IAI Working Papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI |Foreign direct investments (FDI) |Italy FDI from Chinaandotheremergingeconomies. makers on how tomaximisethe benefits from rising flows of in thispaper gives risetoanumber of suggestions for policy main implications of thisphenomenon. Evidence presented by Chinesecompanies inthecountry andhelp summarise the detailed case studies, which exemplify the strategies followed Italian caseissupported bythepresentation of anumber of both traditional andadvanced industries. Theanalysis of the also because it isseenasavaluable source of strategic assetsin its strategic position asa gateway tothe Mediterranean, but for Chineseinvestors notonly because of its largemarket and specific features. Italy isconsidered an attractive destination advanced countries, while also showing some country- investments inItaly present features similar tothoseinother of Chinesemultinational enterprises (MNEs)inItaly. Chinese This paper analyses foreign directinvestment (FDI) activities Abstract by Marco Sanfilippo Risks andGraspingOpportunities Chinese Investments inItaly: Facing keywords IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI 2 policymakers, mediaandtheresearch community inunderstandingthedynamics resources inAfrica or Latin America, thereseemstobe even more interest among Although alot could besaidabout strategic investments togetaccessnatural international integration of thecountry. owned enterprises, thus reflecting also theGovernment’s strategic approach tothe investment andthe factthat thelargestshareof its FDI canbeattributed tostate- growth, but for otherreasons aswell, including thegeographic spreadof Chinese to invest abroad. Thecaseof Chinaisof particular interest notonly for thisrapid the tenth five-year plan in2001, whose final purpose was to foster domestic actors the “Going Out” strategy, officially implemented bytheChinese Government with aspx?publicationid=588. * 2 1 Investment Report, major destinations for foreign directinvestment (FDI). According tothelastWorld seeing some of the largerand more dynamic middle-income countries become of the most recent features of the globalisation process, in which we are now The risingrole of emerging-market multinational enterprises (EMNEs)isone Introduction by Marco Sanfilippo* Facing Risks andGraspingOpportunities Chinese Investments inItaly: Chinese Investments inItaly . seminar on “Investimenti cinesi in Italia. Opportunità e rischi”, Rome, 18 November 2014. November 18 Rome, erischi”, Opportunità Italia. in cinesi on “Investimenti seminar below theUSandJapan). and, inless thanadecade,it hasbecome thethirdlargestinvestor worldwide (just example of such trends,since its outflow was almost insignificant intheearly 2000s Needless tosay, thePeople’s Republic of Chinaisprobably themostrelevant top 10countries for thesizeof theirFDI. global FDI, but some of theseemergingmarket countries arenow listedamong the University of Antwerp. E-mail: [email protected]. Paper prepared for the Istituto Affari Internazionali (IAI), November 2014. Presented at the at Presented 2014. November (IAI), Internazionali Affari Istituto for the prepared Paper Marco Sanfilippo is T Sanfilippo Marco UNC Ibidem. AD, TAD, World Investment Report 2013 World Report Investment enure T enure 1 notonly do EMNEsasagroup already represent one-third of rack Docent at the Institute of Development Policy and Management, Management, and Policy of Development Institute at the Docent rack 2 Thissuddenriseof ChineseFDI follows thelaunch of , http://unctad.org/en/pages/PublicationWebflyer. , IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI 3 makers on how tomaximise thebenefits from rising flows of FDI from Chinaand the existingevidence, with theobjective of deriving useful suggestions topolicy section isdevoted tounderstandingthekey implications that can bedrawn from country andhelp summarisethemain implications of thisphenomenon. Thelast view, well exemplify the mainstrategies followed byChinesecompanies inthe supported by thepresentation of anumber of detailed casestudies, which, inour the investments directedtoadvanced countries. Theanalysis of theItalian caseis Ministry of Commerce seriously underestimate thereal destination of some of from a range of different sources, given that official data from theChinese the European strategies of Chinesecompanies. Thesestatistics have beencollected the global distribution, thepaper presents some statistics on therole of Italy in main issues related totheriseof FDI from China,including theirmotivations and FDI inadvanced economies and,inparticular, inEurope. After introducing the This paper isanattempt toput thecaseof Italy inthebroader context of Chinese and thewhite goods sector tomachineryandluxury goods, for deeperanalysis. possible toidentify some interesting cases,spanningfrom the integration during thepost-acquisition phase.Thisproblem notwithstanding, it is underperformed, mainly because of problems related tocultural andmanagerial These studies also noted that some of the more promising takeovers have so far concentrated inthenorth of thecountry andgrowing sincethemid-2000s. in Italy have emphasised that theymostly take theform of small-sized investments, European entry point for Chinesefirms.Existinganalyses on Chineseinvestments investors, sofarItaly hasbeenseenasone of thepreferred destinations asa Even if it cannot be considered as one of the most attractive countries for foreign more advanced resources andassets. Italy hasincreasingly beentargeted bylarge-scale Chineseinvestors looking for since thelate ’80s.In more recent years, following theabove-mentioned trends, one of themostsignificant destinations of Chinesemigrants andentrepreneurs long-standing economic and political relations. As amatter of fact,Italy has been based on traditional manufacturing sectors, andbecause thetwo countries have given that thecountry shareswith China asimilar productive structure, mainly a good exemplification of thesetrends,but it is also acase of interest in its own, Within thiscontext, thecaseof Italy –which isthefocus of thispaper –isnotonly have beenblocked due todomestic protectionism. to buy strategic assets(mainly inthetelecommunications andtheoil industry) Portugal (telecommunications andenergyassets).However, some otherattempts of financially constrained countries such asinGreece(port infrastructures) and the financial crisis, which enabled ChineseMNEstopick up some key public assets interest of Chineseinvestors inadvanced countries hasintensified inthewake of upgrade towards more sophisticated production within theglobal value chains.The how, andbrands,which are particularly needed in Chinatoenable thecountry to need to get access to a range of strategic resources, including technologies, know- that mostof theinvestments directedtoadvanced economies aremotivated bythe of investments from ChineseMNEsindeveloped countries. Themainreason is Chinese Investments inItaly IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI 4 Source: Author’s elaborations on UNC T axis) Figure 1 | and Japan. worldwide, with ashareof roughly 6percent of global outflow, justbehindtheUS China hasalready completed its transition and,today, it isamong thetop-investors than intheprevious year (Figure 1).According tothelatest data from UNCT financial crisis,with flows amounting to84.2 billion dollars in2012,13percent more Since then,FDI from Chinahasbeenrapidly increasing,including during the officially implemented with thetenth five-year planin2001. have become increasingly debated topics inthewake of the“Going Global” policies, China’s foreign directinvestments andtheglobalisation of domestic multinationals 1. ChineseFDI: background other emergingeconomies. Chinese Investments inItaly 3 Ibidem. T 3 rend in Chinese FDI, 1978-2012 ($ mln left axis; % of world’s total right AD FDI Statistics. AD, IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI 5 which hasonly beenrelaxed inthelastfew years. technology, productive capacities, brands,marketing andotherintangible assets. that ChineseMNEsinvesting inadvanced markets aremostly insearch of new As amatter of fact,thereisevidencebasedon casestudies andad-hocsurveys is theopportunity toaccessstrategic assetstobuild up global competitiveness. home country-based. Therefore, among theprevailing pressurestoinvest abroad competitive advantages of ChineseMNEshave beenfound tobenetwork- and investors. by theexistingliterature asamajor source of comparative advantage for Chinese provided to investors in industries and countries of interest has been identified of the government, including in particular the overall guidance and support (December 2013), p. 312-325. p. 2013), (December Review Economic in China Strategies?”, Internationalisation their in Differ Enterprises 8 7 6 5 4 exploiting ones, especially when FDI isdirectedtomore developed countries. Chinese investments, with asset-exploring motivations often prevailing overasset- Another issue raised in the literature is the unconventional pattern of many the institutional background andtherole of theState among theothers. of internationalisation of Chinese multinational enterprises, their motivations, A largestrandof research hasemergedinrecent years toinvestigate thepattern Chinese Investments inItaly 10 9 38-53. & World China in China”, in Economy Reform Structural the and enterprises considering that thelargestshareof FDI canstill beattributed tostate-owned in shaping theinternationalisation strategies of domestic firmseither directly, of thesefeatures iscertainly theoverwhelming role of theChineseGovernment Some specific features of ChineseFDI have beenthesubject of awideliterature. One extension intraditional approaches totheinternationalisation of firms. pattern, different from traditional investor countries, supporting the need for an most of thesestudies sharesimilar conclusions inthat ChineseFDI shows aunique International Journal of Management Reviews of Management Journal International in Investment of competitive advantages. more traditional motivations, including profit-maximisation and the exploitation private companies aremore likely toundertake internationalisation following of ChineseFDI areattributed totheactivities of state-owned enterprises, while Journal of International Business Studies Business of International Journal T p. 381-410. p.

