HONG KONG S historical. A showcase for 50 years of fashion FROM HAUTE COUTURE to. IN ITALY, YOU never ask your. Big appetite for culture of the table

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1 SPONSORED SUPPLEMENT S THURSDAY, JUNE 2, 2005 Italians cherish city s role as China gateway Long-established trade and financial ties with Hong Kong set the stage for expansion in the mainland s production sector Reports by Stephanie Harrington HONG KONG S historical role as a crucial link to markets in China will continue to grow as Italian companies access the untapped potential of the mainland s consumer markets, according to Italian financial groups in Hong Kong. Relations between Italy and Hong Kong have been very strong, and will continue to grow, said Fabio de Rosa, president of the Italian Chamber of Commerce and chief of personnel at Banca Intesa in Central. Hong Kong is a favourite place for Italians to invest their money. Exports from Italy to Hong Kong rose 25 per cent to reach US$3.8 billion last year, surpassing the record of US$3.5 billion set 10 years earlier. More than 50 per cent of goods imported from Italy worth US$2.8 billion are destined for re-export to the mainland. Italy s imports from Hong Kong rose 21 per cent to US$3 billion last year, surpassing the previous record of US$2.5 billion. Mr De Rosa said that was mostly because goods produced in Guangdong transited through Hong Kong. Mr De Rosa said: Hong Kong isn t growing as a manufacturing centre. It s a service country. Trade is less important than ensuring European companies see this as a place to invest their money. Consul-General for Hong Kong Gabriella Menghello said Italy had had a presence in the region since Marco Polo travelled to China in the 13th century, and the two cultures shared common values of work, family and community. Although the nation s presence in Hong Kong is relatively small, Italy has contributed significantly to the development of the city through its missionaries and, recently, through its business community. For us, Hong Kong is still a very important place. It is an important financial hub, an important trading partner of Italy, Ms Menghello Mr De Rosa said Italian companies used Hong Kong to launch overseas products in southern China, particularly Guangdong and the Pearl River Delta, and relied on Hong Kong s investment in production facilities in the mainland and its close partnership with centres such as Shanghai to form distribution networks. Hong Kong s simple fiscal and tax structure, efficient services and business friendly policies would continue to ensure its place as a gateway to China, he It s easy to come to Hong Kong. It s seen as a very friendly place to do business. Hong Kong s success is because it has good infrastructure and a good bureaucracy. I ve never seen a bureaucracy so efficient as in Hong Kong, he There are more than 120 Italian companies in Hong Kong, including a strong financial sector consisting of about 10 major banks and insurance companies, and engineering firms and consumer product groups. Franz Hilburger, managing director of Oriental Buying Services, said the firm s administrative headquarters had been in Hong Kong since 1994 because it had an efficient government and educated population and it provided good access to the mainland. The textile company buys products for its Italian parent company GruppoCoin, which operates more than 300 department stores. Ms Menghello said education was a burgeoning area in cultural relations: 182 Hong Kong students will take part this year in a summer exchange programme; and a Marco Polo study-exchange programme was launched in spring. A total of 420 students in Hong Kong enrolled in Italian language courses at university this year, an increase of 70 students over last year. Professor of Italian Luigi Laudanna said: A lot of students like the image of Italy, not only the culture, but the lifestyle. A showcase for 50 years of fashion FROM HAUTE COUTURE to pret-a-porter, Hong Kong will get a rare look at a halfcentury of Italian fashion, including items that would be difficult to see in Italy. With exhibits valued at more than $8 million, the 50 Years of Italian Fashion exhibition begins tomorrow and continues till the 15th at IFC Mall. On display will be 74 dresses, menswear, accessories and original sketches from 42 top Italian designers. These are some of the fashion designers who have created the concept of Italian fashion, said Cecilia Pavanello, general manager of the Italian Chamber of Commerce, which is organising the show as part of a series of cultural events. It s a rare opportunity to see these dresses. Even in Italy, you would see them only on television. Exhibits range from an evening dress by Emilio Schuberth, once worn by actress Gina Lollobrigida, and a Brioni suit made for John Wayne to the contemporary designs of Versace, a favourite brand of singer and actress Jennifer Lopez. The iconic leather Gucci handbag with a bamboo handle crafted by company founder Guccio Gucci in 1947 will also be on display. These are exquisite creations, said Alessia Tota, a