3785 Will China kill Italy?

Very interesting question. I cannot post here any opinion, because I cannot be objective, but I'd like to see others saying theirs.

I had heard on many occasions that there were very many shoes getting imported that used much lower quality leather & cheaper labour.....clothes I can imagine too?

Maybe Italy will continue to sell on quality?

[QUOTE=tuscanhills]I had heard on many occasions that there were very many shoes getting imported that used much lower quality leather & cheaper labour.....clothes I can imagine too?

Maybe Italy will continue to sell on quality?[/QUOTE]

Confindustria has already pointed out this important thing in recent meetings.
Yes, this is the idea they want to pursue.

Change target and beat them on quality.

Let's wait and see if they'll make it.

I work in Italy in the wool/cashmere textile sector and some of the Chinese are already there with very high quality, at least in fine worsted cloth and as a result mono-industry Biella is running very scared.
Although they have not yet found the ultimae secret in cashmere knitwear it is a matter of pride for them as they regard the cashmere fibre as their own (as they do silk).
Italy should win the race by virtue of design and customer service but some of the top Italian brand names are producing in China as well as at home in Italy and for large orders the Chinese service is not bad at all.
This only leaves fast turnaround and short runs where the Italian producers are not facing direct competition from China but then it comes from India/Sri Lanka who can have enough English speaking staff to give the care and attention required for these orders.
It is all very depressing!

The Economist magazine has covered (remarkably well) the China/Italy commercial confrontation - and it is real. The fundamental problem seems to be that the areas where Italy has been a leader - furniture, shoes, handbags etc. - the sort of products which are frequently produced by "family firms" here, can be produced much more cheaply in China. The big Italian firms - like Benetton - have already opened up production facilities in China,: they live on a brand image - and the customers really don't know where the label has been printed.
I am not at all convinced that the 'recommended by politicians' answer to say "well, it is Italian, it must be better design" can have any credence for more than a few months.
Neither am I convinced that a centre left government in Italy can be of any help in guiding Italy into a fundamentally better global economic positon. The country is in a mess, echoes of the last days of the Roman Empire - fiddle while it burns............or just leave it to the globalists.....forza Benetton??

We've been fortunate to travel quite a bit and have lived in some weird and not always wonderful places. We've naturally picked up things we've liked along the way including: wrought iron furniture (India), leather and silk items (India, Pakistan) and gold jewellery in what the hype would have us believe is the best place for buying it, Dubai. Nothing we have ever bought abroad compares even remotely in quality or design to the equivalent purchased in Italy and, surprisingly, there isn't always the huge difference in price that you'd expect for what are sometimes second rate goods.

In the longer term, the middle market may possibly take bit of a knock from mass cheaper foreign imports but there's always going to be those demanding top Italian quality who are prepared to pay top whack for it. And even with my modest resources, if I'm going to splurge on a pair of suede trousers, as I foolishly did in Mumbai, I'd like them to last for more than a couple of wearings before inexplicable rips appear in the fabric. Whereas my nice little leather skirt that cost me the equivalent of almost a week's salary back in September 1984, looks just as nice today as it did on the day I bought in Florence. My only complaint is it's a tad tighter now! But I don't think that's anything to do with Italian manufacturing...

Problem is Violetta when you decide to move up to a larger model you on't know where it has been made! The Chinese can and DO provide the quality too. As Relaxed has said, the largest brand names are already mnufcturing overseas whilst maintaing the impression that they re Made in Italy.
The cleverest people spotted this many years ago when brand nmes like Gucci, Prada, Churches etc startted attracting pemiumswell beyond their earnings. This becase the investment gnomes saw into the future.
I still maintain ... very depressing for a large sector of Italian industry as the overlap with China is massive.

......and the Chinese make cars too; watch out Ferrari!

Yes maybe china has the good quality and cheap prices but I think in the end Italians will be Patriotic and Shop for products made in Italy, I Now live in Denmark and most Danish people will
Buy Danish products, I have lived in Italy and I see all the cheap crap sold on the streets and in the Sunday markets, but that what you get from china its Cheap Crap…. It’s the same with those fake designer bags they sell on the streets…. They fall apart after 1 month…
And for fabrics and textiles the government should put a tariff on them to keep the jobs in Italy
EVERY TIME WE BUY CHEEP INPORTED GOODS IT PUTS ITALIANS OUT OF WORK
LOVE ITALY BUY ITALIAN!!!!!