Management and Organizational Review and Management Organizational in Extension?”, heoretical

John Child and Suzana B Suzana and Child John Ligang Song, Jidong Yang and Yongsheng Zhang, “State-owned Enterprises’ Outward Investment Investment Outward Enterprises’ Jidong Song, YangLigang “State-owned Yongsheng and Zhang, Ping Deng, “ Deng, Ping Update”, Working an on International OECD in Papers Policy: Investment “China Ken Davies, Alessia Amighini, Roberta Rabellotti and Marco Sanfilippo, “Do Chinese State-Owned and Private Private and State-Owned Chinese “Do Sanfilippo, Marco and Rabellotti Roberta Amighini, Alessia Peter J.Peter B Peter J.Peter B uckley et al., “ al., et uckley , No. 2013/1 (2013), http://dx.doi.org/10.1787/5k469l1hmvbt-en., No. (2013), 2013/1 7 uckley et al., “ al., et uckley Recent empirical evidencehasshown that mostof thespecific features 5 or indirectly, through strong regulation of theinvestment policies, T he Internationalization of Chinese Firms: A Critical Review and Future Research”, Future and Review ACritical Firms: of Chinese he Internationalization T T he Determinants of Chinese Outward Foreign Direct Investment”, in in Investment”, Direct Foreign Outward of Chinese he Determinants he Determinants of Chinese Outward Foreign Direct Investment”, cit.; cit.; Investment”, Direct Foreign Outward of Chinese he Determinants . Rodrigues, “ . Rodrigues, 8 T , Vol. 499-518. No. p. 4(July 38, 2007), he Internationalization of Chinese Firms: A Case for ACase Firms: of Chinese he Internationalization , Vol. 14, No. 4 (December 2012), p. 408-427. p. 2012), , Vol. 14, No. 4(December 6 Such extensive involvement , Vol. 19, No. 4(July-August p. 2011), , Vol. 1, No. 3 (November 2005), 2005), No., Vol. 3(November 1, , Vol. 27 4 Overall, 9 The 10 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI 6 No.1/2 (2013), p. 190-208. p. (2013), No.1/2 Innovation of Learning, Technological and Journal Development International in divides”, organisational and cultural M&A: overcoming overseas “Chinese Mucelli, Attilio Alon and Ilan expertise inhandling FDI asthemainchallenge for future ventures abroad. from Chinesecompanies, 82percent of themidentified thelack of management performance andtheirglobalisation strategies. In arecent survey of 110executives experience isoften pointed toasone of themainconstraints on Chinesefirms’ In thisrespect,theshortage of domestic “talents” with relevant international raise capital andtoescape aless favourable domestic environment. lack of experience, which contrasts with theirneedtorapidly internationalise to wp2009-041.pdf. WorkingMerit Papers 1-29, p. http://www.nbr.org/publications/nbranalysis/pdf/vol16no3.pdf. 2005), 13 12 11 of World Journal in Business T Firms do Chinese “Why Deng, Ping FDI, a short methodological note is necessary. Before gettinginto thedescription of thegeographic andsectoral trends of Chinese 1.1 Geographic distribution of Chinese FDI markets. economic aspects(including corporate governance regulations) of thehostcountry only limited knowledge of western-style managerial practices andthesocial and little or noprior experience, lackinginternal management capabilities andwith As latecomers ininternational markets, ChineseMNEsoften invest abroad with the two companies werehuge. not prove successful and finally broke up because the cultural differences between for instance,thejoint venture betweenTCLandtheFrench company Alcatel did manage large-scale operations abroad, including some complicated M&As. Thus, with westerncompanies have led observers todoubt theirability tosuccessfully international experience of many Chinesefirmsandtheircultural differences firms intheirinternational operations. In some cases,thelack of substantial prior of ChineseMNEs,less hasbeensaidsofaron thedifficulties experienced bymany While much emphasis hasbeengiven tosome of themore noteworthy operations Chinese Investments inItaly 16 15 14 Investments International Chinese (eds.), Gugler Philippe and Fetscherin Marc Alon, Motorbike Ilan Arena”, in acquisition management of theItalian motorbike company Benelli byQJ the internationalisation process of thecarmaker CheryinEurope. economistinsights.com/business-strategy/analysis/brave-new-world.

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Friedrich Wu, “ Wu, Friedrich Ying Zhang and Sergey Filippov, “Internationalization of Chinese Firms in Europe”, UNU- in in Firms of Chinese Filippov, “Internationalization Sergey and Zhang Ying Francesca Spigarelli, Ilan Alon and William Wei, “ William Alon and Ilan Spigarelli, Francesca Is China Buying the World? Buying China Is Nolan, Peter his short methodological note is based on Alessia Amighini et al., “Investigating Chinese Chinese “Investigating al., et Amighini on Alessia based note is methodological short his A brave new world. The climate M&A for The Chinese abroad A brave world. new 14 Private firms,more thanstate-owned enterprises, suffer from thisrelative , B asingstoke and New York, Palgrave Macmillan, 2012, p. 355-375; Francesca Spigarelli, Spigarelli, 355-375; p. Francesca 2012, York, New and Macmillan, asingstoke Palgrave T NBR Analysis NBR in China”, of Corporate he Globalization , No. 2009-041 (2009), http://www.merit.unu.edu/publications/wppdf/2009/ (2009), , No. 2009-041 , Vol. 44, No. 4 (January 2009), p. 74-84. p. 2009), No., Vol. 4(January 44, end to Acquire Strategic Assets in International Expansion?”, Expansion?”, International in Assets Strategic toend Acquire 11 Similar difficulties canbe foundinthepost- , Cambridge and Malden, Polity Press, 2012. Press, Polity Malden, and , Cambridge B enelli and QJ Compete in the International International the in Compete QJ and enelli 16 In China,there are two main , March 2010, http://www. 2010, , March , Vol. 16, No. 3 (December , Vol. No. 16, 3(December 13 , Vol. 6, 12 15 or in IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI 7 (February 2011), p. 43-65. p. 2011), (February B Sector Private oecdinvestmentpolicyreviews-china2008encouragingresponsiblebusinessconduct.htm. Policy Reviews and theVirgin Islands, with thefinal location generally undisclosed. 20 19 18 17 No. 6(November-December 2014),Vol. 44-63. p. 22, Help?”, Data Firm-level & World China in How Can Economy Investments: Direct Foreign Outward • • • • number of concerns. by MOFCOM arebasedon officially approved investments, but are affected bya do not allow either sectoral or geographic disaggregation. FDI data provided international investment position. Theyarepublished annually andgenerally data areaggregate Balance-of-Payments data, which provide apicture of China’s Commerce (MOFCOM) –that collect FDI data according todifferent criteria. SAFE agencies –theState Administration of Foreign Exchange (SAFE) andtheMinistryof Chinese Investments inItaly 22 21 evidence of increasinginvestments intheseareas. represent only asmall fraction of thetotal, aclaimthat conflicts with mounting official data, theshares of Africa, Europe and North America, taken together, would by MOFCOM as one that can entirely be trusted. As a matter of fact, following the above, it ishardtoconsider thegeographic distribution of ChineseFDI provided publicly available from MOFCOM’s Statistical B MOFCOM’s Statistical from available publicly 2011, destination countries andregions (Figure 2).According totheofficial data, by statistics canbeeasily checked by aquick look at thedistribution of thedata by How such concerns may, infact,influence thereliability of Chinese official

MOFCOM, MOFCOM,

OECD, “China 2008: Encouraging Responsible B Responsible Encouraging 2008: OECD, “China At redaction, 2011 was still the latest year for which official statistics on Chinese FDI were were FDI Chinese on statistics official for which year latest the still was 2011 At redaction, OECD, “China 2008: Encouraging Responsible B Responsible Encouraging 2008: OECD, “China Ken Davies, “China Investment Policy: an Update”, an cit. Policy: Investment “China Ken Davies, Dylan Sutherland and Lutao Ning, “Exploring ‘Onward-Journey’ ODI Strategies in China’s China’s in ODI Strategies ‘Onward-Journey’ Ning, Lutao “Exploring and Sutherland Dylan countries. establishment of special purposeentities, andreinvesting inChinaor inthird tripping, i.e.channelingof largeinvestment outflows through taxhavens viathe Fourth, MOFCOM data arealso strongly affected bythepractice of round- are treated differently depending on thespecific regional regulations Third, underreporting iscommon practice, especially among private firmsthat institutions, whose approval procedure wasnotunderthecontrol of MOFCOM. Second, at least for theperiod 2002-2005, theydo notinclude FDI from financial by thissource. First, re-invested earnings and intra-company loans are not officially recorded often escape formal approvals. some transit locations with respecttothefinal destinations. the firstdestination of theirinvestments, which results inthe overestimation of 21 73.6percent of total ChineseFDI went toHong Kong, theCayman Islands, China Commerce Yearbook Commerce China 2012 , November 2008, http://www.oecd.org/investment/investmentfordevelopment/, November 2008, Journal of Chinese Economic and Business Studies Economic and of Chinese Business Journal in usinesses”, 20 Thisistheresult of acommon practice among firmstoregister only 17 19 , B ulletin. eijing, China Commerce and T and Commerce eijing, China OECD Investment Investment OECD in Conduct”, usiness usiness Conduct”, cit. Conduct”, usiness rade Press, 2012. Press, rade , Vol. 9, No. 1 22 Given the 18 andcan , IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI 8 research/projects/china-global-investment-tracker-interactive-map. Focus on Competition”, Backgrounder Focus in the United States, CanadaandtheUKattract the bulk of Chineseflows. Hence, of investments, but only astransit locations, OECD countries, such asAustralia, financial centers (andespecially Hong Kong) are notcounted asthefinal targets of Chineseinvestments. Even more interestingly, data show also that when percent of total inthecaseof Heritage, reflecting awidergeographic distribution where theyrepresent 85percent of thetotal, while theyaccount for roughly 60 worldwide, wecanseethat theyarequite concentrated inthecaseof MOFCOM, published bytheHeritage Foundation, Chinese FDI, thispaper reports information collected byanewdatabase recently centers. In theend,for thesake of providing aglobal view on thedistribution of the destination country, thus bypassingintermediate ones, including thefinancial have theinvaluable advantage of drawing theinformation directly at thelevel of reliable sources of information thenarethosecollecting firm-level data, which the latter areoften outdated andnotstandardisedacross different countries. More host countries’ statistics (such as national banks or statistical offices); however, even In order to disclose the real distribution of Chinese FDI one should better rely on Source: Author’s elaboration on MOFCOM, China Commerce Yearbook 2012,cit. Figure 2|Geographic distribution of ChineseFDI, stock2011 Chinese Investments inItaly 24 23 one another,makingcomparisons less risky. for inclusion inthedatabase, aggregate flows from thetwo sources aresimilar to latter data do not include a large number of deals, given the high threshold used distribution of ChineseFDI flows from MOFCOM with the Heritage data. Even ifthe more than 100 million dollars) at thefirm level. T