curator for the exhibition. We spent a lot of time looking for garments made by these kinds of designers. To complement the exhibition, the Italian Trade Commission will hold four spring and summer fashion shows, tomorrow and on Saturday, featuring Italian brands sold at the mall. Italian fashion is an easy sell in Hong Kong. The market is sophisticated, very mature, said Bulgari Hong Kong managing director Angelina Bleach. The population is cosmopolitan. It s easy for highend luxury businesses. Italy ranks second to the mainland for imports of clothing, accessories and footwear to Hong Kong. A spokeswoman for Milanbased Giorgio Armani said top Italian fashion retailers such as Armani had enjoyed dramatic growth at their Hong Kong outlets in the past two years, with mainland clients having a significant impact on sales. Benetton Group, which has its regional headquarters in Hong Kong, will open 40 stores in China this year, and plans to have 200 outlets on the mainland by Meanwhile the Swank Shop, which has imported Italian labels for 50 years, will open a store later this month for Italian designer Roberto Cavalli at the IFC Mall. But David Hong Kin-hay, managing director of Swank, said that Italian clothing took off in Hong Kong only after Armani launched his ready-to-wear collections in the early 1980s. It took some effort to educate and convince local people to wear Italian or European clothes. Once they started, they saw they could really express their own character, he LIFESTYLE BUILT AROUND ANCIENT LOVE OF THE FINE ARTS A MONTH-LONG SERIES of events will be launched tomorrow at IFC Mall to mark the National Day of Italy. The events herald the Year of Italy in China celebrations scheduled for next year. Italy 2005: Quality and Lifestyle will showcase the five pillars of Italian culture art, film, fashion, design and music until July 7. Italy is normally associated with food and fashion, but it is more than that. It is a very ancient culture, said Fabio de Rosa, president of the Italian Chamber of Commerce, the event organiser. Highlights include the exhibitions 50 Years of Italian Fashion (June 3 to 15) and Italian Light (June 3 to 15), showcasing classic and modern lamp designs. Also on show are the works of highprofile artists Roberto Cipollone, known as Ciro (June 3 to 12), and Gianluca Miniaci (June 7 to 22). Italian films will be screened from June 6 to July 7, while composer and pianist Giovanni Allevi will make a rare appearance in a concert on June 12. Four I-Style fashion shows will feature leading Italian brands. For more information, visit Big appetite for culture of the table IN ITALY, YOU never ask your mother what s for dinner it will make her angry. But Hong Kong people are eager to query the menus of an increasing number of Italian restaurants in the city offering the famously simple but classic cuisine. Ten years ago, you could count the number of Italian restaurants in Hong Kong on your fingers, said Pino Piano, director of the Gaia Group, which owns and operates the restaurants Gaia, Va Bene and Isola Bar+Grill. Now there are dozens and dozens. Grissini s chef de cuisine Vittorio Lucariello said Italian restaurants have been getting better and better since he moved to Hong Kong two years ago. The allure of the cuisine lies in its simplicity. Developed by the peasantry, Italian food uses seasonal ingredients from the country s nine regions to create creamy or tomato-based sauces for pastas, fragrant risottos, hearty soups, pastries and gelati. The trend of cucina molecolare (molecular cooking), experimentation with products such as cooking sugar at a high Chef Vittorio Lucariello says Italian food here keeps improving. temperature to derive a low-fat alternative to olive oil, may be at the forefront of modern Italian cooking but the great chefs never forget their origins. Our food was made because it was necessary, said Paolo Teverini, one of three master chefs visiting Grissini restaurant at the Grand Hyatt Hong Kong hotel for its Bella Italia promotion. You used a small amount of ingredients with good taste and low cost. Simple ingredients. Italy s family-oriented culture of the table, as Chef Teverini phrased it, is something that attracts Hong Kong diners. Lauren Morkel is director of marketing for Grappa s Bar and Italian Restaurants, which has a month-long Italian festival promotion. She said many people came to the company s Italian-American eateries for a relaxed family meal. Mr Piano imports all of his ingredients from Italy, and there are several shops here that sell food and beverages imported from the country. Alessio Conti, an awardwinning pastry chef visiting Grissini, has begun scouring Italy for the perfect oranges and nuts for panettone, an Italian Christmas cake, countering a trend in Italy towards cheap massproduced desserts. Another visiting chef, Italian ice-cream master Palmiro Bruschi, has sold world-inspired gelato at his shops in Tuscany to complement traditional techniques and flavours. He said he may create a mango or lychee gelato in an acknowledgement of Hong Kong s love for Italian food.