[QUOTE=Robbie78999]Yes maybe china has the good quality and cheap prices but I think in the end Italians will be Patriotic and Shop for products made in Italy, I Now live in Denmark and most Danish people will
Buy Danish products, I have lived in Italy and I see all the cheap crap sold on the streets and in the Sunday markets, but that what you get from china its Cheap Crap…. It’s the same with those fake designer bags they sell on the streets…. They fall apart after 1 month…
And for fabrics and textiles the government should put a tariff on them to keep the jobs in Italy
EVERY TIME WE BUY CHEEP INPORTED GOODS IT PUTS ITALIANS OUT OF WORK
LOVE ITALY BUY ITALIAN!!!!![/QUOTE]

Hi Robbie

I remember reading recently that a tourist was stopped by the 'Designer Police' in Italy and fined (a massive amount) for wearing a pair of 'rip-off' designer glasses. So looks like Italy is fighting back, at least in the arena of the designer copy marketplace.

If you can't stop people importing and selling the stuff, fine the people who buy it. That's maybe a better deterent and will make the potential customer think twice before buying. Now, must go and have a sort through my wardrobe for that faux 'Gucci' bag :rolleyes:

[quote=Susan P]Hi Robbie

I remember reading recently that a tourist was stopped by the 'Designer Police' in Italy .......[/quote]

There was a big (ahem!) expose recently on UK television whereby 'innocent' Brits were stopped by French police having taken a day trip from the French Riveria to Ventimiglia (or somewhere similar) and had their Burberry & Louis Vuitton's slaughtered in front of their eyes..... I couldn't see this changing any of their habits & buying pukka Louis' though!

...but Robbie raises an interesting question; when did [i][b]you[/b][/i] last but cheap cr@p?

[QUOTE=Susan P]I remember reading recently that a tourist was stopped by the 'Designer Police' in Italy and fined (a massive amount) for wearing a pair of 'rip-off' designer glasses. So looks like Italy is fighting back, at least in the arena of the designer copy marketplace. [/QUOTE]

But behind that ridiculous law is the assumption that we know something is a designer copy. If I just want a cheap pair of sunglasses (as I tend to lose them) I really wouldn't know if something was meant to be a copy. I haven't a clue about expensive brands and all the aspirational nonsense that surrounds them. Something that looks OK, does the job and doesn't fall apart at my first sneeze is all I ask.

Many people on this list are reasonably well off, including you Violetta with your 'modest resources' and an amazing ability to keep your figure:-). Many people who buy in the markets or Bon Marche or equivalent don't have a vestige of choice. I appreciate the occasional nice piece and have bought some Italian stuff at Per Una in M&S, but it really isn't an either/or situation, and I certainly have bought cheap c**p quite often.

I love cheap cr*p! I'd buy it by the lorry load and flog it if I could.. and then buy a cashmere coat and a wonderful silk scarf.

:D :D

:mad: :mad: Yes but what have you ever Bought Cheep or on the Street
That really lasted??? I mean it dose not mean you can’t go and buy an inexpensive pair of sunglasses. But the point it the vendors selling bootleg products of even inexpensive stuff... still makes the local shop keeper suffer
And if you look at the average Italian the are not wearing cheap stuff
it really comes down to do you want to give the business to people who don’t support the community or pay taxes and get products smuggled into Italy and produced by children
China floods our markets and undermines our local economy….
So if you wonder Italy is not so clean and you must wait 4 hours in a public office
It because people don’t realize the long team damage they do….
So of you think this is a joke… well its not you write how you love Italy
Then behave like it and respect this beautiful place…

Robbie

Stai calmo per piacere! Get a sense of humour. English or Italian.. I dont mind which!