China Global Investment Tracker Investment Global China see: dataset of the For adescription On the methodology, see Derek Scissors, “China’s Global Investment Rises: T Rises: Investment Global “China’s Scissors, Derek see methodology, the On , No. 2757 (8 January 2013), http://herit.ag/18kFDRn. 2013), , No. 2757 (8 January 23 which records transactions (eachworth 24 If welook at thetop 10destinations able 1compares thegeographic , http://www.heritage.org/ , he U.S. Should he U.S. IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI 9 similarities, but also clear differences, betweenthetwo areas. TheUShave been investors isnowadays intheUnited States andinEurope. However, therearesome their natural resources, thebulk of thestrategic-asset seekingactivity byChinese Apart from thecasesof Australia andCanada, which have mostly beentargeted for markets. target for many Chinesefirmsinsearch of advanced assets andmore sophisticated its production structure. Hence, developed countries have become necessarily a transformation of theChinese economy is,infact,linked tothe upgrading of worldwide. Thereasons arenothardtounderstand.Theprocess of structural economies areamong themostattractive destinations for Chineseinvestors As reported intheprevious section, looking beyond official figures, advanced 2. ChineseFDI toadvanced economies: theEuropean inroad Foundation database. Source: Author’s elaboration on MOFCOM, China Commerce Yearbook 2012,cit., andHeritage of firm-level information appear consistent with thepicture provided inT of such findings, other recent attempts to analyse Chineseinvestments bymeans Chinese investment, providing aclearer picture of thisphenomenon. In support using firm-level information allows for the dissection of the real distribution of Chinese Investments inItaly 25 Outward Foreign Direct Investments...”, cit. Investments...”, Direct Foreign Outward Chinese “Investigating al., et Amighini Alessia europe-patterns-impacts-and-policy-issues; Implications Table 1|ChineseFDI bydestination country, stock2011 confirming that thereisabiasinthe official statistics publishedby MOFCOM. Luxembourg United States Canada South Africa Singapore Top 10 Russia Australia Hong Kong MOFCOM top10 Cayman Islands Virgin Islands (US) t China Invests in Europe. Patterns, Impacts, and Policy Impacts, Patterns, in Invests Europe. China Rosen, H. Daniel and Hanemann hilo , New York, Rhodium Group, June 2012, http://rhg.com/reports/china-invests-in- York,, New Group, June 2012, Rhodium % ontotal 85.2 61.6 0.9 0.9 6.9 2.6 2.5 1.0 2.1 5.1 1.7 10 # 8 4 6 9 2 3 5 7 1 Russia Indonesia South Africa Argentina United Kingdom B Top 10 Kazakhstan Australia Canada United States razil Heritage top10 % ontotal 60.2 13.2 13.1 2.6 2.2 2.4 3.8 3.6 6.5 9.5 3.3 able 1, 25

10 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI monitor. Table 2|Failed ChineseFDI transactions intheUS,2003-2013 entertainment andIT in high-tech manufacturing andadvanced services, including financial services, the year 2000.Themostrecent trends show asignificant upsurge of investments (minimum 500,000dollars) projects, for atotal amount of 37.4 billion dollars since Source: Author’s elaboration on Heritage Foundation database. The targeted byalargenumber of Chinesefirmsinabroader spectrum of industries. Chinese Investments inItaly 26 Year 2008 2008 2005 2008 2010 2010 2010 2010 2009 2009 2008 2008 2008 2013 2012 2012 2011 2010 2013 t he monitor is available at the following link: http://rhg.com/interactive/china-investment- link: following at the he monitor available is China Investment Monitor bytheRhodium Group Huawei Bank Development China CNOOC CITIC CIC Huawei Huawei T Sichuan A-Power Minsheng CIC SAFE Great Wall COFCO Aviation Beijing Superior Ansteel Huawei andZTE New China trust engzhong Investor . Size ($mln) 18,000 2,000 5,000 4,230 2,430 1,000 1,300 1,790 600 900 480 490 690 300 100 120 150 150 170 Share (%) 60 43 10 14 17 5 1 Citigroup Unocal 3Com Bear Stearns Energy Group Renewable UC Motorola 2Wire Morgan Stanley TPG Iomega Morgan Stanley Development Steel Sprint Foods Smithfield Beechcraft Hawker B Partner 26 hastracked 820large Finance Energy T Finance Finance Energy T T T Finance Finance T Finance Metals T Agriculture T Energy T echnology echnology echnology echnology echnology ransport ransport ransport Sector Banking T Banking Investment Alternative Autos Investment Banking T T Banking Steel T Aviation Alternative Aviation Subsector elecom elecom elecom elecom 11 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI over thetransfer of strategic technologies toChina. to observe Chineseinvestment proposals rejectedintheUS,due totheconcerns Investment intheUnited States (CFIUS).In thisrespect,it hasnotbeenuncommon giant Lenovo –arestill waiting for final approval from theCommittee on Foreign idUS http://www.reuters.com/article/2014/02/18/us-fisker-wanxiang-sale- 2014, February 18 28 27 successfully completed, IBM’s x86server unit, andelectric carmaker Fisker. But while thelatter hasbeen worth more than 6billion dollars, including thetakeovers of Motorola Mobility, In thefirstquarter of 2014 alone, Chineseinvestors announcedhigh-tech deals Chinese Investments inItaly 30 29 place to invest. See Ken Davies, “China Investment Policy: an Update”, an cit. Policy: Investment “China Ken Davies, See to invest. place somewhat sensitive tothedata adopted. Arecent report bytheRhodium Group Concerning thedestinations, asremarked intheprevious section, information is into more advanced, diversified andcomplex markets, such asthe European ones. in linewith theexistingconcerns over theability of Chinese investors tointegrate them mention thecultural differences andunfamiliarity with local markets. Thisis on themaindifficulties encountered intheir European ventures, 40percent of and know-how) asakey motivation. Interestingly, when firmsareasked toreport one-third of the firms mention the search for advanced assets (such as technologies cases) or toexpandtheirsharesback inChina(47percent). seeking motivation; either togainaccesstheEuropean market (85percent of the firms showed that the large majority of them invest in the continent with a market- A recent survey run by theEuropean Chamber of Commerce in China of 74 Chinese technologies andservices and it ishome towell-recognised international brands. manufacturing production, aswell asastrong specialisation inadvanced safe destination. It has a large market, long experience in a wide range of traditional large number of advantages toChineseinvestors. Overall, it canbeconsidered a the differences in endowments between the different countries. Europe offers a On theotherhand,investments inEurope areclearly more heterogeneous given the caseof thesovereign wealth fund,theChinaInvestment Corporation, CIC). in mostcasestheinvestor isastate-owned or astate-linked enterprise (such asin the economy, especially financial services andtelecommunications, as well asthat reported inT also collects information on the“troubled” investments, i.e.thosethat failed. As archive/10. , B Union European biggest recipients inEurope wereFrance, theUKandGermany (seeFigure 3).While firm-level data) to show that whatever thesource adopted, 2011,thethree up to has put togetheranumber of different sources (including Eurostat, MOFCOM and t

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Chinese Outbound Investment in Investment Outbound the Chinese China, in of Commerce Union Chamber European Indeed, a recent survey of Chinese investors points out that the US is indicated as the hardest hardest the as indicated is US the out that points investors of Chinese survey arecent Indeed, om Hals, “Court clears sale of hybrid car maker Fisker to China’s ”, in Reuters in Wanxiang”, to China’s Fisker maker car of hybrid sale clears “Court om Hals, China Invests in Invests Europe China Rosen, H. Daniel and Hanemann hilo B REA1H1LM20140218. able 2,it isevident that thesedeals areconcentrated inkey sectors of eijing, January 2013, http://www.europeanchamber.com.cn/en/publications- 2013, eijing, January 27 theformer acquisitions –bothproposed bytheelectronics 28 , cit. , TheHeritage Foundation 29 Importantly, almost , 30

12 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI European Integration European T foreign partnersinkey domestic assets. of crisis, as well as by weaker political resistance in some countries to accept new explained by China’s stronger economic andpolitical bargaining power in time for themodernisation of thecontainer terminal (T COSCO’s long-term lease intheGreekport of Piraeusandtherelated investment as energyinPortugal, Poland andMalta, or transportation infrastructure, such as of theopportunity togainaccessnational assets,including local utilities, such countries at theperiphery of thecontinent. Chineseinvestors have taken advantage and attract foreign capital, some big investments have taken place,especially inweak investors. As financially constrained governments were forced to privatise assets Europe provided anattractive opportunity for theentrance of newtypesof Chinese number of investments, although some of themarenoteworthy. Thecrisisin As far as other European countries are concerned, they have received a smaller Source: Author’s elaboration on Thilo HanemannandDaniel H.Rosen, China Invests in Europe , cit. Figure 3|Geographic distribution of ChineseFDI flows in Europe in themachinery, communication andconsumer goods sectors. largest number of Chinese investors, even if, on average, of smaller size, including London. Germany, on theotherhand,isbyfarcountry that hasreceived the many MNEs(including intheminingsector) establishtheirheadquartersin and energy),theUKisamore attractive destination for financial activities since France has been mainly targeted in capital-intensive sectors (such as chemicals Chinese Investments inItaly 31 or purchase property worth at least EUR 500,000.” Sophie Meunier, “‘ Meunier, Sophie 500,000.” EUR at least worth property or purchase Portugal, in jobs 10 or create new capital, in 1million EUR at least transfer they if Portugal in status residency to acquire foreigners enables which Permit’ Residence ‘Golden the instituted Portugal 2013, January In bonds. government in 250,000 EUR at least investing to those residency granting law’ immigration investment ‘Hungarian the adopted Hungary 2012, December “In policies. migration to related are investors Chinese benefitted mostly who have those that reports Meunier he European Crisis and Chinese Direct Investment in the European Union”, of European Journal the in in Investment Direct Chinese and Crisis he European

A relaxation of measures on FDI attraction has interested many countries during the crisis. crisis. the during countries many interested has attraction on FDI of measures A relaxation , Vol. No. 3(2014), 36, 298. p. 31 Perhaps themostsignificant example of able 3).Thiscanbecertainly B eggars can’t be Choosers’: Choosers’: be can’t eggars 13 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI Source: Author’s elaboration on Heritage Foundation database. Table 3|Major ChineseFDI toEuropean peripheral countries interests infastgrowing markets inLatin America andAfrica. a strong strategic orientation given that thetwo acquiredcompanies hadexisting be driven only byeconomic opportunities or contingencies, but theyhave aswell by Chinesestate-owned enterprises intheenergysector cannotbeconsidered to of state-owned companies asaconsequence of thecrisis.Theacquisitions made such trendsisPortugal, which hadtoimplement astrict privatisation programme Chinese Investments inItaly 32 Journal 2009 2008 2010 2011 2011 2012 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 Year