2 S2 THURSDAY, JUNE 2, 2005 SOUTH CHINA MORNING POST Company engineers an expansion With offices in Milan, Rome, France, Morocco, Singapore and the US, Meridionale Impianti plans to extend reach to China Salvatore Raffa (middle), the president of privately owned Meridionale Impianti, with chief executive Pasquale Pistorio (left) and executive vice-president Laurent Bosson (right) of STMicroelectronics, a customer of the Italian hi-tech products and services company. Reports by Pamela Sun, Caroline Thomas and Angela Gaspar MERIDIONALE IMPIANTI, a dynamic privately owned Italian company, is expanding one step at a time. Headquartered in Catania in Italy, it has offices in Milan, Rome, France, Morocco, Singapore and the United States. Now it is investigating opportunities to open offices and start production in China, possibly in a joint venture with a local company. The 30-year-old company, with more than 400 employees worldwide, provides a broad range of hi-tech products and services for the microelectronics, pharmaceuticals and fibre optics industries. Products include ultra highpurity systems for distribution and control of gases, chemicals and water, turnkey installations, clean rooms with all auxiliary facilities, process tool hook-ups and piping works. The company also offers valueadded services such as total facility management and analytical expertise. Meridionale Impianti is already well-known in the global marketplace, serving customers such as STMicroelectronics, Micron, Texas Instruments, Philips, MEMC, IRCI and Pirelli. While Asia represents 20 per cent of the Meridionale Impianti s turnover, it predicts this will increase by at least 50 per cent annually for the next three years. The company has an ambitious three-year plan for China: 2005 will involve building contacts with agents, 2006 will see the opening of a manufacturing and service centre, and 2007 will bring an alliance with local companies for project execution where local manpower is needed for system installation. We have been so successful in other markets because of our added-value services, said Marco Borsari, corporate vice-president sales and marketing. China offers a huge number of potential customers as a result of expansion of internal market demand for hi-tech products. We hope to find niches there, where our added-value services, engineering capabilities and experience in systems integration can attract customers. Top car horn supplier switches focus to Southeast Asia Fiamm already has two joint ventures under way in China FOR 10 YEARS, General Motors has nominated Fiamm as its supplier of the year for automotive horns. The family-owned Italian company is the world s leading horn producer, and number three supplier of standby batteries. Over its 62-year history, Fiamm has diversified from electric trucks into other automotive sectors, horns, antenna systems and standby batteries for industrial applications. Its industrial batteries, representing one quarter of sales, provide uninterrupted power supplies for the telecom and computer industries, emergency lighting, security, and power back-up systems. We offer quality service, and reliable products with outstanding technology, said Giulio Dolcetta, chairman of Fiamm. Our main customers for horns are car manufacturers. In starter batteries we are stronger in the replacement market. Fiamm has 14 plants located in Europe, the United States, Brazil and the Far East, supplying customers in more than 150 countries. The company plans to expand its sales and manufacturing activities in Southeast Asia to serve car manufacturers establishing operations in the Far East. In 2004, Fiamm formed two joint ventures in India for the production and sale of horns. Two more are under way in China: one for standby batteries and one for horns. The aim is to develop sales in the Chinese and Far Eastern markets and to establish a strong Chinese manufacturing base from which to supply customers worldwide. The production facilities will be located in the developing area of Wuhan, selected by the government as a manufacturing hub for cars and automotive components. In the past few years we have seen great progress in China in resolving business and legal uncertainties, Mr Dolcetta We are confident this process will continue, increasing the attractiveness of the country for new ventures and production facilities, and supporting the economic development of a very important and promising market. Giulio Dolcetta says production facilities will be located in Wuhan, China. Shipping company sets new course for Hong