:) :)

This law was brought in a year or two ago by the late, unlamented Berlusca government, for the usual reasons. They didn't know what to do, but thought they had to [I]look [/I]as if they did, and to show how serious they were, so they blamed foreigners and increased the penalties ridiculously. (I think the fine was E10,000 for buying anything fake, reduced to E5,000 if you paid on the spot.) However, it didn't work, for very obvious reasons - those people who had been buying the fake stuff didn't then turn to buying the genuine (and hugely expensive) stuff, it put off the tourists (there were stories, reported abroad, of various French, German and Scottish people being faced with these idiotic demands from the carabinieri), a case was brought against it (in Tuscany, I seem to remember), by an AN lawyer - and I suspect it's now been quietly forgotten. Anyway, I hope so. The thing was absurd, the product of shallow cheapskate thinking, an unwillingness to face the real problems or to find any real solutions, and an unthought-through belief in authority, discipline, and absurd punishments.

So Sanch.. whats the answer?

People will always love a bargain, will always lust after the real thing but will pretend to be satisfied with the fake/copy/poor quality goods for several reasons - to convince others they are wealthy.. to hide the fact they are miserly.. or simply because they can't afford the price of the "real thing" and peer pressure can push them into making the purchase.

Thoughts?

:) :)

Mind if I butt-in here before Sancho? I think that to some extent, the designer brands depend on the fakes to 'feed' desire for their products, much as they would like to deny it. Similarly, the big software companies like Microsoft would rather allow a certain percentage of the programmes they sell to be pirated, even though they don't make any money from them, because they surpress rivals from entering the market and develop customer loyalty to the brand. Today's Indian kid learning to use Microsoft software using a pirate copy may be tomorrow's CEO or Microsoft developer.

If it was as easy to fake a Ferrari as it is to fake a Luis Vuitton handbag, then Ferrari would have something to worry about. That should give some indication of the costs of making a handbag; fake or real. The best that the Italian luxury goods industry can hope for is that trade with China will create a new generation of Chinese millionaires, foolish or pretentious enough to aspire to owning their goods. Meanwhile, I'll happily sip my Prosecco and shed no tears for the French champagne industry that I am so heartlessly destroying by buying a 'fake'.

That's part of the problem Marc

It's not so easy to fake a Louis Vuitton handbag if anyone had to do it from scratch!

The counterfeiters get the genuine article and pick it to pieces so they can see how it is constructed and use it as a template. I cant remember exactly how many pieces go towards making the genuine bag, but I know it's well over a hundred.

Louis Vuitton are the ones who researched, developed and evolved the design.. and paid for it.

All the fakers have to do is copy it - so - d'ya fancy going halves and we could get the market in fake Ferrari's off the ground?

Bring yer Mam round fer tea and we can discuss further! ;)

:D :D

[QUOTE=Anastasia]So Sanch.. whats the answer?

People will always love a bargain, will always lust after the real thing but will pretend to be satisfied with the fake/copy/poor quality goods for several reasons - to convince others they are wealthy.. to hide the fact they are miserly.. or simply because they can't afford the price of the "real thing" and peer pressure can push them into making the purchase.

Thoughts?

:) :)[/QUOTE]

Agreed on almost everything of the above (although I don't myself think peer pressure plays much of a part, and I'd add that some people probably buy as a joke - "Here's my Rolex. Cost me £3 it did. Cheap or what? It's even got a guarantee. In Chinese.") but asking me what the answer is is like asking me to make the same mistake as the Berlusca government and offer one when I don't know. (The proof that their's [I]wasn't[/I] the answer is that manufacturers and shopkeepers are still in much the same difficulties as before the stupid fines were introduced.) For what it's worth, though, I suspect that less regulation (especially of the petty kind) would help, and less dependence (encouraged, of course, by government after government) on patronage.

[QUOTE=Robbie78999]:mad: :mad: Yes but what have you ever Bought Cheep or on the Street
That really lasted??? I mean it dose not mean you can’t go and buy an inexpensive pair of sunglasses. But the point it the vendors selling bootleg products of even inexpensive stuff... still makes the local shop keeper suffer
And if you look at the average Italian the are not wearing cheap stuff
it really comes down to do you want to give the business to people who don’t support the community or pay taxes and get products smuggled into Italy and produced by children
China floods our markets and undermines our local economy….
So if you wonder Italy is not so clean and you must wait 4 hours in a public office
It because people don’t realize the long team damage they do….
So of you think this is a joke… well its not you write how you love Italy
Then behave like it and respect this beautiful place…[/QUOTE]

Cheap or expensive they never last because I lose them or sit on them. I bought mine in a shop in the local main square, and I don't suppose all these cheap sunglasses are only bought by unrespecting tourists. Unfortunately what you are suggesting is exactly what brought down the UK car industry - expecting their customers to buy whatever they produced and at whatever cost. Frankly for many things you'd find it difficult to find things not made in China etc. and as for the major brands - the name/label may be Italian (or Japanese for that matter) but have a look where the item was actually made.