The Wall Street Wall The Street in EDP”, Portugal’s in stakes gets “China Kowsmann Patricia and Wayne Ma , 23 December 2011, http://on.wsj.com/vfjmdQ. 2011, December , 23 Unicom Shipping China Ocean Industrial Wanhua China Unicom Industrial Wanhua Gong Machinery Guangxi Liu Three Gorges Industrial Wanhua International Fosun Huawei Shipping China Ocean State Grid Investment China Power HNA Greenland Shanghai Shipping China Ocean Investment China Power Investor Size ($mln) 4,560 1,000 1,660 1,500 3,510 300 240 500 260 260 740 100 190 120 310 150 510 Share (%) 100 20 58 25 10 21 51 1 1 T BorsodChem T Portugal Energias de Folli Follie BorsodChem REN Wola Huta Stalowa Weglowa Kompania NH Hoteles Melia Hotels Enemalta Partner/Target elefonica elefonica 32 T T Chemicals T Energy Chemicals Other Chemicals T Energy T T Energy Real estate Real estate T Energy echnology echnology echnology ransport ransport ransport ransport Sector Greece Spain Hungary Spain Portugal Hungary Greece Hungary Greece Portugal Poland Hungary Poland Spain Spain Greece Malta Country 14 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI exploreeconomies/italy. pdf. OrizzonteCinain 359. of Automotive and Journal Management Technology International in 34 33 Doing Business report of theWorld Bank. of theglobal competitiveness indexof the World Economic Forum, and56thinthe countries, but also to middle income ones. As an example, Italy ranks 46th in terms ranks usually show apoor performance of Italy compared notonly tootherOECD some of themost relevant rankings measuring competitiveness. Indeed, these to theEU-27. Thisisnotsurprisingifone looks at theposition of thecountry in and 1percent of theworld’s total, andabout 4percent of theinvestments directed performed quite poorly inthelastfew years, representing on average between0.4 within Europe. According tothelatest data from UNCT Italy cannot be considered the most attractive destination for foreign investment 3. ChineseFDI inItaly with Huawei, which hasestablishedits affiliates all over the continent. are quite frequent, especially inthetelecommunications sector. Such isthecase and development (R&D) centres in thecontinent. Greenfield investments inR&D Europe’s human resources andits research infrastructure byestablishingresearch in Norway andIceland. Further tothis,Chinesecompanies have tried totap into Bluestar Adisseo), general aviation in Austria (AVIC-FACC) or natural resources Germany, auto partsinSweden (B T these acquisitions canbefound intheindustrial machinery(Beijing No.1 passed into Chinese hands. This has involved different industries. Some examples of Still, inrecent years, some strategic assetsinthemanufacturing sector have also Chinese Investments inItaly 36 35 markets. Thecaseof theautomotive industry isclearly one of themostrelevant, by Great-Wall in Hungary and building facilities inPoland, or theautomotive sector, with theinvestments made examples include theelectronics sector, with companies such asHisense andHaier costs of inputs, andtheopportunity toeasily getinto thelargeEUmarket. Key European countries in particular are attracting such investments due to the lower investments inproduction activities areless frequent, but areon therise.Eastern production platforms with long tradition torapidly growing Chineseautomakers. a setof resources, including advanced skills indesign andtechnologies, aswell as including for ourfocus on Italy (seenextsection), considering that Europe provides ool-Coburg Waldrich) or therenewable energy(Goldwind-Vensys) sectors in

Alessia Amighini et al., “Investigating Chinese Outward Foreign Direct Investments…”, cit. Direct Foreign Outward Chinese “Investigating al., et Amighini Alessia See Alessia A. Amighini and Andrea Goldstein, “Se la Cina investe nell’automotive investe Cina occidentale, la “Se Goldstein, Andrea and Amighini A. Alessia See World B Alessia Amighini, “ Amighini, Alessia Doing Business Doing ank, , marzo 2014, p. 6-7, http://www.iai.it/pdf/OrizzonteCina/OrizzonteCina_14-03. T he International Expansion of Chinese Auto Firms: T Auto Firms: of Chinese Expansion he International , October 2014, http://www.doingbusiness.org/data/ 2014, , October Bulgaria to assemble new cars for the European AIC-Weigl), chemicals inFrance (Chemchina- 36 , Vol. 12, No. 4 (2012), p. 345- p. No. 4(2012), , Vol. 12, AD, inward FDI inItaly ypology and T and ypology 33 Greenfield rends”, 34 35

15 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI all’estero ed estere in Italia estere ed all’estero (February 2012), p. 47-66. p. 2012), (February Studies Economic and of Chinese Firm-level”, Business at the Journal in Investigation Development T group (T emerging market multinationals, with Chineseinvestors representing thelargest level information on inward FDI inItaly, reports asignificant riseinthe number of 39 38 37 Source: Author’s elaboration on database REPRINT and competitive networks of suppliers. characterised bystrong sectoral specialisation andbytheexistenceof efficient to exploit theeconomies of agglomeration inits famousindustrial districts, Europe. Moreover, anotherfactor driving foreign investors toItaly istheopportunity compared tootherwesterncountries make Italy anappealing destination within On theotherhand,sizeof thedomestic market andthelower labourcosts country, high levels of bureaucracy andrigid labourmarket regulation. are the poor infrastructure, high levels of criminal activity in some areas of the low R&Dexpenditure, andthelargesizeof thepublic sector. Otherdisadvantages medium-sized enterprises, specialisation intraditional sectors characterisedby factors such as the fragmentation of the private sector dominated bysmall and The reasons for thispoor performance arewell known andinclude structural Chinese Investments inItaly The latest edition of Italia multinazionale, Overall, the presence of multinationals from emerging economies is on the rise. capabilities andbuild theirown global champions intheseindustries. including China,currently tryingtoupgrade theirproduction andtechnological represent anattraction factor for multinationals from emergingeconomies, sectors such as automotive, textiles andclothing, machinery, and home appliances Table 4|Summary statistics on Chineseinvestors inItaly, 2005-2011 related investments byArab firms. while theturnover of Chinesefirms ismarginal when compared with resource- or Indian companies (accounting for 15,000and5,000jobsin2011,respectively), Their contribution intermsof employment ismuch smaller compared toRussian affiliates arecharacterisedbyasmaller scale ofactivities compared tootherEMNEs. operation in Italyoperation B Giacomo Pyke, Turnover (mln Euro) Employees N. of affiliates International Journal of Technological Learning, Innovation of Learning, Technological and Journal in International Polo’ Effect”, he ‘Marco

Giacomo B Giacomo Carlo Pietrobelli, Roberta Rabellotti and Marco Sanfilippo, “Chinese FDI Strategy in Italy: Strategy FDI “Chinese Sanfilippo, Marco and Rabellotti Roberta Pietrobelli, Carlo Italia multinazionale 2012. Le partecipazioni italiane italiane partecipazioni Le 2012. multinazionale Italia (eds.), Mutinelli eMarco Mariotti Sergio able 4).Despite this,asconfirmed also byexistingresearch, , Vol. 4, No. 4 (2011), p. 277-291; Valeria Gattai, “Chinese ODI in Italy: An Empirical Empirical ODI Italy: An in “Chinese 277-291;, Vol. p. No. 4, 4(2011), Valeria Gattai, ecattini, “ ecattini, , Geneva, International Institute for Labour Studies, 1990 p. 37-51. p. 1990 Studies, for Labour Institute International , Geneva, Industrial Districts and Inter-firm Districts Co- Industrial (eds.), Werner Sengenberger and ecattini T he Marshallian Industrial District as a Socio-Economic Notion”, in Frank Notion”, aSocio-Economic as Frank in District Industrial he Marshallian , Soveria Mannelli, Rubbettino, 2012. Rubbettino, Mannelli, , Soveria 1,240 2005 676 28 2006 1,348 721 32 37 38 TheItalian specialisation inavariety of , http://www.ice.gov.it/statist_esterno/fr_dx4.htm. 2007 1,769 themostcomprehensive source of firm- 914 46 2,889 1,666 2008 70 2,833 2009 1,187 77 2,820 1,869 2010 81 , Vol. 10, No. 1 39 Chinese 2,885 2011 1,941 86 16 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI by Chineseentrepreneurs –constantly on theriseover thelastdecade parallel story totheone wearefocusing on inthispaper. Small-scale activities run 13, No. 3 (March 2014), 192-208, p. http://www.davidpublishing.org/show.html?16920. No. 3(March 13, Review Business Chinese in Sector”, Luxury the in Italy in Firms of Made Acquisitions Chinese dx.doi.org/10.1504/IJ Innovationof Learning, Technological and Development Journal International in Divides”, Organisational and Cultural M&A: overcoming Overseas “Chinese Mucelli, Attilio Alon and Ilan ODI Italy...”, in Spigarelli, “Chinese Francesca cit.; Valeria Gattai, cit.; a commercial office ofCemate Machinery T were quite sporadic, including anoffice inTurinof theNanjing Motor Corporation, Chinese FDI inItaly startedasearly asthe’80s,even ifat that stagetheinvestments interactions betweensmall andbigger investors nor byGovernment policies. forms of capital transfers from Chinado notappear linked toeachotherbystrategic in fact,bedefinedas foreign directinvestments and,inthecase of Italy, thesetwo household appliances (white goods) andtheautomotive dominate thepicture, concentrated inthemanufacturing andtheservice sectors. In theformer group, A review of theexistingevidenceshows that thegreater number of investments is grew larger,andincluded some interesting casestoanalyse. China inMilan. It isonly sincethe beginningof thenewcentury that ChineseFDI http://www.cgiamestre.com/2014/08/aumenta-limprenditoria-straniera-boom-di-quella-cinese. di cinese quella Aumenta boom straniera: l’imprenditoria Mestre, CGIA communities. foreign to other compared absolute terms in fastest the 2014, and 2008 between percent, 42.9 by increased number their that calculate they addition, In country. the in entrepreneurs of foreign so far. from some of themore significant cases of investments that have beenundertaken latest available year andanalyse the strategic motivations andimplications arising follows, thispaper reviews theexistingevidence,update theinformation tothe 41 40 district due totheentry of Chineseworkers andenterprises. Prato andthelargeliterature on thechanges that occurredinthelocal industrial country sincetheendof the’80s. And, along theselines,it isdifficult nottomention to refer totherapid increaseof Chinesemigrant entrepreneurs who flowed into the When discussingtheriseof Chineseinvestments inItaly, it seemsalmost inevitable 3.1 Theriseof Chinese investments in Italy: some facts few comprehensive analyses basedon firm-level surveys or casestudies. of Chineseinvestors inItaly hasonly beenstudied anecdotally andtherehave been Italy is a phenomenon that deserves a careful consideration. So far, in fact, the rise Despite theirsmall relevance intheoverall picture, theriseof ChineseMNEsin Chinese Investments inItaly 42 1274. B Cambridge Journal of Economics of Journal Prato”, in Cambridge in usinesses