Kong FINAVAL S FAR FLUNG operations direct tankers, laden with crude oil and chemicals, from one end of the world to the other. The Italian shipping company runs a truly global operation, co-ordinating logistics from offices located in Rome and Monte Carlo, with a new hub planned soon in Hong Kong. The company is among the leaders in the transport industry for the clean and dirty cargo markets. The roster of its customers includes most of the major international names in the energy and chemical industries, such as BP, Chevron, Texaco, Vitol, Odjfell, Valero, Shell and Total. Finaval manages 24 vessels, 20 of which it owns. The firm produces worldwide turnover of more than 140 million ($1.37 billion), generated by a headcount of 450 crew members and staff. In the field of logistics, it is important to work with specialised organisations like ours, which really understand the product they are handling, said Giovanni Fagioli, president and chief executive of Finaval. His company s mission is centred on the delivery of efficiency and quality. At the same time, it never loses sight of its commitment to policies that promote health, safety and the protection of the environment. The new Hong Kong office, which is scheduled to open this year, will help to strengthen and expand the global network. Hong Kong has already been serving as a hub for Finaval s Asian operations. The company functions with only 15 brokers here, whose role is to arrange for the vessels to meet the needs of major customers. Our new office will become the focal point for the entire interasia market, Mr Fagioli Finaval has established relationships with Sinochem and several private Chinese ship owners, whom it hopes to attract as customers once the new office is open. Its executives travel on a daily basis between the ports of Shanghai, Singapore and Hong Kong, laying the groundwork for a new customer base. The Asian markets both China and India will ultimately be more important than anywhere else in the rest of the world, Mr Fagioli Pioneer Zobele to focus on Chinese domestic market THE FIRST CHAPTER in the story of the Zobele Group began 85 years ago, with the manufacture of fly paper in Italy. The family-owned firm then moved into new products, such as floor wax, shoe polish and soap. The company is a global leader in electrical air fresheners and insecticides, including mosquito mats and coils. As long ago as 1974, Zobele turned its attention east, by importing mosquito mats from Japan. Twenty years later, the company decided to broaden its network of international production facilities to include Spain, Mexico, India and Brazil. Eventually, it located its most promising new facility in the town of Xiangzi, in Guangdong province. Zobele first opened a smallscale factory there in 2002, on an experimental basis, employing 150 people. The venture was so successful that the company expanded to a larger 12,000- square-metre facility and warehouse, plus offices and a dormitory for 1,200 employees. As a result, turnover has grown from under US$1 million to US$20 million, with US$30 million forecast for this year. Having entered China ahead of other Italian firms, Zobele still sustains one of the largest Italian operations in Guandong. We are a strategic partner for most of the multinational companies, said Enrico Zobele, chairman of Zobele Group. Ten per cent of local production remains in China, and the remainder is exported worldwide, but the company plans to target the domestic Chinese market soon. As our next step, we will certainly start focusing on Chinese customers, Mr Zobele Chinese research and development facilities and universities also offer the Enrico Zobele, Zobele Group chairman, is impressed by China s growth. company a fertile opportunity for partnerships. Zobele s emphasis on innovation is rooted in its longstanding and close cooperation with academic and technological centres, designers and key suppliers. The company is already exploring new product concepts in areas such as pharmaceuticals, pet care and personal care. Although Zobele does not carry its own brand, it is well known and respected for its innovation and intellectual property development. The firm has also established an efficient quality system, and an integrated global supply chain, to reinforce its manufacturing capabilities. Mr Zobele, who visits China every two months, believes the mainland will become his company s key strategic manufacturing location. I m excited at how China is growing in every aspect, he You can feel the spirit and the movement there from day to day.

