Surviving tough times

Second-generation Sino-Italian entrepreneurs innovate to combat recession

Sino-Italian entrepreneurs' businesses have continued to post moderate growth throughout Italy's worst economic crisis in decades. Nevertheless, they are showing slight signs of fatigue, especially in the import-export sector, experts say.

"Chinese communities in Italy are also having to weather the crisis, since this is a recession on a European scale, and most of the Sino Italian entrepreneurs' clients are European," says Junyi Bai, president of Associna, the most important and active cultural association of second-generation Chinese-Italians. As a corporate lawyer, Bai also deals with transnational operations between Italy and China.

"The crisis is biting us, too," says Francesco Wu, entrepreneur and founder of Unione Imprenditori Italia Cina, a new and innovative association of second-generation Sino-Italian entrepreneurs that offers mentoring and entrepreneurial education, information, integration and job formation and aims to facilitate dialogue with Italian institutions.

The Italian manufacturing sector has around 23,500 enterprises, 17,650 of which are shoe and clothing labs. The restaurant sector is also quite solid: it has 12,500 activities nationwide. Personal care businesses are likewise in good shape, especially hair and beauty salons which, according to a recent survey by industrial association Mestre Cgia, posted some of the most rapid growth numbers of recent months, with a 38.8 percent rise.

On the other hand, "the imports from China are slowing down", Wu says.

After several jobs, two years ago Francesco Wu, who was educated as an electronic engineer at the Milan Politecnico, decided to enter the restaurant sector, one that is generally in good shape.

"My choice was primarily due to the fact that my family's business was no longer working," he says. "The recession has badly bruised the garment sector - all those small Chinese labs common in Lombardy are the worst affected. That is why I had to show more responsibility toward my parents," he says.

Wu was totally smitten with the idea of buying and managing an Italian restaurant. While combining Italian and Chinese cuisine has been a trend for the last seven years, very few restaurants in Italy are totally dedicated to Italian food. They are still a rarity.

Wu's restaurant, Borgo Antico, is in Legnano, 25 km northwest of Milan. "My restaurant had an annual growth of 15 percent last year," Wu says proudly adding that most of the dishes are designed to suit native Italians' demanding palates.

"Businesses that come through these nasty downturns offer outstanding value," Wu says.

"Product and service quality has improved considerably after the arrival of second generation Chinese-Italian entrepreneurs. They want to invest more in innovation. I myself have made the first steps towards innovation with my restaurant," Bai says.

Chinese communities in Italy have evolved over the years, and Associna has been analyzing their gradual changes. Milan, Prato, Florence, Rome and Naples have the most Chinese people.

The number of enterprises owned by Chinese immigrants has grown by a steady 232 percent in the last 10 years. According to the latest Italian Chamber of Commerce survey, there were 44,121 enterprises active nationwide at the end of the first six months of 2013. Of these, 16,250 were in the manufacturing sector. The study found that the majority of enterprises were sole proprietorships.

Another survey, conducted by the Mestre Cgia, shows that there were 210,000 Chinese people registered as residents in Italy as of June 2013.

Prato's and Florence's vast Chinese communities are devoted to clothing and leather manufacturing activities, what they call "fast fashion", says Bai. While Naples, which witnessed a dramatic growth in the number of individual businesses (692 percent) in the last decade, has a community that is dominant in import-export.

Milan is the best Italian city for young Chinese small entrepreneurs. Historically, the capital of Lombardy is packed with cafs, and currently Chinese managers manage at least one out of every five to six cafes in the city. There has also been a sharp increase in Sino-Italian bars.

"This is a very Milanese phenomenon," says Bai. Chinese have fallen in love with espressos, "cornetti" (Italian croissants) and "panini" (Italian sandwiches): it is something they can learn how to make easily. This is a good example of diversification and also innovation," says Wu.

The Chinese generally purchase an existing coffee shop and maybe start a second location from scratch later. "Running a caf involves less physical and mental strain than a clothing lab. A bar gives more stability. Furthermore, it involves minimum managing risks," Bai says.

Despite Chinese small entrepreneurship levels reaching all-time highs in the last couple of years, small business owners encounter a number of difficulties when trying to fund their enterprises. Besides financing, bureaucratic obstacles remain a black spot for all.

Native Italian startups cannot get bank loans easily, so one can imagine the difficulties for Sino-Italians firms. "Banks in general lend only to the most profitable customers. It is a worrying trend," Wu says.

"Chinese bank rates are even higher.For this reason, the majority of Chinese family businesses, which require moderate amounts of capital in their initial years, often raise money through informal channels like family and friends," Wu says.

The second-generation entrepreneurs are lucky in one sense in that they don't have the linguistic difficulties that their parents had. "A large number of them have gained degrees from Italian universities. Most of them are capable of managing the family business by the time they are 20." Bai says

Wu and Bai agree that the new generation of Sino-Italian entrepreneurs have created a new business culture model that increasingly relies on the exchange of interrelated skills between the two ethnic groups.

"We want to create jobs in Italy and contribute to the society. We are full of energy and enthusiasm," Wu says.

The move to hire Italian workers (by a small number of family enterprises) is not only a matter of marketing but also a real necessity, Wu says. "It is due to a shortage of Chinese workers. Entrepreneurs have multiplied, so there is a relatively lower labor force available. In addition, a small number of workers are returning to China."

In fact, the potential of businesses in addressing the challenges, particularly those concerning jobs in a country that is experiencing persistently high unemployment, peaking at 40 percent in the case of young people, comes not from immigrant family businesses but from medium and large investment from China. Emblematic is the case of multinational companies such as Huawei and Lenovo that have operations in Italy.

Some deals involving Chinese companies have also been noteworthy. Renato Bianchi's C B Ferrari was sold two years ago to Jingcheng Holding Europe, a move that helped retain jobs for more than 157 employees. "The best thing about the deal was the Chinese firm's decision to stay put in Italy," Bianchi says. "The Chinese company was OK with keeping the managers and the workers. That was extremely important for me. It meant that I was not betraying my people".

The company, based in Modena and Mornago, produces automated precision machines that make turbines for the automotive, aeronautical and energy industries. Another example is the Benelli/Quinjiang Group, in the automotive industry.

A study released recently by trade group Fondazione Italia Cina showed that at least 195 Italian companies are under Chinese management, while 133 affiliates and subsidiaries benefit from having stakeholders from the Chinese mainland and 62 from Hong Kong investors. Investment from large Chinese companies has reached around 2.665 million euros, while the alliances have provided more than 6,000 new jobs to Italian people.

Standa, an old Italian chain of department stores has now become Star Planet (Hua Feng Group) and generates turnover of around of 95,000 euros.

Another success story from second-generation Sino-Italian business owners is that of the supermarket chain called Au-Mai, the 29 supermarkets launched by an entrepreneur from Brescia, Wenxhu Chen, who has just announced construction of the largest sales outlet in Europe not far from Berlusconi's big villa in Arcore.

The Oriental Mall, a five-storey shopping center opened last summer in Milan's Chinatown, is another development that is attracting attention. Twin brothers Michele and Francesco Hu provided funding.

"The road to success comes through hard work, determination, personal sacrifice and thrift," Michele Hu says.

"Competition is tough, really intense," stresses Bai. The second-generation entrepreneurs identify strongly with their original heritage as well as with their acquired Italian mental attitude. "Perhaps our prospects and dreams are similar to those of our Italian peers."

For China Daily

(China Daily European Weekly 11/01/2013 page22)