See Gabi Dei Ottati, “A T Ottati, Dei Gabi See A recent report by the CGIA of Mestre shows that, with 66,000 units, Chinese are the third group group third the are Chinese units, 66,000 with that, shows of Mestre CGIA the by report A recent Carlo Pietrobelli, Roberta Rabellotti and Marco Sanfilippo, “Chinese FDI Strategy in Italy...”,Strategy FDI “Chinese Sanfilippo, Marco and Rabellotti Roberta Pietrobelli, Carlo T rennan, “An Analysis of “An Analysis Brennan, Louis and Vecchi Alessandra LID.2013.051703; ransnational Fast Fashion Industrial District: An Analysis of the Chinese Chinese of the Analysis An District: Industrial Fashion Fast ransnational echnology and abranch of theBank of , Vol. No. 1-2 6, http:// 190-208, p. (2013), , Vol. 38, No. 5 (November 2014),, Vol. No.1247- p. 5(November 38, 41 Thisis,however, a , August 2014, 2014, , August 42 –cannot, 40 In what , Vol. 17 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI of CDP Reti, recent agreement by China’s State Grid Corp. for a 2 billion euro stake in the capital in needof financial capital toinvest in upgrading its core technologies. Also, the the specific technologies to develop gasturbines on their own, and Ansaldo was mutually beneficial agreement, given that theChinesecompany does notpossess 2014, http://www.ft.com/cms/s/0/4e8e4cc4-d6ba-11e3-b251-00144feabdc0.html. 2014, 43 Source: Author’s elaboration on database REPRINT in which China iseagertoupgrade. since theyareindustries inwhich Italy hasastrong comparative advantage and Chinese Investments inItaly 45 44 Economic Performance Economic and Regional Geography, Institutions (eds.), Percoro Marco and to Italy?”, Crescenzi Riccardo in Table 5|Sectoral distribution of Chineseinvestors inItaly, 2005-2011 strategy toinvest inItaly’s financial markets. and FIA them, thestakes acquiredbyChinainleading domestic interests such asT entry of Chineseinstitutional investors in thedomestic financial market. Among These recent acquisitions are also among the most relevant of a more aggressive example of anexpansion of Chineseinvestors’ interest toacquire public assets. debt burdensandtokeep focusing on its core business. currently owned byFinmeccanica, which acceptedthedeal inorder toreduce its to buy a40percent stake of Ansaldo Energia,apower equipment company relevant exception isrepresented bythevery recent interest of Shanghai Electric Italy hasnotyet beentargetedfor strategic sectors such asenergyandutilities. A In contrast toothersouthern European countries affected bythecrisis(T telecommunications, which areotherattractive industries for Chineseinvestors. the Mediterranean. Italy also represents animportant market for electronics and logistics, whose relevance isdue tothegeographical position of Italy asahub in the rise,represent some exceptions. Afurtherimportant sector istransport and are intrade-related activities. Financial andconsulting companies, recently on of-china-snam-terna-la-versione-franco-bassanini-cassa-depositi-prestiti. Formiche.net eprestiti)”, in depositi Professional services Construction T Logistics Manufacturing Sector

rade Carlo Pietrobelli, Roberta Rabellotti and Marco Sanfilippo, “What Drives Chinese Multinationals Multinationals Chinese Drives “What Sanfilippo, Marco and Rabellotti Roberta Pietrobelli, Carlo Fernando Pineda, “State Grid of China in Snam eT Snam in of China Grid “State Pineda, Fernando The Financial Times Financial The in Stake”, Energia to buy Ansaldo Electric “Shanghai Segreti, Giulia T (botharound 2percent of thecapital), canbeconsidered aspartof anew 45 theItalian energygridholdingcompany, canbeseenasalarge-scale , Heidelberg, Springer, 2013, p. 397-414. p. 2013, Springer, , Heidelberg, Affiliates , 31 July 2014, http://www.formiche.net/2014/07/31/state-grid- 2014, July 31 , 28 35 4 2 1 43 Most of theinvestments intheservice sector , cit. Turnover (mlnEuro) erna. La versione di Franco B Franco di versione La erna. 897.702 113.645 54.209 19.986 598.3 44 Thisisexpectedtobea assanini (Cassa (Cassa assanini Employees 1723 480 326 467 , 8 May , 8May elecom able 3), 2 18 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI Table 6|Geographic distribution of Chineseinvestors inItaly, 2005-2011 white goods. Chinese investments, largely intheirsectors of specialisation, i.e.automotive and including in particular Piedmont and Veneto, have so far received a number of (Verona) andhasrecently inaugurated its Milan’s headquarters.Otherregions, functions arethoseof thelaw firm YingKe, which is already in Italy since2011 organisational issues tofirmsinterested ininvestment to or from China. Similar Exchange (CMEX)provides comprehensive advice on legal, fiscal, financial and invest inItaly arealso present. Among them,since2007,theChinaMilan Equity branch in2011.Consulting firmsset up toassistChinesecompanies wanting to the world intermsof stockmarket capitalisation, which hasopened its first Italian and of theIndustrial andCommercial Bankof China(ICBC), thelargestbankin in theservice sector. It hostsbranchesof theBankof China,establishedin1998, the search for newmarkets andothertrade-related activities (market-seeking), and confirms that themainmotivations for Chineseinvestments inthecountry are Similar totheevidencefrom otheradvanced economies, existingresearch on Italy 3.2 Motivations and casestudies Source: Author’s elaboration on database REPRINT employment andturnover, respectively. affiliates inthecountry, inturn contributing to45.3and46.7percent oftotal foreign that theregion isthemainattractor of FDI, asit hosts49.4 percent of total foreign of which are based in the metropolitan area of Milan. far, theregion of Lombardy hoststhelargestnumber of Chinesefirms,themajority Geographically, Chineseinvestments arestrongly concentrated inthenorth. By Chinese Investments inItaly 46 Piedmont Lombardy Region Calabria Campania Marche Friuli Liguria Emilia Romagna Lazio Veneto

Italia multinazionale 2012 multinazionale Italia (eds.), Mutinelli eMarco Mariotti Sergio Affiliates 37 10 8 4 4 6 1 1 1 1 46 , cit. Milan isparticularly attractive tofirms This is not surprising, given , cit. , 19 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI “secolo cinese” 47 by . notable example isrepresented bytheacquisition of themachinerycompany CIFA investment opens apreferential channeltotheChinese market. Sofar,themost products. In thecaseof acquisitions, thisstrategy canbenefit Italian firms,asthe the home market in a more efficient way and with differentiated (and upgraded) for thelatter, some investments have initially beenmadewith theideaof serving to export inthehostmarket, andthosemainly targetingtheChinesemarket. As between those oriented to enhance existing trade or create new opportunities As far as market-related motives are concerned, an important distinction is discussion todiscernthemainfeatures of ChineseFDI inourcountry. concluded byChinesefirmsin Italy sofar,help provide anevidence-based Insights from selected casestudies, including themostrepresentative operations including themotivations andthemodalities adopted byChinesefirmsin Italy. In what follows, thispaper discussessome of themostcommon strategies of entry, the search for strategic assets. Chinese Investments inItaly 49 48 Luxury Sector”, cit. Sector”, Luxury the in Italy in Firms of Made Acquisitions of Chinese “An Analysis Brennan, Louis and Vecchi different management cultures. advanced managerial capabilities, theystill suffered problems inintegrating the in Italy tominimisetheinfluence of cultural differences bymakinguse of local and importantly, it has been shown that despite some attempts by Chinese MNEs to advanced skills andtechnological capabilities inspecialised clusters. Moreover, Pietrobelli, Roberta Rabellotti and Marco Sanfilippo, “Chinese FDI Strategy in Italy...”,Strategy FDI cit. “Chinese Sanfilippo, Marco and Rabellotti Roberta Pietrobelli, through greenfield investments. Having acquired newcapabilities andincreased local enterprises, while at thesametimeestablishingalso representative offices to invest inEurope initially forming joint ventures and strategic alliances with region. With theriseinChineseexports, themainlogistics companies have begun sectors areclearly aimedat supporting tradewith thehostcountry andits home On theotherhand,some important investments inthelogistic andtransportation branded products inChina. became aseparate company, CIFA Hunan, allowed CIFA tosell brandedor co- reverse internationalization process. The“Factory intheFactory”, which later by theItalian production unit, opened intheZoomlion industrial park, with a the financial crisis on theconstruction sector, relevant sales results wereachieved activities, including marketing, sales, andproduction. Despite thedeepimpact of and integration wasachieved startingfrom R&Dandthenmoving toall other of resources hasbeeninvested tostandardisethemainmanagement processes, with theefficiency andfinancial capacities oftheChinese group. Alargeamount of thetwo companies, mixingtheknow-how andexcellence of Italian production