3 SOUTH CHINA MORNING POST THURSDAY, JUNE 2, 2005 S3 Guala Closures reputation on the mainland is growing fast Company will focus on premium spirits and wine sectors because consumption among world s highest Guala chairman and chief executive Marco Giovannini (left) and marketing director Paolo Ferrari see potential. Making a fashion statement in Asia THE FASHION DESIGNER Max Mara Group took a novel approach when it decided to use Snatt s logistics services for managing and transporting goods to warehouses. By becoming Snatt s first large customer in 1984, Max Mara created a trend for outsourcing the warehousing and distribution of clothing apparel, shoes and accessories. Key accounts from top designers followed. Snatt Far East now serves a who s who of major fashion houses, including Dolce & Gabbana, Calvin Klein, Fila, Valentino and Diesel, while Snatt in Italy has key clients such as Polo Ralph Lauren, Tommy Hilfiger and Chicco. The leading Italian logistics firm handles more than 50 million pieces per year, through its headquarters in Reggio Emilia and its offices in Bologna, Milan and Hong Kong. The company started its Hong Kong hub in 1997, as a logistics platform for Asian production using Italian standards. In high fashion, you need know-how and experience said Gabriele Benfenati, chief executive of Snatt Far East. So we brought our systems, technology and software from Italy to Hong Kong, which has enabled us to attract big names in the fashion and apparel business. Snatt s automated and integrated technology represents a substantial investment in machinery and labour. The firm manages and transports merchandise to and from Italy and abroad, door to door. In Asia, Snatt exports and, in particular imports, goods from China, Indonesia and Vietnam. Retail goods are delivered daily to shops in Hong Kong, while in wholesale activity, the business supplies Asian manufacturers. Snatt plans to branch out further in Asia by developing logistics in Shanghai, followed by Shenzhen and Guangzhou. A joint venture might provide one route. Another avenue would be a wholly ALESSANDRIA-BASED Guala Closures produces specialised safety closures that prevent tampering and adulteration for the beverage and oil markets. The 50-year-old Italian company is today considered the benchmark brand in its industry worldwide. All aspects of the manufacturing process are completed within the company s plants. Guala, which does not license or outsource, has even developed its own assembly machinery. The highly technical nature of the multi-component products, plus the company s many patents, help prevent counterfeiting. The company is determined to protect its coveted reputation and dominant brand. At packaging exhibitions you see a lot of small companies with brochures saying Guala look-alike product or Original copy of Guala, said Marco Giovannini, chairman and chief executive of Guala Closures. Our best advertising comes from our competitors. The company has always concentrated on the wine and owned business, for which Snatt has applied for an operating licence. The company hopes to open its office this year on the mainland, where it will spend several years setting up a stable operation to serve several large accounts. We have something more sophisticated to offer than lowcost labour said Ricardo Fuochi, chairman of Snatt Far East. As soon as labour costs in China increase, our technological system will become even more interesting. spirits industries, although its products are also used by olive oil, vinegar and soy sauce manufacturers worldwide. Twice the size of the closest competitor, it has 22 plants in 12 countries on three continents. We follow the market, wherever it is, Mr Giovannini Being so global gives us the international number one position. Guala Closures entered the mainland in 1992, where the safety closure industry did not exist. We created the Chinese market, Mr Giovannini Currently, the company has one plant in Waihu, north of Beijing. Every employee there is Chinese, except the general manager. The company intends to focus on the mainland s high-end spirits and wine sectors. It is confident about the development of the alcohol industry there. Spirits consumption in China is already the second highest in the world, and wine consumption will be the second highest in five years time, Mr Giovannini With the right partners, China can potentially become a top quality producer. Ricardo Fuochi, chairman, Snatt. Andrea Crespi says Sensitive Fabrics can be used in many different ways. Innovative fabric puts material world in spin TEXTILE MANUFACTURER Eurojersey believes the next few years will bring it notable success in the Chinese clothing market. By increasing promotion of its unique product, Sensitive Fabrics, the Milanbased company foresees strong sales growth out of its Shanghai and Hong Kong offices. Patented in 1989, Sensitive Fabrics is a totally new type of fabric created by an innovative method of combining Lycra and Meryl microfibre. This versatile material can be used in a wide range of garments including swimwear, underwear, sportswear, outerwear and accessories. What makes this product and this company special is that the