-depth investigation, we reached the conclusion that two public loans worth EUR 900 million granted by Italy to Alitalia gave the company an unfair advantage over its competitors, in breach of EU State aid rules,” said EU competition chief Margrethe Vestager said in a statement.

“They must now be recovered by Italy from Alitalia to help restore a level playing field in the European aviation industry.”

But the authorities in Brussels simultaneously said new flag airline ITA – set to start flying next month – was not liable to reimburse the money and that 1.35 billion euros being injected into the firm by Rome did not breach state aid rules.

“Italy has demonstrated that there is a clear break between Alitalia and the new airline ITA, and that its investment in ITA is in line with terms that a private investor would have accepted,” Vestager said.

“Once ITA takes off, it is for Italy and ITA’s management to make use of this opportunity once and for all. And we will continue to do our part to ensure fair competition in the European aviation sector.”

READ ALSO:

Loss-making Alitalia was placed under state administration in 2017 but Italy has struggled to find an investor to take it over. The situation was only exacerbated by the coronavirus pandemic that grounded airlines worldwide.

The Italian government gave the company two loans for the amount of EUR 600 million and EUR 300 million in 2017, as Alitalia scrambled for liquidity without access to the debt market.

Earlier this year Italy said it had reached an agreement with the European Union for a bailout that creates a new debt-free company to take over some of Alitalia’s assets – ITA.

The board of directors of ITA last month approved a binding offer for 52 of Alitalia’s aircraft, related airport slots and other assets.

The Italian government has created a 100-million-euro ($117-million) fund to reimburse Alitalia customers.

Italy provided state loans to Alitalia totalling 1.3 billion euros between 2017 and 2019.

In July, it approved another 700 million euros for ITA.

Further sums are expected in 2022 and 2023, bringing the total to 1.35 billion euros.

SHOW COMMENTS