It's a global economy I'm afraid, and just saying 'buy national' doesn't work anymore. I recently bought my kitchen in Ikea for my rented flat: the wall cabinet carcasses were made in Italy, the doors I think Eastern Europe somewhere, and the hinges in Austria. If Italy wants to export hundreds of thousands of these pensili to an international market, they have to accept imports of other items, like the Austrian hinges.

There is a great deal of confusion and misunderstanding regarding the WTO rules and the impact they will have on world trade. The implications for the prosperity of individual nations depends on which of the following groupings that nation fits: a) developing mamoths: China, India and Mexico; b) developing minos: Vietnam and Sri Lanka; c) mature western economies with low proportion of manufacturing jobs: UK, U.S. France; d) mature western economies but with large overlap with China-India in their manufacturing industries: Germany and Italy; e) mature western economies but with large and subsidised agricultural production: U.S., France, Italy and Spain; f) mature western economies with industries producing "must have" goods with strong national loylaty: Germany (Porsche/BMW) and Italy (Ferrari); g) new EC entrants and aspirants with well educated workforces, crumbling industries alongside state-of-the-art inward-investments and oodles of productive farmland; h) extra EC ex-Soviet countries with highly educated workforces but with crumbling industry and infrastructure; g) mineral rich countries; i)African and other poor countries without mineral wealth.

It is not an easy subject to analyse but if we start with the premise that free trade is a good thing which produces economic growth which in itelf is a good thing, then we would have to agree that allowing China to flood markets with cheap goods is a good thing too because their industries and their new rich will consume services and "must have goods" from the developed world.

It is said that the reduced cost of consumer goods (e.g. textiles, plasma screen tvs and other electronics) is a fillip to the world economy at least equal to that caused by the 19th century industrialisation of Europe and America. The question we are asking in this thread is whether Italy will be a loser or a winner. I am sorry to say that it will probably be a loser.

In this regard:

1) to disparage Chinese production as sub-standard is the same mistake used against Italy in the fifties and sixties and Japan in the sixties and seventies and it would seem that China is learning very quickly that quality and premium price go together like a horse and carriage.
2) the corect question is not whether the Italian DESIGNED handbag is a fake but where it was made. Designer labels are legitimately manufactured in China TOO and often the contriband includes "over-production".
3) If you want to know if your handbag is fake or over-production take it to one of the flagship stores of the "label" and ask them to spruce it up a little. If they take it away and say that THEY will call YOU when it is ready then assume it is a dud. :D

So you mean all that cheap cr*p down the local market could be just the over production of the real thing?

I'll get me coat.. I'm off to do a bit of shopping!

Good post Stodge.

:) :)

[QUOTE=Robbie78999]:mad: :mad: Yes but what have you ever Bought Cheep or on the Street
That really lasted???... And if you look at the average Italian the are not wearing cheap stuff [/QUOTE]

I fully agree with you on this bit, Robbie. I always regret the pullovers I buy off our village street market stall, they go all bobbly within a couple of wearings and totally out of shape even after careful washing. (Must check on Saturday where they're made. Could it be China???) But few of my Italian friends would shop from these stalls much preferring to save and splurge on something really good quality. And this includes shoes, handbags too.

Thank you........ it seems i am being too uptight...
maybe a little but i mean well,
But i am Itailian so........

Robert

Robbie and Violetta,

Obviously neithr of you buy from the markets but obviously someone does or otherwise why woul the stallholders bother and my experience tells me that it is not just non-Italians as when we lived in Folgaria w were the only stranieri and yet the market came round every week of the year.

However, this is not the main problem for Italy that has always survived on exports. The fact that Americans and Northern europeans are buying their shoes and garments from China now isn't even the main problem.

The main problem is that the top Italian brands are manufacturing premium priced goods outside Italy!