same product can be used in many different ways, said Andrea Crespi, export manager of Eurojersey. Usually you have two options: creating a technically advanced fabric, or a fashionable fabric. The technically advanced fabric gives performance, but doesn t have a great appearance. The fashion fabric looks good and feels soft, but isn t technically innovative. Sensitive is the first product that combines the benefits of both types of fabric. The company plans to grow its business in China by increasing relationships with garment manufacturers in Hong Kong and the mainland. The combination of Italy s reputation in fashion and the unique qualities of the fabric are a winning formula. People are starting to appreciate quality more, which means there will surely be a place for Eurojersey to develop in this market, Mr Crespi The company, founded in 1960, is a trusted leader in the world knitting industry and is proud not just of its unique product, but also of its Italian heritage: features that make it highly competitive. Sensitive Fabrics are produced exclusively at Eurojersey s headquarters near Milan, the only warp-knit fabrics factory in Europe with a complete vertical production cycle to ensure total quality. What Eurojersey has done, which other companies haven t, is simple, Mr Crespi Here in Italy, we have invented an internationally traded product that has a patented technology and name. Nobody in the global knitting industry has ever traded a branded fabric or patented a product like this before. Sensitive brand means excellence Made in Italy, and it is communicated all over the world through the hang tags that act as a real certificate of authenticity. Geared up to double production TURIN-BASED COMPANY, Util Industries, is gearing up to take advantage of the rapid growth in China s automotive sector. Manufacturing brake components, it expects its recently acquired mainland plant to more than double its production from 15 million pieces by the end of this year to 40 million in This ambitious expansion strategy is based on the forecast increase in car production in China from two million in 2002 to nine million in 2008/2009. We want to follow the growth of the automotive industry in China, said Oscar Finessi, general manager of Util. Such growth promises more jobs for Chinese employees. With 150 people employed at the new mainland plant, Util plans to increase this to 400 within the next five years. Founded more than 40 years ago, Util has maintained an impressive track record. It supplies more than 30 per cent of the world s metallic brake component market, making it the European and American market leader. Chairman Franco De Gennaro Besides its factories in Italy, Util has three in Canada and a sales office in the United States. Overall, the company employs 1,300 people. The new mainland facility begins another chapter in the Util success story. We are going to China because it is a big new market that is opening its doors, Mr Finessi Initially, the mainland production facility will serve the domestic market and international companies in China. Util hopes to export from China three years down the road. At the moment, we are going to China because our customers asked us to go and help them produce there, Mr Finessi In a few years, we would like to become one of the most important companies in China and the Far East. The opportunity is there to grow fast. Util also makes it clear that it has a long-term commitment to China. A new production facility like ours means investing in knowledge, in technology, in people. We are not planning to go for one year and then move away, Mr Finessi One of Util s key strengths, along with the quality of its products, is its excellent relationship with its customers something it plans to maintain in its mainland operations. We are the leading company because we are partners with our customers. We want to reach the same level of relationship with our Chinese customers. Engineering partnerships abroad LIKE MANY INTERNATIONAL companies, Italian civil engineering firm Torno is looking at the mainland with keen interest these days. But rather than trying to build a mainland operation, Torno is hoping to form joint ventures with Chinese firms in Europe. More than us going to China, I think that the Chinese are ready to come here, said Massimo Dal Lago, executive vice-president at Torno. And I m very much open to the possibility of making joint ventures with them, in Europe and in third countries. Torno is an international company with contracts spanning Western and Eastern Europe, South America and Africa. It is no stranger to Asia, either. The world s third-tallest dam was built by Torno in Ertan, China, and the company has completed two projects in Taiwan. What Torno is now looking for from the mainland is labour for its Italian jobs. At the moment, there is a boom in Italy and we don t have enough people, Mr Torno executive vice-president Massimo Dal Lago. Dal Lago There is so much to build after so many years of a flat market that we re fighting to get labourers. Chinese materials and machinery are also attractive to Torno. We are already purchasing equipment in China, Mr Dal Lago With elevators