China and the World

Italy for sale

Are the Chinese the new merchants of Venice?

Chinese Premier Li Keqiang shakes hands with Italian Prime Minister Matteo Renzi during a signing ceremony at the Great Hall of the People in Beijing

Ciao: Li signs deals with Renzi

In the first century AD, the Roman commentator Pliny the Elder complained bitterly about the gold flowing east to pay for silk from the Seres (silk people). At the other end of the Silk Road, the Seres were similarly aware of the Romans, believing them to live in a fabled land they called the Da Qin, or Great Qin, after their own country’s founding dynasty.

Historians are divided over whether these classical civilisations – found at either end of the famous trade route – ever had any direct contact with one other. One envoy from the Han Empire called Gan Ying definitely tried to get to Rome in the first century BC. But having reached Mesopotamia (modern day Iraq), the Parthians misled him in a bid to maintain their control over that section of the trail.

But modern day trade relations between China and Italy are blossoming, with the Italians a lot more assiduous in courting the Chinese this time around (in contrast, Pliny thought the Han must have been a “savage nation”).

Much of that is born from necessity. China’s Time Weekly ran a feature recently examining how cash-strapped Italians have been reaching out to their Chinese “saviours” by turning to a website called Vendereaicinesi.it, which translates as “sell it to the Chinese”.

The goods on sale are varied: the magazine reports at least 18,000 adverts on the site including one from an ice cream parlour in Tuscany, another from a denim workshop in Cremona and even an offer to sell a Ferrari 458.

Typical vendors are Clothilde Narzisi and Luca Solima, who run a cafe overlooking Milan Cathedral. They have been forced to sell, blaming tough conditions and high taxes. Narzisi tells Time Weekly that “Chinese people are the only potential buyers”.

Most of the adverts are targeted at Italy’s 321,000-strong Chinese community. According to the Italian trade union body, Confartigianato, there are now 66,050 Chinese firms in Italy and their number has climbed 6% from 2013. The majority of these concerns are engaged in trade (24,050) and manufacturing (18,200), although there are now 13,700 Chinese-run bars, hotels and restaurants – a welcome development for mainland tourists who have had their fill of pasta and fancy Peking Duck instead.

Property agents are also hoping Chinese buyers will be encouraged to come to Italy by the 25% drop in house prices since 2008.

One agent from Milan tells Time Weekly, “I’ve sold several villas and a few apartment buildings to the Chinese since June. Some owners are now asking me to take the initiative and find more Chinese buyers because they find them very straightforward to deal with.”

Italian multinationals have become a favoured target for Chinese investment too. Time Weekly cites Bloomberg data, which shows that Italy is China’s second largest investment destination in Europe in 2014, with cross-border M&A volume of $3.43 billion.

Deals include Shanghai Electric’s purchase of a 40% stake in Ansaldo Energy, State Grid’s acquisition of a 35% stake in energy networks company CDPReti and Bright Food’s takeover of olive oil maker Salov.

The State Administration of Foreign Exchange, the forex regulator and manager of some of China’s currency reserves, has also been increasing its exposure in Italy, according to the Financial Times. Its activities include the purchase of a minority stake in the investment bank Mediobanca, and 2% stakes in each of Italy’s five largest firms – Fiat, Telecom Italia, Eni, Enel and Prysmian.

Trade relations were recently given a boost by Premier Li Keqiang’s visit, which culminated in the signing of €8 billion ($10 billion) of deals. But Italian leader Matteo Renzi describes them as just the antipasti. “We must bring more China to Italy and take more Italy to China,” he says.

The Han dynasty envoy Gan Ying would have agreed that there should be more trade with Italy. In the chronicle, Hou Hanshou, Gan said of the Roman Empire: “It is from this country that all the various marvellous and rare objects of foreign states come.”


© ChinTell Ltd. All rights reserved.

Exclusively sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.