The Doubts Raised and Opportunities Offered by China Inc.

Since the late 1990s, direct Italian investment in China and other emerging economies has raised cries lamenting the loss of manufacturing strength due to outsourcing. When it finally emerged that producing and selling abroad is not only fundamental to compete, but is also indispensable to guarantee corporate survival and safeguard employment at home, another fear emerged. That Chinese and other foreign capital are buying the jewels of Made in Italy, from luxury brands to engineering firms, and the few large family groups that have long been the vaunt of spaghetti capitalism.

➜ Who's Behind Chinese Brands
Does the Great Crisis, whose end might be in sight also for Italy, really leave our manufacturing industry at the mercy of cunning far-away investors and managers who know little about our history? Couldn't it be that behind names like Fosun, Hony, Haier, CIC, etc. there are concealed interests, perhaps those of the Chinese Communist Party or the People's Liberation Army?
Or, to the contrary, should the red carpet be rolled out to lure Chinese capital in a country that still struggles to be attractive for transnationals at a moment in time when Italian firms risk losing ground in the face of the rapidity of technological and organizational change, which, such as 3D manufacturing, the Internet of Things or Big Data, require financial resources that the Chinese have?
These are legitimate questions and the answer lies in the middle, i.e. not only in medium stat virtus, but also veritas. China is aging rapidly, the pool of agricultural labors anxious to migrate toward coastal regions is depleting and the cost of labor is rising. Therefore, to keep fueling growth, the share of domestic demand and services in the economy must increase. Beijing knows that for future development, it is necessary to rely on national champions that can compete on the basis of brand, technology, distribution chains, and possibly one day, public resources need to be mobilized for these ambitions to materialize. This reinforces the suspicions of those who think that China Inc. is not a fully transparent game, because the boundary between politics and economics is blurred.
However, stronger growth in Europe and Italy requires productive investment, an indispensable condition to fight unemployment, poverty, and precariousness. So Chinese investment is welcome, and private companies are doing it. For example, Zoomlion has enabled the Italian Cifa to become a minority partner of the number one group in the world for building machines, thereby surpassing the German company Putzmeister. Or Caruso, whose new Chinese ownership has been following a growth strategy that is projecting the company from Parma to the world. In both cases, and there are others, a strong industrial logic has led big Chinese business groups to bet on Italy.

➜ How to Be Rewarded by the New Globalization
It remains nevertheless true that Chinese investment abroad is a major phenomenon that needs to be analyzed with care and a balanced mind.
Should these investments, even when they involve private actors, be treated like any other type of foreign investment, or should they require ad hoc treatment?
Would welcoming Chinese government investment be tantamount to signing a pact with the devil, because it would necessarily lead to accepting hidden conditions and potentially damaging constraints? Does the presence of Chinese groups and business relations with them affect the choices of host governments and public opinion? Does Chinese investment weaken or strengthen the European social model? Is there a risk that that China's preference for bilateral relations with European nations undermines Brussels and Europe's bargaining power? Considering Washington's skepticism vis-à-vis Chinese investment, in some cases to the point of forbidding it for strategic reasons, what are the consequences for trans-Atlantic relations of the benign neglect with which Europe is welcoming them?
At any rate, it is fundamental that this new manifestation of globalization must be accompanied by efforts that earn Chinese companies the right to invest, through the adoption of irreprehensible legal conduct and ethical practices, sometimes even virtuous practices that go beyond what is required by national law. This is a lesson that Italian companies seem to have learned. Thanks to this, they are reaping opportunities in China and other emerging markets, and it is natural to expect Chinese multinationals to do the same in European markets.