Ringing success

Italian entrepreneur banks on Chinese technology to build mobile phone empire

People often describe Chinese products as "cheap" or unreliable", while they consider Italian products "slick" or "stylish". The Italian mobile phone entrepreneur Stefano Nesi thinks that his phones transcend those stereotypes.

Stefano Nesi, founder of NGM, makes Italian-style mobile phones in China. [Andrea Fenn / for China Daily]

"Making quality stuff in China? It's not just me saying that it works. Rather, it is all in the numbers," says the 46-year old Nesi, who has carved a niche for himself in Europe with his New Generation Mobile range of phones.

"Italian creativity and the Chinese attention to detail are the hallmarks of the NGM range. Our four-year association has not only resulted in innovative products, but also the creation of a successful business," he says.

What makes Nesi's success even more outstanding is that it comes at a time when most nations in Europe, Italy included, are reeling from a severe debt crisis. At the same time, Nesi says his success is also an eye-opener for other Italian entrepreneurs to look east for growth.

However, Nesi's offices lack the gloss that you might associate with the digs of a highly successful business. Located in a two-story residential building with whitewashed walls and red roof, boxes of mobile phones that have made Nesi rich are strewn around a room, along with the trophies won by the rally team that his money has helped fund.

But Nesi says his company will soon move to a new "sci-fi style" building. The new headquarters are in a modern three-story office building located on the other side of the railway overpass, but set in the valley around Pisa where the tallest building is still the leaning tower.

Nesi says that he was one of the first entrepreneurs from the Tuscan valley who started doing business with China. He says that his ties with China go back to 1989, when "you could not produce in China, but only import".

"At that time I was importing rugs, curtains, towels, pajamas and other textiles from China. The business has done well over the years and is now managed by a Chinese partner in Ningbo in the country's east."

The turning point in Nesi's career came in 2002, when he got control of a small amplifier factory in Shenzhen in lieu of an unpaid debt. "It was then that I decided to venture into the electronics market," he says.

Nesi says that importing mobiles from China to sell in the Western markets was not exactly the best idea at that time to maximize returns.

"At that time, everybody thought China was all about buying cheap stuff and selling the same in the West for huge profits . To make a difference, I felt that we should instead make products that are really world-class."

Fired up with the idea, Nesi set up a firm, comprising of Italian designers and engineers, to design and develop "Italian-style" mobile phones and subsequently manufacture them in China. After six years of working as an original equipment manufacturer for other brands around Asia, in 2008 he launched his own brand, New Generation Mobile (branded as NGM) to make original mobiles for the Italian and European markets.

It was not exactly an opportune time to enter the market, Nesi says. Stiff competition from established brands saw NGM bleeding with revenue of just 2 million euros, and only a few hundred original phones sold in Italy during the first six months.

Undaunted, Nesi and his team, pressed on. To stand out from his peers, Nesi and his team came up with a host of creative functions and marketed their new phone as the perfect phone for "unfaithful partners". The phones could use two SIM cards with two different numbers simultaneously, and had a "private area", a secure memory within the phone to store private conversations, for instance those with a secret lover. These conversations could not be accessed by anyone other than the phone owner. The phones also have a background noise function, which simulates background noises to make the person on the other side of the line believe that the owner is in a place different from where they are.

None of these functions were a technological breakthrough and were already available, but it was the first time that they were incorporated in a high-end mobile phone and marketed strongly. Not surprisingly, the product was a runaway hit.

From 2009 onwards, NGM's revenues have risen steadily and last year stood at 62 million euros. The company has a market share of about 11.4 percent in Italy, according to statistics provided by market research company GfK. NGM is also Italy's third biggest producer of mobile phones that are not linked to any operator and now plans to reach out to other European markets.

Today the NGM brand can be seen everywhere, from the sides of cars of an international rally team to the jerseys of a team in Italy's top football league. This year, NGM will also sponsor a MotoGP team in collaboration with German motor producer BMW.

"At NGM, we like sports," Nesi says, as he shows a video of the first tryouts at the Sepang ring in Malaysia in January, when their motorcycle did not start, much to the embarrassment of the team engineers.

Such results and such optimism jar with the prospects of the Italian mobile phone market, which contracted by 10 percent last year, and in general with the poor state of the Italian economy due to the European debt crisis, which is set to contract by 2.2 percent this year, according to the International Monetary Fund's latest estimate.

According to analysts, Italy is struggling to adjust its mostly manufacturing economy to cheaper and more dynamic competition from abroad, including China. Even as unemployment in Italy soared to an eight-year high of 8.9 percent in December, Nesi and his team are getting ready to employ more graduates from the nearby University of Pisa to double his workforce. "The additional staff intake is necessary to fill up the 4,500 sq m of space at the new "sci-fi" headquarters," he says.

Looking to the future, Nesi says his team has already come up with the next big thing on the mobile front. "It is a phone with an in-built detachable Bluetooth headset that is perfect, for those who can never find their headset around when they need it."

But NGM is not just about ingenious applications. GfK data shows that NGM phones are among the highest-priced in the market, something that stands out especially when Chinese phones are selling at much lower prices than Western ones.

Nesi justifies the high price tag of NGM phones and says every model is built in accordance with European quality standards, and a large part of his success comes from his strong belief in China's high-end manufacturing capabilities.

"If you go to China and ask for low-cost products, Chinese producers will make you cheap and low-quality products. But if you ask for a high-quality product, they can make you that as well. Don't forget, that even the iPhones are also made in China."

Nesi's eyes sparkle when he shares the details he has incorporated into NGM phones, like double-injection phone shells, a complex molding process normally used for car parts, and zircon embellishments made in association with Austrian jeweler Swarovski.

Nesi says all the additions are carried out in Shenzhen, where he has a factory that employs over 750 people. "Employees in the (Shenzhen) facility work under a system where those who produce more and better quality products are paid more money.

"If a Chinese can work more and obtain more money to raise their living standards or to save for the future, they will do it. I think this is the reason why China is developing so fast and so well."