Italian Industry Looks for Ways To Capitalize on China Market

An agreement aimed at improving relations between Italy and China was signed here Wednesday and marked a significant change of attitude within the nation's...

MILAN — An agreement aimed at improving relations between Italy and China was signed here Wednesday and marked a significant change of attitude within the nation’s fashion industry toward the Asian giant, which until recently was viewed by most Italian entrepreneurs as a danger rather than an opportunity.

This story first appeared in the January 31, 2008 issue of WWD.  Subscribe Today.

As the Chamber of Fashion divulged stagnant economic trends for 2008, with a projected growth in sales of only 1 percent to 70.23 billion euros, or $102.63 billion at current exchange, China was highlighted as “the only big economy that continues to show dynamism.”

Mario Boselli, head of the chamber, said, “The main perils for the year do not derive from Chinese competition, but rather from the slowing down of the economic cycle in Western economies.”

Boselli said Germany helped lead the growth in the euro currency markets for the past two years, but a stalled economy in that country will affect the rest of Europe this year. The influence of exchange rates, along with higher prices of raw materials, deep-set insecurity about the future and pessimism in the minds of most consumers contributed to a slowdown in the last few months of 2007. On the bright side, however, Boselli said he expects the latter part of 2008 to pick up and holds hope for the emerging markets, “the only ones that are growing and that can compensate the stall in the more consolidated ones.”

Sales figures for 2007 are still preliminary, but the chamber estimated they grew 2.9 percent to 69.53 billion euros, or $101.61 billion, in line with expectations.

Boselli said he viewed the agreement signed with Fondazione Italia Cina as a means to open up the Italian fashion market to Chinese entrepreneurs and for Italian brands to expand in China, especially those that don’t have the strength of big designer groups to approach that country. Former Fiat chairman Cesare Romiti, currently chairman of the Fondazione, which was founded in 2003 and promotes the Made in Italy labels in China, also signed the agreement.

The first step will be a weeklong visit to China in April that will culminate with the first international Annual Luxury Brands Meeting in Shanghai on April 18 and 19, organized by Fondazione Italia Cina and China Europe International Business School. As per this first “Fashion Mission,” Romiti and Boselli said they are putting together a group of 20 Italian firms that will meet with potential partners and Chinese fashion associations and visit Shanghai, Beijing, Hangzhou and Tianjin. Ideal candidates are those that have a history or a “story to tell” and those that are ready to invest in communications. Lectures on intellectual property and distribution regulations in China are also part of the package.

Romiti said, “Italy has not yet exploited its competitive edge in China in a sector where it represents excellence in terms of creativity and quality around the world.” The executive attributed this to “administrative and commercial barriers and little knowledge of the Chinese market and its potential.”

The Fondazione includes founding partners such as the Italian Ministry of Foreign Affairs and Ministry of Culture among other state institutions, companies such as Fiat and Pirelli and banks such as Banca Intesa. Members of the board include Fiat vice president John Elkann and Fausto Tatarella, general manager at publishing giant RCS Medigroup.

Among the Fondazione’s projects are the Eurostreet project in Hangzhou, inaugurated in 2005, which is a shopping street of Italian labels including Dolce & Gabbana, Giorgio Armani, Ermenegildo Zegna and Ferrari.

Romiti said it is important to encourage the introduction of Chinese fashion in Italy, as well, although it is still in its early stages. “There is no progress if we close up,” said Romiti. Boselli concurred. “As long as these products have their own identity, we will work toward their promotion in Italy.”