MILAN, Jul 11 (Class Editori) – Pirelli’s model gets the mark of approval, as it makes for the perfect example when it comes to economic relations with China – even for SMEs. After handing their majority share to Chinese giant ChemChina back in 2015, the tire producer managed to protect their technological know-how and Italian character. Part of their success links back to their governance agreements with the new owner. "We made this move looking at our long-term growth prospects, and not only at our short-term earning needs," said the Vice Minister of Economy, Massimo Garavaglia to MF-Milano Finanza, on the margins of Milan's Italy-China financial forum. During the event, the Minister of Economy Giovanni Tria welcomed its Chinese counterpart, Liu Kun, as well as several financial and insurance institutions from both countries, hoping to start a structured cooperation focused on leveling the playing field. As clarified by the Minister during his speech, the objective is "achieving growth based on mutual trust".
After all, as emerged during the event, SMEs play an important part in China as much as they do in Italy. "Italian enterprises are quite strong in a variety of sectors – not only luxury and fashion, but also mechanics and pharmaceuticals. They need to be supported during bilateral trade," added Garavaglia.
Question: China looks at Italy with great attention, in particular because of its SMEs with their features and their specialized know-how – also because, when it comes to Italian operations in China, they play a very important role, but are often victims of aggressive acquisitions. Is it possible to replicate Pirelli’s model in order to support Italian SMEs?
Answer: We can intervene at different levels. In any case, I need to precise this first: China offers great opportunities. By 2022, World Bank’s estimates project a 300 million increase in the number of Chinese families with more than 100 thousand euro in financial availability. Italian enterprises have their own support platform, built over the CDP (Italian Deposit and Consignment) and the Italian banks and insurances. An all-in “one-door” package granting entrance to the Chinese market while providing a wide range of services – including credit, collaterals, equities, venture capitals – aimed at facilitating internationalization. Obviously, every entrepreneur is in charge of their own affairs, and can freely decide how they prefer to approach the situation. What is important is that, today, these types of instruments are available to them.
Q: Michele Geraci, your colleague working in the Ministry of Economic Development, wants to favour greenfield investments, proposing a verification system for acquisition results and tying further shares acquisition to the capacity of generating value. Do you believe it a feasible strategy?
A: As I said, entrepreneurs are in charge of their own affairs, yet they should be able to rely on an organized and structural support. We should not forget that financial support comes from direct support to the real economy. This is not enough; we need to fasten the pace when it comes to protocols for procedural easing, in particular for smaller companies. Sometimes even getting a promissory note takes a long time, and the process is quite complicated.
Q: More than once have the Italian and European business realities raised the issue of the need for a level playing field in China. Has the financial forum set any guarantees in this regard? Has the Chinese management committed to create openings?
A: Even in this aspect we must intervene at different levels. A more structured cooperation level exists between regulators. Chinese institutions have also expressed their will to further opening the market, committing to perform even more investments abroad starting from 2020.
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