Valeria Gattai, “Chinese ODI in Italy: An Empirical Investigation at the Firm-level”, cit.; Carlo Firm-level”, at Carlo the cit.; Investigation Empirical ODI Italy: An in “Chinese Valeria Gattai, For more details see Daniela Grancini et al., CIFA L’anomalia al., et al americano seme Grancini Dal vincente. Daniela see For more details Francesca Spigarelli, Ilan Alon and Attilio Mucelli, “Chinese Overseas M&A...”, cit.; Alessandra M&A...”, Alessandra cit.; Overseas “Chinese Mucelli, Attilio Alon and Ilan Spigarelli, Francesca , Milano, T , Milano, 49 Boththeacquirerandacquiredcommitted totheintegration ecniche Nuove, 2013. ecniche 47 48 Chinese FDI in Italy look for brands and access 20 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI China of and Integration the International Reform Sector Financial Wu (ed.), Zhongmin Evidence”, in acquiring European companies andinvesting innewinfrastructure projects. their market power, Chinesecompanies arekeen tostrengthentheirposition by Chinese Investments inItaly 50 in design andproduct development. Compared tootherpossible locations such and seeinvestment inItaly asarapid andefficient way to improve their capabilities design skills. cases, the target is to improve technical know-how, with a particular emphasis on collaboration with otherlocal specialised firmsandresearch organisations. In both Chinese researchers areworking togetherwith theirItalian counterparts instrict 2005, thetwo companies establishedR&Danddesign centres inTurin,where companies, Jac Anhui Janghuai and Changan, to invest in of theproduction process isalso behindthedecision of two Chineseautomotive The existence of a specialised automotive cluster concentrating all different phases the entry of Chinesecarmakers intheautomotive clusters basedintheTurinarea. Though with different modalities andobjectives, one canfindthesame logic in markets andtechnologies. of apoolof specialised workers andsuppliers andbyspecialised knowledge on many specialised firmsgenerates positive externalities, arisingfrom thepresence firms specialised incomponents andintermediate products. Theagglomeration of home toimportant companies such asPhilips andWhirlpool, andmany other manufacture. In fact,Varese iswell known for its white goods production andis the headquartersinVarese, given thearea’s strong tradition inwhite goods acquire knowledge and managerial capacity was behind thedecision tolocate and thehigh endof theChineseimport market. Further tothis,theintention to the capacity todesign, develop andproduce goods suitable for theEuropean market need to overcome EU tariff barriers and, on theother, bythe objective of improving cooking appliances. in 2009it acquiredanotherItalian company, Elba, specialised intheproduction of made its firstacquisition in Italy buying Meneghetti, arefrigerator producer, and nowadays aworld leader inthewhite goods sector, toinvest inItaly. In 2003,Haier the search for upgrading existingcapacities arebehindthedecision of Haier, The needtoopen theway tolargerandmore sophisticated markets, togetherwith heavily inGreece’s Piraeusport. received some interest from Chineseinvestors, before theydecidedtoinvest search for a more stable gateway in the Mediterranean, the port of Gioia important Italian ports. In thisrespect,it hasalso tobehighlighted how inthe invested intheports of Naples andGenova tosecuretheirpresenceinthemost in the top ten world shipping companies in terms of tons of goods transported, (China Ocean Shipping Group) andChina Shipping Company, bothof which are pattern well applies toChineseinvestments intheItalian logistics sector: COSCO

Christian Milelli, Françoise Hay and Yunnan Shi, “Chinese Firms enter Europe: Some Empirical Empirical enter Some Europe: Firms “Chinese Shi, Yunnan and Hay Françoise Milelli, Christian , London and New York, New and , London 198-214. p. Routledge, 2009, Both companies are “newcomers” to the global automotive market These acquisitions weremotivated, on theone hand,by the Turin. In 2004 and 50 T This auro 21 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI occidentale, cit. occidentale, 53 52 51 do with the entry of T attractive of themade-in-Italy brands.Sofar,theonly noteworthy operation hasto few of these cases are in the textiles sector, without any doubt one of the most there areanumber of interesting casestodiscuss.It isinteresting toobserve that Moving toinvestments aimedat gettingaccessto high-value assetsinourcountry, microwave technologies. in Rome, TurinandMilan. Thelatter, inparticular, hostsalargeR&Dcentre on Later, it broadened thescope of its Italian activities opening innovation centres relatively early, in2004,byestablishingrepresentative offices in Rome and Milan. is that of thetelecommunications giant Huawei. Huawei entered theItalian market Still, anotherinteresting story mixingmarket- andstrategic asset-seekingmotives automotive industry inChina, The strategies of thefirmsinTurin broadly reflect the dynamics occurringinthe specialisation inniche markets. are looking for new competences to catch up with the global players or pursue that theyplantoproduce for theEuropean market intheshort run,but rather they assets byinvesting inmore sophisticated markets. This,however, does notimply Latin America andEastAsia) and,more recently tryingtoacquirenewstrategic looking abroad –firstexporting, thenproducing indeveloping countries (e.g.in Chinese carmakers share25percent of theirhome market, andhave started which has become overcrowded, given the presence of numerous global players. stressed theneedtoescape risingcompetitive pressureintheChinesemarket, Among themotivations for investing inItaly, themanagersinterviewed also engineering, modelling, prototyping andmathematical analysis andcalculation. of specialised suppliers for outsourcing a wide range of activities including skills, availability of highly qualified and cheaper human resources andapool as Germany or theUK,Turincluster offers theadvantages of excellent design Chinese Investments inItaly 55 54 years, anamount among thehighest signed sofarinEurope. technology toWind for a1.3billion dollars contract tobecompleted inthenextfive T telecommunications operators. After having ensuredthe supply of its services to significant foothold asastrong provider of contracting services tothemajor 30, No. 189-203. 30, p. 3(June 2012), Journal Management European in of R&D Model Internationalization?”, ANew R&D Europe: in 2013, http://on.wsj.com/1z70Cop. 2013, so far. cases of technology-seeking investments madebyChinesecompanies inEurope elecom andVodafone, it hasrecently agreedtoroll out anewmobile-broadband

Carlo Pietrobelli, Roberta Rabellotti and Marco Sanfilippo, “Chinese FDI Strategy in Italy...”,Strategy FDI cit. “Chinese Sanfilippo, Marco and Rabellotti Roberta Pietrobelli, Carlo Alberto Di Minin, Jieyin Zhang and Peter Gammeltoft, “Chinese Foreign Direct Investment in in Investment Direct Foreign “Chinese Gammeltoft, Peter and Zhang Jieyin Minin, Di Alberto The Wall Street Journal Wall Street The Mobile in Network”, Italian to upgrade “Huawei Schechner, Sam Described in Alessia A. Amighini and Andrea Goldstein, “Se la Cina investe nell’automotive investe Cina la “Se Goldstein, Andrea and Amighini A. Alessia in Described Italia multinazionale 2012 multinazionale Italia (eds.), Mutinelli eMarco Mariotti Sergio 53 rendy International inthecapital of Sixty (afirmspecialised 54 Interestingly, inItaly, Huawei hasrapidly gaineda 52 51 andcanbequoted among themostinteresting , cit. , 55 , 12 April April , 12 , Vol. 22 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI marisfrolg-fashion-6432d4ea-9d72-11e3-bc9d-c89ba57f02d5.shtml. February 2014, http://www.corriere.it/economia/14_febbraio_24/krizia-venduta-cinesi-shenzen- high-end market. Co Ltd, with the objective to expand internationally, and especially in the Chinese of theready-to-wear (“pronto moda ”) business,byShenzhenMarisfrolg Fashion very recent rumour regards the acquisition of Krizia, one of the best-known brands in view of usingthemin theproduction of advanced products. a long-term strategy totransfer such competences andtechnologies backtoChina, to China.For SHIG, on theother hand,theacquisition of Ferretti represents aswell both considered askey sources of competence andknow-how, noteasily exportable delocalisation inproduction, but kept theoriginal establishment andemployees, to serve therisingdemandof luxury boats inChina,hasalso notundertaken any Chinese investor inthiscase, motivated bytheneedtodiversify its businessand finally soldtotheShandong Heavy Industry Group (SHIG) in2011. Interestingly, the fresh capital tofinancedebtsandnewinvestments, 75percent of thecompany was the company experienced financial distress and, aftervarious attempts tofind technologically advanced boats and yachts. Due to the impact of the 2007 crisis, in 1968,Ferretti rapidly become aworld leader inthesegment of luxury and features of Chinese investments in strategic assets in advanced markets. Founded insights. Thelatter, inparticular, isaninteresting case,asit embodies many of the producers inthenorth of Italy, Cantieri della Pietà andFerretti, provide similar Further tothiscase,therecent acquisitions byChinesecompanies of two yacht respond more quickly todemand. of thecompany inview of keeping astronger control on theChinesesideandto restyling of oldmanagement practices hasled toasubstantive re-organisation in Bologna, and noChineseworkers werehired.Ontheotherhand,asignificant shares inChina.Importantly, production waskept intheoriginal establishment how inbothproduction andbrandmarketing inorder toincreaseXHH’s market diversify its core business,andtoacquireabetterunderstandingof theknow- 56 by Vecchi and B from theFrench group LVMH (LouisVitton Group). As described inmore details watches of internationally renowned brands,of OMAS, aproducer of luxury pens, XinyuHengdeli Holdings Limited (XHH),one of theworld’s largerdistributors of country. In thiscontext, afirstinteresting deal wasthe2007acquisition by producers areeagertoenter quickly tosatisfy thelargedemandintheirhome segment inwhich Italy hasastrong comparative advantage, andwhere Chinese Some of the most interesting strategies can be observed in luxury products, a in teenagers’ clothing) to distribute in the large Chinese market. Chinese Investments inItaly 58 57 Firms in the Luxury Sector”, cit., p. 201. p. cit., Sector”, Luxury the in Firms it/10cZV9.

