Business models are changing, but Chinese presence in Italy's business world remains high.
ROME — It all started with spring rolls and cheap screwdrivers: this is how China first entered our homes. If the restaurants with the dragon sign put us in contact with Asian cuisine, the shops that populate our cities, thanks to the low costs and the big assortment, paved the road for the invasion of Chinese products. But over the past few years, Chinese entrepreneurship has adopted a different guise, transforming what many believed to be a colonization into a new resource for our economy. Today, between 40-50% of the products displayed in Chinese shops are "made in Italy" or are distributed by Italian import-export businesses to meet EU security requirements.
Because of development, the cost of labor has almost tripled in China, while the euro-yuan exchange rate has fallen 20-30%, reducing the wholesale margin, explains Francesco Wu, honorary president of the Italy-China Entrepreneur's Union (UNIIC) and advisor on foreign entrepreneurship for Italy's Confcommercio business association. Another key factor is that the quality of products has risen, and as a result, their prices as well.
"It has become less profitable to import jewelry, toys, and clothing at the same rate of the early 2000s," says Wu. "Many large chains today have a mixed assortment of Chinese and Italian products, some are even of European origin." An interesting case, he says, is that of Aumai, a megastore chain in northern Italy where you can buy good quality Italian products, such as shoes and clothing, at competitive prices. The trick, says Wu, to keeping the prices down is that the products are bought in large stocks, so customers may not find the latest model.
The Hua Yi Si Buddhist temple, located near via dell'Omo — Photo: Google
In Rome, changes are visible in the historic Chinatown in the via dell'Omo, an area filled with industrial warehouses and wholesalers, a large part of which are Chinese. One after another, there are shops selling household products, clothes, shoes, display shelves and much more. Marco Wong is spokesperson for Associna, the association of second-generation Chinese Italians, and an entrepreneur in the food imports sector. Wong explains that there are nearly 80 wholesalers, but there used to be more. Distribution has changed. Many sellers don't come here anymore for supplies and instead go directly to the representatives, many of whom work for Italian companies."
In the morning, clients are scarce. Due to the cost of rent, wholesalers who need large spaces have moved outside of Rome, say the operators, and as a result the area is gradually emptying out. The same happened in Rome's central Piazza Vittorio and in Milan's via Paolo Sarpi, where the showrooms that had changed the neighborhood's identity are closing down or converting into new businesses. "Things may appear unchanged to those who do not pay attention," says Wong. "But an evolution is underway."
A telltale sign for the change is that many Italian goods or goods distributed by Italian companies are actually made in China. "Christmas products are mainly marketed by two Italian companies, one from Nola, in the province of Napes, the other from Apulia," explains a business owner. "One of the main distributors of household goods is also from Apulia. Oftentimes, Chinese stores sell Italian cosmetics. A small company from the center of Italy has grown mainly by selling to Chinese shops and today has a huge revenue."
For example, pots, detergents, soaps, and paper are distributed by Italian companies. However, hardware, car and cell electronics parts come from China."What allows Chinese businesses to still offer competitive prices is a mentality of management based on rotation: this means that they make sure that clients return by keeping prices low," Wong says.
The very model of Chinese stores has reached saturation.
Bing Lin, 50, has been in Italy for almost 23 years. He's the manager of an import-export business: his 4,000-square-meter warehouse hold thousands of products, from toys to coat hangers. "Compared to ten years ago, the advantage of important products from China has decreased because the costs of materials and labor have gone up," he says. "Today, a transport container costs between $1,200 and $1,900, while customs clearance costs depend on the value of the goods. I mainly import hardware, plastic, and fake flowers. Italian suppliers have more experience with the Italian market and the quality is greater."
A Chinese warehouse in Rome — Photo: Gdoweek via Twitter
"The very model of Chinese stores has reached saturation and is struggling, also because the economic crisis has reduced the spending power of the lower-middle class, who are the consumers of these products," explains Wu.
There are those who have closed their shops, those who have returned home. Thanks to China's frenzied development, immigration has slowed down, even though Chinese entrepreneurs are the most represented in Italy: over 80,000. In Rome, many have changed fields, opening up bars or tobacco stores.
In Milan, second-generation Chinese have diversified and are present in many sectors. There are those who try out new business models coming from China, by importing regional cuisines, for example or those who have found their fortune in sushi. "In Milan today there are around 500 sushi restaurants, most of which are run by Chinese," says Wu. "The first Japanese restaurant that won a Michelin star, Iyo, is run by Chinese. We are business people. We go where the business is."