There are a number of reasons why the commercial rise of the Chinese is particularly difficult for Italy to cope with. The areas in which the Chinese started their manufacturing for export were predominantly those where the merchandise was relatively easy to manufacture, and had a high labour element. This put Italy immediately into the firing line, because this type of product was Italy's export manufacturing base. Now it seems that the Chinese have started to export power station turbines and other heavy manufacturing items, so Germany will start to get into trouble very soon.

The second reason is that Italy tends to have manufacturing "clusters": whole provinces will be crammed with manufacturers of one particular commodity - be it chairs, shoes, ceramic tiles or textiles, and so if there is a major slow down in their market a small area of the country suffers devastating economic damage. This is particularly the case in the traditionally more wealthy northern regions of Italy. Couple this with the fact that a large proportion of Italian manufacturing is carried out by small family concerns, with probably not the most flexible management style, and these firms fail very quickly.

Successive governments, through their taxation and contribution practices, have not encouraged larger firms to develop, and the trades unions have also not encouraged any flexibility in work contracts, so it is very difficult for any firm to react quickly to a marketing challenge.

It is difficult to see what is going to happen: Italy is not a service based economy like the UK - except in the field of tourism. Since you cannot go to Beijing to see St. Peter's Basilica, it is not surprising that this is the field where many Italians are pinning their hopes at the moment.

Dear Relaxed,
I should say that you are a rather pessimistic guy. Under many aspects you are right, but there are some details that should be better unfolded. Taxation is due to a huge budget deficit caused by the squanderer Christian Democratic governments we had in ‘70s and ‘80s. They had the very bad habit to spend more they could, causing public deficit to rise enormously. To keep public expenditure under control (below 3% of GDP as it was imposed by EU) new governments had no other solution than reducing expenditure and increasing taxation.

Apart from that I agree with you with certain minor exceptions…. :)

[LEFT]The emergence of global markets and international competition has become an important facet of business life. We’ve only got to look around us to see how the power of foreign competition has made traditional national borders a thing of the past. The Italian economy is falling under the strong influence of market forces unlike businesspeople have ever embraced before and this is something that is not going to go away. [/LEFT]

Italy’s economic foundations are underpinned by small/medium enterprise and although a great deal of these SME's are innovative and dynamic, family run organisations with a certain amount of entrepreneurial flair, many are going to come under increasing pressure from emerging global competitors and some will (it is already happening) inevitably fail. Part of the problem (and I agree with on this one Relaxed) is due to inflexible management styles and lack of understanding of the complex forces, principles and institutions that affect their organizations ability to compete internationally. Add to this the rigid labour practices that also affect competitive advantage and the fact that small enterprise in Italy continues to be hampered by excessive start up costs, taxation and bureaucracy, is it any wonder that many companies, especially the weaker ones, are facing difficult times?

The issue of public debt has been a longstanding one. In 1981 public debt had reached 61% of GDP. By 1991, the level of debt had reached 104% of GDP. Given Italy’s well-reported model of tax evasion, its complex, albeit obscured structure of income and expenditure, the high level of public debt does not surprise me. I don’t think it is a question of not allowing the larger firms to develop. Many of these have received substantial tax breaks and incentives in the past. Moreover, the larger state owned, archaic autocracies for example, continue to be plagued by gerontocracy, clientilism and protectionism. They are unproductive and unresponsive to the needs of their markets and customers and continue to destroy economic value instead of creating it.

Yes, Italy’s service sector is still underdeveloped compared to other economies. Yes, it has pinned its hopes on the all-important tourist sector, but it is beginning to lose some ground here too. According to the WTO, in 1950 Italy ranked 3rd in the world’s top tourist destinations. In 1970, it ranked 1st. In 1990 and 2000, it ranked 4th but in 2004 the most notable change in the ranking by international tourist arrivals was China's move from 5th to the number 4 position, trading places with Italy, whilst France remains the unchallenged leader. There’s an underlying message here somewhere. Italy can no longer rely on the “presumptive longevity” of its tourism appeal.

It is difficult to dispute that Italy’s industrial and economic assets need strengthening, but it is going to be equally be difficult to say what Italy’s future direction will be. The business environment is not only constantly changing, but the rate of change itself is rapidly changing. It is going to be interesting to see how industry and the new Government will tackle, with any degree of efficacy, the many challenges that lie ahead.