China launches investment drive in Italy
By Guy Dinmore and Giulia Segreti in Rome, Published: October 7 2010
Italy’s decision to illuminate Rome’s Colosseum in communist red for the visit of the Chinese premier sent the strongest possible signal as to the importance it placed on the trip.
The unusual move in honour of Wen Jiabao’s first visit in more than five years comes as Italy prepares – somewhat nervously – for a surge in large-scale investment in infrastructure and high-tech joint ventures, hoping in exchange to win equal treatment for Italian companies in China.
But if – as veteran China-watchers believe – Beijing intends to build a strategic gateway into Europe through Italy, and to a lesser extent Greece, then those plans must first overcome Italy’s notoriously slow and punitive bureaucratic system, which has deterred many a foreign investor before.
Addressing Italy’s business leaders on Thursday, Mr Wen drew applause with promises to respect intellectual property rights, which he described as a “great civic virtue”, and put Italian companies on an equal footing with their Chinese counterparts. That point was seized on by Mr Berlusconi, a billionaire media magnate, who noted this would mean equality in applying for Chinese tenders and dealing with China’s bureaucracy and legal system.
Just as they have in Greece, which Mr Wen visited earlier in the week, Chinese and Hong Kong companies are actively expanding into ownership and development of ports and other infrastructure.
Hutchison Whampoa is fighting bureaucratic delays to invest €500m ($690m) in developing Italy’s southern port of Taranto; state-owned Cosco is expanding the port of Naples; and HNA, a Hainan-based aviation and logistics group, is in €3bn talks to build a terminal near Civitavecchia, north of Rome.
One diplomat described it as a “national security concern, an obsession with controlling the whole chain of production” that mirrors China’s investment in ports in Pakistan, Burma and Africa.
While China’s focus in developing countries has been to secure raw materials and food supplies, Italy is attractive for its engineering and high-tech sectors, particularly renewable energy. Mr Wen noted in particular Italy’s strength in “design, innovation and creativity” and its dynamic small enterprises.
The changing dynamics are illustrated by events in the white goods and automotive sectors.
Indesit, Italy’s champion of household goods, pulled out of China a year ago, while Haier, its former Chinese partner, is investing heavily in its first European plant in northern Italy.
Gianluca Di Pietro, Haier’s general manager for Italy and Greece, said it aimed to be among the top five white goods producers in Europe by 2014. “Any of the big companies who aim at a global leadership must see the EU as a natural part of their growth journey,” he said.
Carmaker Fiat’s plans to abandon its plant in Sicily next year have led to expressions of interest from China’s Taihe and Chery.