As Miconex 2018, the reference international trade show in the instrument, automation and control segments, scheduled for October, draws closer, it provides the occasion for some thoughts on the relationship with China
by Valerio Alessandroni
The impressive urbanization and the growth in purchasing power of the middle class are the bases of the constant increase in Chinese domestic consumption: This is not only the case in so-called first-tier cities (Beijing, Shanghai and Guangzhou) but also in the second- and third-tier cities (20 metropolises, each with 7-10 million inhabitants), as well as numerous other urban areas with 3-5 million inhabitants. Besides this, the increase in income and the birth of new trends in culture and fashion inspired by the Western model determine new consumption patterns on the Chinese market. Depending on the sector, such models may be inspired by status symbols (luxury goods, wines and so on, with high image value) and by strong attention for value-for-money (rationalization of purchase choices using e-commerce); we are therefore considering specific factors in determined segments, particularly as concerns durable gods (product/process quality, after sales service and so on). The best part of foreign companies makes higher profits in China than in the rest of the world. The health sector, the food industry, clean technologies and mobility infrastructures, as well as retail and logistics, are the segments which are likely to show the highest growth rates.
Today China is the world’s first market for the automotive industry and all the greatest manufacturers are present on this market with local productions. Machinery and chemicals, especially in the higher added value domains, will still show signs of growth.
Numerous cases of cooperation between our country and China
From logistics to mechanics, there are more and more virtuous cases of cooperation between Italian and Chinese companies. From the year 2000 until now, over 250 large Chinese and Hing Kong groups invested in our country. In the vast majority of cases (90%) he Chinese investor has control; 70% is made up of greenfield investments, 30% by acquisitions (60% from Italians and 40% from previous foreign investors). In order to work, this integration between Italian and Chinese companies must be cultural, even more than corporate. There are many success stories which followed this path, and even more opportunities for Italian companies wishing to follow it, thanks to operators capable of facilitating the relationship between two worlds which are bound to be increasingly in contact during the forthcoming years. On the other hand, interactions between local and Chinese companies are not always easy, in a historical phase where China is engaging in a new season of globalization and passing from quantity to quality. The transition it is tackling is indeed deep, and it will lad it to become and advanced company based primarily on consumption, services and innovation. A crucial transformation process to relaunch the Chinese industrial sector, and which is likely to be stable and continuous with a long-lasting presidency. Today China still offers many opportunities to Italian investors, but with respect to the past it demands a greater knowledge of local and industrial dynamics; particularly, awareness of the constant growth of consumption and of the increase in technological level, as foreseen by the Made in China 2025 plan. For Italian companies, there are obstacles as well as opportunities. Cooperation is the milestone to tackle them and gradually overcome them. However, on its own it is not enough, companies must also expect investments and perseverance in a medium-long term outlook. It often takes time to build a partnership based on trust, and to understand the different ways of doing business.
The New Silk Route connecting various continents
Finally, great opportunities are ahead for countries on the Mediterranean on account of the new maritime Silk Route which will connect Asia, Africa, Europe and the East coast of North America. “Belt and Road”: this is a great growth opportunity for the economic systems of the countries concerned and for the single companies; only those who will move on time and with a correct approach will be able to obtain concrete benefits. The project goes far beyond a mere convenience comparison among different transportation solutions on the Europe-Asia route. “Belt and Road” is an industrial policy initiative destined to change significantly the state of trade exchanges, and, as such, it will overturn competitive advantage positions which currently seem consolidated. The “Belt and Road initiative” is therefor not just the revamping of the historical Silk Route, that is, the railway which connects Europe and Asia passing through the territories of the former Soviet Union. There is also a Southern Belt which goes through India, Pakistan, Iran and Turkey, destined to open a doorway towards South-East Asia.
Finally, there is the new maritime 21st century Silk Route which will connect Asia, Africa, Europe and the East Coast of North America.
An opportunity to be present directly
In order to take advantage of the opportunities provided by the Chinese market it is necessary to be present on the spot. This allows, first and foremost, to: pick up the emerging trends and peculiarities of Chinese demand, to shorten the distance between producers and consumers in logistic and commercial terms, to monitor constantly both the normative evolution and the administration policies enacted by province and town authorities, which on account of the continent size of the country-market may be subject to considerable variations. Taking part in Miconex, the reference international show in the instrument, automation and control industry, is the ideal solution for companies wishing to approach the great Chinese market. Organized by CIS (China Instrument and Control Society, the Chinese association of instrument companies), the 29th edition of Miconex will be held in Beijing from the 24th to the 27th of October. In its role as Italian referent for CIS, G.I.S.I. is organizing a collective stand for associates wishing to take part.