Giuliana Ferraino, “Krizia venduta ai cinesi di Shenzen Marisfrolg Fashion”, Corriere.it in Marisfrolg Shenzen di cinesi ai venduta “Krizia Ferraino, Giuliana Rita Fatiguso, “Sixty entra nell’orbita Sole24Ore Il entra in cinese”, “Sixty Fatiguso, Rita rennan, “An Analysis of Chinese Acquisitions of Made in Italy in of Made Acquisitions of Chinese “An Analysis Brennan, Louis and Vecchi Alessandra rennan, 57 58 the acquisition was motivated byXHH’s willingness to , 17 December 2011, http://24o. 2011, , 17 December 56 For the rest, a , 24 , 24 23 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI Motorbike Arena”, cit. Arena”, Motorbike of Chinese Acquisitions of Made in Italy Firms in the Luxury Sector”, cit. Sector”, Luxury the in Italy in Firms of Made Acquisitions of Chinese “An Analysis Brennan, Louis and Vecchi Alessandra also M&A...”, See cit. overseas “Chinese Mucelli, Attilio Alon and Ilan Spigarelli, Francesca Motorbike Arena”, cit.; International the in Compete QJ with theinitial expectations. of thisventure quite troublesome andclearly underperforming when compared Chinese andItalian managerial cultures, have madethepost-acquisition phase However, anumber of problems, mostly related tothedifficulties of matching in its sector facingariskof closing businessdue tolong-lasting financial troubles. opportunity for theChineseinvestor, given that Benelli wasawell-recognized brand 59 the view that China’s economic size,combined with nonmarket advantages, could possession of key technologies andcompetences. Such concerns arereinforced by Chinese competitors, andfinally losing out thecompetitive edge guaranteed bythe feelings. Ontheone hand, therearegreat concerns about transferring key assetsto Advanced economies are increasingly attracting Chinese MNEs with mixed structural transformation of thecountry. new markets, resources andstrategic assets,largely neededtodrive theprocess of to domestic MNEs and to their globalisation strategies, driven by the need to access this context, animportant role (and strong political support) isincreasingly given growth and an overall upgrading of the structure of thedomestic economy. Within which areexpectedtolead towards amore balanced (andsustainable) pattern of direct investment. Nowadays, Chinaisexperiencing afurtherprocess of reforms, together with consistent inflows of capital through high levels of inward foreign of international tradeandtheabsorption of external technology andknow-how country underwent arapid transformation, including atremendous expansion China iscertainly themostnotable case.Over thelastthirty-five years, the markets inthedistribution of global wealth. Within thisgroup of countries, further stepintheglobalisation process andreflects therisingweight of emerging The recent riseof multinational corporations from theglobal South represents a Conclusions company referred tobytheexistingliterature istheacquisition of theItalian motorbike the deals underperforming, ifnotfailing. Oneof themostemblematic casesoften managerial practices compared towesterncountries have led, insome cases,to relative inexperience of Chineseinvestors, thecultural diversity anddifferences in Chinese attempts tobuy foreign companies have mettheoriginal expectations. The Lastly, as discussed in the previous sections, it has to be noted that not all the Chinese Investments inItaly 60 and organizational competences of theChinesepartner. clearly shows how thishasbeenconsequence of thelackof effective managerial

For a description of the case see Francesca Spigarelli, Ilan Alon and William Wei, “ William Alon and Ilan Spigarelli, Francesca see case of the For adescription Francesca Spigarelli, Ilan Alon and William Wei, “ William Alon and Ilan Spigarelli, Francesca Benelli by the Chinese firm Qianjiang. 59 Thecaseof Benelli, asdescribed bySpigarelli etal. B enelli and QJ Compete in the International International the in Compete QJ and enelli This was initially considered a good B enelli and and enelli 60

24 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI dimension thanon thelatter. FDI ingeneral, andtoItaly inparticular, allows for more insights on theformer the impact on thehostcountry. Sofar,thestate-of-the-art knowledge on Chinese i.e., the factors affecting the location choice of foreign firms, andthe second being country’s investment-attraction policy. Thefirsthasto do with thedeterminants, which research on FDI cancontribute toinform policymakers on betterdefininga Moving totheimplications: generally speaking,there aretwo aspectsthrough public companies, asexemplified bythe very recent cases of Ansaldo andCDP Reti. of CIFA) andarenow also targetinglargerscale assets,including thoseowned by of Chinesefirmshave become more aggressive andsuccessful (such asinthecase on, andespecially intheaftermath of thefinancial crisis,theacquisition strategies the acquiredcompany, translating into poor post-acquisition performance. Later with largecultural andmanagerial differences, resulted introubled management of Chinese investors. Indeed, asinthecaseof Benelli, such inexperience, together constrained firmsandhave beenusedastestbed for relatively inexperienced happened inotherEuropean countries, such acquisitions have targetedfinancially- Chinese investors with theaimof gettingaccesstostrategic resources. Initially, as A thirdtypeincludes thelargeroperations –mostly M&As –madesofarby logistics platform herethankstothefavourable location intheMediterranean. a tradition of excellence in the industry; and COSCO, which created alarge-scale the availability of relatively lower-cost but well-trained employees togetherwith Changan, which have created research centres intheautomotive industry due to chosen Italy asthe European headquartersfor its white goods industry; Jac and second typeof Chineseinvestor includes, among theothers,Haier, which has giving risetoasecond typeof investor now embeddedinourcountry. This Over time, some of these firms have targeted Italy as a more strategic location, Italian market tofavour trade or otherfinancial transactions with China. greenfield investments with themainmotivation of establishingthemselves inthe for the majority of Chinese firms currently basedin Italy, who have mainly made or marketing offices in Italy aspart oftheir European strategy. Thisisthecase in foreign markets. Most of thesecompanies have establishedsmall representative by firms whose decision toinvest in Italy ispart of an organic strategy of growth different types of Chineseinvestors inourcountry. Thefirsttypeisrepresented In light of theevidencebrought inbythispaper, it ispossible todistinguish investors hasbeguntoshrink. and jobstorevitalise static sectors of theeconomy where therole of traditional aftermath of theglobal financial crisis, for theircapacity tobringinfreshcapital flows from emergingeconomies areincreasingly welcomed, especially inthe intellectual property rights byChinese companies. Ontheotherhand,investment threaten the correct functioning of markets, as well as by the fear of violations of Chinese Investments inItaly 25 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI Firms in the Luxury Sector”, cit. Sector”, Luxury the in Firms little chance toguarantee alonger-term stay inthe country. 61 by some ad-hoc surveys, investors areconcerned, existingevidence,discussedinsection 3,andsupported Factors driving ChineseinvestorsinItaly: As farasthefactors attracting Chinese Chinese Investments inItaly 64 63 62 , cit. , Union European Valeria Gattai, “Chinese ODI Italy...”, in “Chinese cit. Valeria Gattai, about thedifficulties ingettingavisa is represented bymigration policies. Chinesemanagershave beencomplaining contribute to the low levels of competitiveness of the country. Another key concern can befound inChinese MNEsinthemore advanced European markets aswell. investors, followed byaccesstostrategic resources. Thisisacommon feature that neighbouring markets (including overcoming tradebarriers) ranksfirst for Chinese endowments. red tape or thedifficulties ingettingaccessto keyservices orpoor infrastructural of Italy to Chinese investors. Existing research hasalso highlighted factors that actually hamper theattractiveness modelling andprototyping. specialised suppliers tooutsource awide range of activities from engineeringto technical know-how, especially indesign skills, andtobenefit from thepool of design centres andheadquarterstoabsorb foreign technology andimprove their district inVarese. In bothcases,Chinesecompanies have establishedR&Dand specialised automotive cluster inTurin(seeSection 3.2)andthehome appliances their skills andcapabilities. Thesearefor instancethevery successful casesof the Italian firms,with the double objective of learning from themand leveraging upon localities, especially indesign-intensive, high-quality production. Theylinkwith are seekingtheoriginal skills andknowledge available inItalian companies and economies andthecompetitiveness of thesupplier networks. Chinesecompanies for theirproduction anddesign excellence, for thedensity of agglomeration activities inItaly and,particularly, inItalian industrial districts known globally and post-sales assistanceiswhat Chinesecompanies arekeen tolearn from their satisfy very demandingcustomers intermsof design, style, branding, marketing its sizeand,especially, sophisticated demand.Gainingknowledge about how to investments inItaly. Italy isconsidered akey market for investment because of commodities andintermediate manufactures andcomponents isdeterminingits increase thesophistication of its production andtomove away from standardised of specialisation of ChineseFDI inItaly reflect these features. China’s strategy to excellence, aswell astheattractiveness of its industrial districts. Themainindustries by along tradition andaninternational reputation for addinghigh value andfor What makes Italy peculiar, then, is the specialisation in industries characterised

Carlo Pietrobelli, Roberta Rabellotti and Marco Sanfilippo, “Chinese FDI Strategy in Italy...”,Strategy FDI cit.; “Chinese Sanfilippo, Marco and Rabellotti Roberta Pietrobelli, Carlo Carlo Pietrobelli, Roberta Rabellotti and Marco Sanfilippo, “Chinese FDI Strategy in Italy...”,Strategy FDI cit. “Chinese Sanfilippo, Marco and Rabellotti Roberta Pietrobelli, Carlo Chinese Outbound Investment in Investment Outbound the Chinese China, in of Commerce Union Chamber European rennan, “An Analysis of Chinese Acquisitions of Made in Italy in of Made Acquisitions of Chinese “An Analysis Brennan, Louis and Vecchi Alessandra 63 Thesearewell-known weaknessesof theItalian system, which 61 is clearly showing that access to the domestic and These factors include, in particular, the high levels of 64 and,even where successful, about having 62

26 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI acquisitions canguarantee mutual benefits to all theparties involved, andcanbe the biggest andmostdynamic intheworld. Thisisanexample of how foreign securing easier accessfor domestic firmstotheChinesemarket, nowadays among overseas M&A...”, cit. overseas “Chinese Mucelli, Attilio Alon and Ilan Spigarelli, Francesca Motorbike Arena”, cit.; International thus delaying theimplementation of the strategy.” management style that cancreate riftsbetweenmanagement andemployees by by arigid andsuspicious mentality andbyahighly centralized decision-making the businessdevelopment. Ontheotherhand,Italian managersarehampered one hand,theChinesemanagement arefrustrated bythebureaucracy that hinders routines due also todiffering working environments inChinaand Italy. Onthe Vecchi andB Firms in the Luxury Sector”, cit., p. 206. p. cit., Sector”, Luxury the in Firms 65 As thecaseof CIFA Lastly, there is another relevant consequence arising from Chinese investments. well synthesised intheanalysis of theBenelli experienced during thepost-acquisition phases.Such problems have beenvery drawback that arisesfrom keeping production inItaly isrepresented by theproblems such asintherecent caseof Ansaldo. Ontheothersideof thecoin, animmediate remains amatter of concern, especially when acquisitions targetkey technologies strategy will lead inthefuture toweaker commitments towards local production intent toabsorb knowledge andknow-how from thetargetcompany. Whetherthis to keep production, technologies andskills in theiroriginal endeavours with the examined, Chinese investors have considered key to their asset-seeking strategies motivated bythewillingness todelocalise acquiredassetstoChina.In thecases seems toreassureagainstthenegative perception of Chinesepredatory strategies and assets,including, inparticular, human resources, inItaly. At themoment, this the strategic assets of domestic companies have sofarmaintained production Existing evidenceshows that themajor casesof acquisitions aimedat acquiring And thislatter occurrencelinkstoanotherpositive effect of Chineseinvestments. OMAS, Benelli or Ferretti –acquisitions have avoided theclosure of domestic firms. Turin areaandbyHuawei, or bypreservingexistingjobswhen –asinthecasesof such asinthecasesof greenfield investments bythe automotive companies inthe through thecreation of newjobs,especially for theyoung andskilled workforce, considered good newsinaprolonged phaseof recession. Thishashappened either country have sofarpositively contributed todomestic employment, andthiscanbe cases examinedinthispaper. Thefirstisthat Chinesemajor investments inthe assessment. A few generalisations, however, can be made when looking at the main that evidenceisstill scattered andtoorecent, it isstill difficult to provide a proper The effectsofChineseinvestmentsforItaly: Moving totheimpact, due tothefact Chinese Investments inItaly 67 66

