China in Italy: Kick Start

The main responsibility for Yan "Klara" Haimei, Qianjiang's chief in Pesaro, is to watch Benelli's balance sheet, leaving design and production in the hands of the Italians. Both the Chinese and Italian managers emphasize that the aim is to boost the Italian brand while improving the performance of the smaller and simpler Chinese scooters. It's a question of knowing your markets. The 500cc motorcycles popular with European and American riders are not even permitted on Chinese roads. Says Marconi: "In China they've produced the same scooter for the past 20 years." Marconi says the equation is not mysterious: Italy has the know-how and style and China has low labor costs — and, increasingly, ready capital. "This is the reality. If we don't produce with the Chinese, we'll eventually lose the technology too."

Downstairs on the shop floor, where 18 motorcycles are produced a day, there is not a single visible sign that Benelli is Chinese-owned. With his handlebar moustache and thick sideburns, veteran worker Righi believes Qianjiang has brought a real change for the better. "We've seen more investment and new projects in the past 18 months than we'd seen in the past decade," he says. On the local level, this might be the most meaningful effect of the Benelli-Qianjiang model: the hundred or so Italian employees at the plant see the Chinese parent as the savior, not the usurper, of their jobs. "We would have closed down without them. They were the only ones with a serious plan," says Stefano Michelotti, a Benelli engineer. "We have to begin to think globally — Italian companies have had a tendency to fossilize."

Cash-rich Chinese enterprises have garnered attention for their mega-investments in Africa and other parts of the developing world. In Italy, Chinese investment has been most noteworthy in the textile business and in the purchase of bars and restaurants in northern Italian cities. Increasingly, Chinese investors are looking at all sectors of the European economy, including high-tech and heavy manufacturing. Thomas Rosenthal of the Italy-China Foundation says there are now 27 Chinese companies doing business in Italy, and that China has jumped from the 33rd largest foreign investor in Italy in 2004 to 10th in 2006.

The China-Italy storyline, though, is not just happy economics. Social integration, for example, has not always gone smoothly. In April, street violence erupted among Chinese immigrants in Milan complaining that they were singled out for parking tickets. The clashes left a dozen police officers and several Chinese residents injured. According to the latest figures from the National Statistics Institute, the number of Chinese residents in Italy jumped from 47,000 in 2001 to 112,000 in 2005. Claudio Morganti, who heads a local branch of the right-wing Northern League party, wrote on a blog: "The reality of Chinese immigration, with its apparently tranquil and quiet exterior and cover of legal business, hides a world of mafia, racketeering, prostitution and black markets."

Giuseppe Berta, a professor of economic history at Milan's Bocconi University, does not endorse such views. Nevertheless, he says that the clashes in Milan were a reminder that the growing economic role of an immigrant group almost inevitably brings disruptions. Even so, these disruptions have been relatively minor since Chinese investment in Italy has, so far at least, focused on small, decentralized industries. "The Chinese presence is growing, but it's a penetration from below," says Berta.

Not all international investment works immediately, of course, regardless of where it originates. Italian automaker Fiat, for example, failed in its initial attempts to build cars in India because of India's protectionist policies and its own ignorance of the market. Now, however, Fiat has a partnership with Tata Motors that will turn out cars geared to local Indian needs. "There are great opportunities in both directions," says Berta, "but the way in must be soft. Europeans can't be aggressive in Asia. And Asians can't be aggressive in Europe."

One thing is clear: learning your partner's language always helps. Qianjiang boss Yan can now get by in Italian and engineer Michelotti often throws a few Mandarin phrases into conversation with his colleagues in Wenling. He's also begun to pick up certain words they keep repeating. Chinese Professor Brezzi explains the difference between "we should" (yinggai) and "we must" (yao). "I always hear 'yao,'" says Michelotti. That's a reminder of who's in charge.