The Chinese new year is celebrated with great pomp in Prato. 20 Kilometers Northwest of Florence, the Tuscan town houses for several years the first Chinese community of Italy, with her reported residents 13.400 in 2005 (18,000 if we add the stowaways) out of a population of 183.000 people. There are now 1,850 Chinese companies on the some 8,000 companies in the industrial district of textile. The Mayor of Prato, the arrival of migrants from Wenzhou has been "wealth and opportunity." But the Chinese of Prato are beginning to suffer from competition from European manufacturers who have relocated to their country of origin. It is one of the paradoxes of the Italian textile and clothing industry, still second annual global supplier after China, with 41.3 billion euros of turnover.
Despite the alarmist statements on global competitiveness deficit Italian fashion chain remains spearheaded the "made in Italy". And experts see good reasons to hope. "It's true, there is a structural problem of the Italian economy which is both related to the specialization of our industrial production, the destination of our exports and our internal cost structure," said the Chief Economist with Banca Intesa, Gregorio De Felice. The inadequate growth of the Italy is in large part due to its deficit of competitiveness. For Felice Gregorio, it is undeniable that the country has lost market share at the international level for ten years, since he represented last year 2.7 of the world trade against 4.6 per cent in 1995. If it had maintained its level of 1995, Italian GDP annual average growth was almost double that actually met (1.3 per year against an average 2.2 European). But this weakness cannot be attributed solely to the Government of Silvio Berlusconi.
Difficulties in exporting
The share of exports of the Italy to China (3.5) has remained stable over the past ten years, while that of the Germany rose from 5 to 8 and that of the France from 5 to slightly more than 6. These countries have yet also was penalized by the euro strong. Why this differential The reason is simple: areas of productions on low value-added textile-clothing, furniture ... particularly exposed to competition from emerging low-cost labour, are still in Italy 44 of the total exports, against an average of 30 at the European level. However, the relative share of high technology in Italian exports (13) has remained identical to that of the end of the 1980s, while it increased from 14 to 21 in France and from 15 to 21 in Germany. Unlike its two larger neighbors, the Italy did not "technological leap" significant in the 1990s.
How to address the innovation gap "The Italy should primarily strengthen its industrial apparatus, which already has a points of excellence." "It would be much easier to invest more in innovation if it had a less fragmented productive system and the slightly larger companies". The four areas of excellence of the Italy are well known: the mechanical, agri-food, furniture and textile-clothing. Export difficulties are related to the evolution of the cost of labour per unit of product which has strongly increased in the peninsula. In fact, the Italy is the only European country with the Portugal which has experienced a decrease in productivity because of the persistent weight of bureaucracy, lack of technological innovation and the higher cost of energy. While export prices fell in France and Germany, they have strongly increased Italy, which explains the difficulties of the country to export.
The production system was used to have, every three or four years, a devaluation that would guarantee the competitiveness. "Since the launch of the euro, is possible." But the productive system is react and adapt slowly to the new context. "This is why I do not share the thesis of decline", said Gregorio De Felice. For him, the macroeconomic data are less and less significant in the new context of globalization. Some companies, like Luxottica, Tod's (Diego Della Valle), manufacturer of braking systems Brembo, Loro Piana, Diesel, the leader of the high-end Zegna male clothing, have made enormous efforts to conquer new shares in the international market. Would "If there was decline, all go wrong." "But the results are very disparate". While the district of Prato encounters serious difficulties, but of Biella resists well to Asian competition and Zegna has opened a chain of 50 stores in China, where he sold neckties to $ 200. Just as Merloni relocated part of its production of household appliances in Poland and Russia, Zegna and world leader of the Luxottica eyewear have taken significant positions in the Middle Kingdom. The large industry is not at rest. For the first time in four years, the first industrial group of the country, Fiat, returned profits in 2005, with a positive net result of EUR 1.4 billion. As its auto wing, Fiat Auto, it has, after a severe descent to the underworld, released its first operating profit quarterly (EUR 21 million) late 2005, after seventeen quarters of losses. Not to mention the areas of packaging, where the Italy holds 25 of the world market, tiles or the rotary printing press, with business leaders such as Cerutti.
Renovate the industrial fabric
"Unlike the United Kingdom, who was able to capitalize on the financial city centre and its universal language, the Italy cannot abandon the industry", said Gregorio De Felice. Today, as property right that left are aware of the urgent need to assist the industrial fabric to renovate. The industrial district model still has potential. In its programme for legislative elections, held Sunday and Monday, Silvio Berlusconi's centre-right coalition has provided a specific Bill to give legal personality to 299 industrial districts and existing to allow Member companies to pay their taxes collectively. For its part, the center-left wants to promote the concentration of business and innovation through tax incentives. Among the districts that are resistant to international competition are those of Beluno (eyewear) and Bologna (machines for packaging), manufacturers of footwear (Brenta, Vigevano...) while still suffering from the rise of Asian manufacturers.
Focus on services
"The delay of the liberalisations remains the fundamental problem of the Italian economy," said Francesco Giavazzi, Bocconi Milan University economist. "In Italy, services weigh less in the added value of the economy France, Germany, or England.". However, there is more growth in the industry. To start to grow, the country must rely on the services. "But if they are protected and closed to competition, it blocks the growth," said the Professor, who is a possible Minister of economy for the centre-left victory. According to the latest figures from the OECD, services account for 63.9 of GDP in Italy, 67.4 in France, 67.1 per cent in the United Kingdom and 68.5 in the United States. "In contrast, the share of the manufacturing industry (30.5 of GDP) remains too important." "Of course, companies like Ferrari and Armani are still competitive, but there is a part of the industry which will disappear with the competition from China". For him, the two priorities in economic matters are therefore to liberalise services in the areas of energy and transport, but also to reduce barriers to entry into the professional services (notaries, lawyers, accountants...), and to continue the reform of the labour market. "In terms of reform, the Berlusconi Government did not much to open up the services sector to competition", believes Francesco Giavazzi.
However, it considers that the reform on the flexibility of labour (the 2003 Biagi Law) has had a positive impact on the market of the employment, the reduction of the black work related to the regularization of migrant workers. "The centre-left would be wrong to back flexibility." "What terrifies most Italian companies, it is impossible to dismiss workers recruited indeterminate", considers the Bocconi Economist, on the basis of the merits of the "Danish model".
For Francesco Giavazzi, the shortage of "national champions" is not necessarily a major handicap for Italian capitalism. "The speech on national champions is a disaster." The country is the best in Europe is England, which has none. "The fact that London Electricity owned EDF has no importance to the English, which interested is that the competition would lower prices."