Daniela Grancini et al., CIFA L’anomalia vincente See also Francesca Spigarelli, Ilan Alon and William Wei, “ William Alon and Ilan Spigarelli, Francesca also See rennan, “An Analysis of Chinese Acquisitions of Made in Italy in of Made Acquisitions of Chinese “An Analysis Brennan, Louis and Vecchi Alessandra rennan: “Different habits andcultural background emergeindaily 67 shows very well, Chineseacquisitions cancontribute to , cit. , 65 andOMAS acquisitions madeby B 66 enelli and QJ Compete in the the in Compete QJ and enelli 27 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI Successes and Successes (eds.), Marinova Svetla and Marinov Marin Agencies”, in Promotion Investment expected establishment of the China-EU B extremely fierce in Europe, given theirrapid increaseinthepost-crisisphase.The challenges, too. Competition to attract new Chinese investors is becoming Dealing with non-traditional investors, such asChineseMNEs,posesadditional to themostdynamic markets intheirhome countries. availability of freshcapital andthechancetobuild abridge tolinkdomestic firms the caseof China,such newinvestors provide otheropportunities, including the than transfer themtothehostcountry. Ontheotherhand,aswell exemplified by motivations for theinvestment istoobtainaccesssuch strategic assets,rather the scope for technology- and knowledge-spillovers may be marginal where the of more traditional investors, such asthosefrom otheradvanced countries. In fact, FDI, attracting EMNEscanresult indifferent impacts compared with the attraction designed to maximise the spillover potential and the externalities stemming from has tobeconsidered, for instance,that, asinvestment-attraction policies areusually the different characteristics and approaches of the newinvestors. In thisrespect, it capital flows, nowadays coming at anincreasingpacefrom emergingmarkets, and of FDI. Within thispicture, it iscrucial tounderstandthechanginggeography of move inthedirection of attracting newinvestors while maximisingthespillovers capital or preservingnational ownership of domestic assets.Rather, policies should the crisis,public discussion needstomove beyond thechoice of attracting foreign For anadvanced economy like Italy, still struggling againsttheconsequences of distant markets intheFar East. by the weakness of the domestic market and the lack of resources to target more seen asapromising strategy for many Italian companies currently constrained Chinese Investments inItaly 68 other mainemerging economies). not seemtohave atailored approach toChineseinvestors (nor toinvestors from shows, for instance,that Italy istheonly advanced European country that does Italy’s backwardnessemergesquite clearly. Adetailed review of theIPAs’ activities EU-27 countries inresponse totherisingrole of FDI from emergingeconomies, at theactivities implemented bythe Investment Promotion Agencies (IPAs) of the represent astrategic tooltoenhancethecommercial policy of acountry. Looking The second has to do with anupgrade of investment-attraction policies, which service provisions andtheremoval of high levels of bureaucracy andredtape. competitiveness, especially with regard to the infrastructural endowments, be clearly motivated by new measures in the direction of enhancing the country’s investors, besides revitalising the domestic economy. Chineseinvestors too would clearly amore generic receipt, which hasbeenlong demandedtoattract foreign vis-à-vis its European neighbours. Thefirstisenhancingcompetitiveness. Thisis in which improvements areneeded to make Italy amore attractive destination with China,will also alter thepicture. Thereareat least threemaindimensions will replaceindividual BIT

Sergey Filippov, “ Sergey T he Rise of Emerging Economy Multinationals: Policy Responses of European of European Responses Policy Economy Multinationals: of Emerging he Rise s that all theEuropean countries have sofarsigned 68 As amatter of fact,Italy isone of the few ilateral Investment T reaty (BIT),which 28 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI do with less restrictive migration policies. to attract Chinese investors (such as in the case of Portugal’s golden visa) have to FDI attraction hasinterested many countries, andthosethat proved more effective also needed.Recently, aspartof thepost-crisispolicies, arelaxation of measureson Third, policies to favour an easier circulation of skilled migrants from China are markets) is urgently needed to catch-up with themaincompetitors within the EU. to adequately promote the country’s attractiveness in China(and other emerging China), nor have arepresentative office inthesecountries. Arrangingmeasures information in the official languages ofthe major emergingeconomies (including countries (togetherwith some easternEuropean ones) that do notprovide website Chinese Investments inItaly Challenges of Emerging Economy Multinationals of Emerging Challenges 2014, p. 217-256. p. 2014, , B asingstoke and New York, Palgrave Mcmillan, York, New and Mcmillan, asingstoke Palgrave Updated 23December2014 29 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI Chinese Gabi DeiOttati, “A T en International Investment, No. 2013/1(2013), http://dx.doi.org/10.1787/5k469l1hmvbt- Ken Davies, “ChinaInvestment Policy: anUpdate”, inOECD Working Papers on 1, No. 3(November 2005), p.381-410 Case for Theoretical Extension?”, inManagement and Organizational Review, Vol. John Child andSuzana B.Rodrigues, “TheInternationalization of ChineseFirms: A p. 499-518 Investment”, in Peter J. Buckley etal., “TheDeterminants of Chinese Outward Foreign Direct Institute for LabourStudies, 1990p.37-51 Industrial Districts and Inter-firm Co-operation in Italy, Geneva,International Notion”, inFrank Pyke, Giacomo Becattini andWerner Sengenberger(eds.), Giacomo Becattini, “TheMarshallian Industrial District asaSocio-Economic (November-December 2014),p.44-63 How CanFirm-level Data Help?”, inChina &World Economy, Vol. 22,No. 6 Alessia Amighini etal., “Investigating ChineseOutward Foreign DirectInvestments: China Economic Review , Vol. 27(December2013),p.312-325 Owned andPrivate Enterprises Differ intheir Internationalisation Strategies?”, in Alessia Amighini, Roberta Rabellotti andMarco Sanfilippo, “DoChineseState- OrizzonteCina/OrizzonteCina_14-03.pdf occidentale, in Alessia A.Amighini andAndrea Goldstein,“SelaCinainveste nell’automotive Vol. 12,No. 4(2012),p.345-359 and T Alessia Amighini, “TheInternational Expansion of ChineseAuto Firms: Typology References Chinese Investments inItaly Ping Deng, “Why do Chinese Firms (December 2012),p.408-427 Future Research”, inInternational Journal of Management Reviews , Vol. 14,No. 4 Ping Deng,“TheInternationalization of ChineseFirms: ACritical Review and (November 2014),p.1247-1274 Expansion?”, inJournal of World Business , Vol. 44,No. 4(January 2009),p.74-84 rends”, inInternational Journal of Automotive Technology and Management, Businesses in Prato”, in Journal of International Business Studies , Vol. 38,No. 4 (July 2007), OrizzonteCina, marzo 2014, p.6-7, http://www.iai.it/pdf/ ransnational Fast Fashion Industrial District: An Analysis of the Cambridge Journal of Economics , Vol. 38, No. 5 T end to Acquire Strategic Assets in International 30 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI Italy: T he ‘Marco Polo’ Effect”, inInternational Journal of Technological Learning, Carlo Pietrobelli, Roberta Rabellotti and Marco Sanfilippo, “Chinese FDI Strategy in gresponsiblebusinessconduct.htm investmentfordevelopment/oecdinvestmentpolicyreviews-china2008encouragin Investment Policy Reviews, November 2008, http://www.oecd.org/investment/ OECD, “China 2008:EncouragingResponsible BusinessConduct”, in OECD Peter Nolan, Is China Buying theWorld?, Cambridge andMalden, Polity Press, 2012 Press, 2012 MOFCOM, 214 International Integration of China, London andNew York, Routledge, 2009,p.198- Some Empirical Evidence”, inZhongmin Wu (ed.),Financial Sector Reform and the Christian Milelli, Françoise Hay andYunnan Shi,“ChineseFirms enter Europe: 36, No. 3(2014),p.283-302 Direct Investment in the European Union”, in Sophie Meunier, “‘Beggars can’t be Choosers’: italiane all’estero edestere in Italia , Soveria Mannelli, Rubbettino, 2012 Sergio Mariotti eMarco Mutinelli (eds.),Italia multinazionale 2012.Lepartecipazioni reports/china-invests-in-europe-patterns-impacts-and-policy-issues and Policy Implications, New York, Rhodium Group, June 2012,http://rhg.com/ Thilo HanemannandDaniel H.Rosen, China Invests in Europe. 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Multinationals to Italy?”, in Riccardo Crescenzi and Marco Percoro (eds.), Carlo Pietrobelli, Roberta Rabellotti andMarco Sanfilippo, “What Drives Chinese Innovation and Development, Vol. 4,No. 4(2011),p.277-291 Chinese Investments inItaly UNU-Merit Working Papers, No. 2009-041(2009), http://www.merit.unu.edu/ rade andDevelopment, 2013, http://unctad.org/en/pages/PublicationWebflyer. AD (2013),World Investment Report 2013,Geneva,United Nations Conference Chinese International Investments , Basingstoke andNew York, Palgrave , Vol. 19,No. 4(July-August 2011),p.38-53 rennan, “An Analysis of ChineseAcquisitions of Geography, 32 IAI Working papers 14 | 19 - December 2014 ISSN 2280-4341 | ISBN 978-88-98650-24-8 © 2014 IAI Latest IAIW Chinese Investments inItaly www.iai.it [email protected] F +39 T +39 Via Angelo B and otherpapers’ series related toIAIresearch projects. 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