and escalators, we are seeing that the quality is increasing and the price is very competitive. The company hopes to establish a joint venture with a mainland firm this year. However, he feels it is too late to establish an operation there. I d be very pleased to go now, but I haven t found anything that is economically reasonable to compete with the Chinese construction companies. But Torno would jump at the chance to engage in concession contracts with the Chinese government, in which it would design, build, operate and finance projects and recover its costs through user charges. On its home turf, Torno has big ambitions, too. It hopes to grow through mergers and acquisitions to the point where it can compete with larger European companies that have a turnover of 5 billion ($48.85 billion) a year or more. If instead of having 150 million projects, you all of a sudden have partners that will help you compete with projects worth more than 1 billion. The moment you ve got two of those jobs, your company is good, he

4 S4 THURSDAY, JUNE 2, 2005 SOUTH CHINA MORNING POST Out to help China firms connect with Europe Two investors see a trend of mainland businesses making acquisitions overseas WHILE THE MAJORITY of Italian investors are mostly interested in opportunities on Chinese soil, I2 Capital and Natexis Cape are looking for opportunities to boost the international growth and ambition of Chinese companies. Their network, resources, management and three years of experience in supporting and managing foreign direct investments in China are now accessible to Chinese enterprises looking to invest in Italian companies listed in I2 Capital s investments portfolio. I2 Capital and Natexis Cape are two innovative companies born out of the marriage of leading commercial banks and successful private equity firms. Both have different backgrounds but share a common hands on approach to their investments. They provide not only capital injection but also involvement in strategic path planning and implementation. I2 Capital has a distinctive expertise in innovative finance by investing in alternative private equity, in distressed non-going concern assets, and in its proven ability in managing turnaround situations. Marcello Gallo, I2 Capital managing director, says his firm is ready to act as co-investors of Chinese companies with an eye on Italian targets. Natexis Cape is an emerging firm investing in profitable small and medium-sized enterprises characterised by an international growth strategy. After the painful era of joint ventures, European companies pursuing cost-cutting strategies are now more focused on establishing wholly owned foreign enterprises. Assets acquisitions is the preferred method. As an example, I2 Capital and Natexis Cape are collaborating to help Idra Casting Machines acquire a Chinese competitor. Idra Casting Machines is the world leader in the production of large die-casting machines, with facilities in Europe and the United States, and is fully controlled by I2 Capital. The aim of the acquisition is to create the first global player in the market in terms of worldwide presence and product range. I2 Capital also controls the majority stake of Deta, one of the European leaders in the assembly and distribution of office chairs, with revenues of more than 50 million ($490.5 million). Its clients are the largest expanding resellers in western Europe, such as cataloguists and large distribution chains. In the past few years, Deta has been increasingly dealing with Chinese suppliers to acquire quality components. While I2 Capital and Natexis Cape have been assisting Italian companies in the Chinese market, they are also equipped to assist Chinese companies to enter the European market. I2 Capital and Natexis Cape believe Chinese companies will increasingly direct their efforts towards the acquisition of European targets in order to enter new markets. They will do so by acquiring well-established brands, knowhow and strategically positioned production and/or logistics facilities. Chinese companies will continue to diversify and enlarge their customer base to fully exploit their low-cost production capabilities. Consequently, a business combination with non-chinese competitors will be mainly distribution network-driven. Western customers are brandconscious and might be reluctant to accept items that are not well branded. High-end market segments which provide higher margins can be entered only by means of wellestablished brands. Acquisitions will also give Chinese companies instant access to know-how, also by means of new patents and product and process innovation. We believe that some of our industrial subsidiaries would be of great interest to Chinese investors seeking to expand in Europe and Italy, said Marcello Gallo, managing director of I2 Capital. We are carefully monitoring the acquisitions done abroad by Chinese corporations. Should this trend be confirmed, I2 Capital will be ready to act as co-investors of Chinese companies willing to take on Italian targets, Mr Gallo Right now, Italy is a very interesting country to grow through acquisitions, considering the high number of companies there with very well-known brands, extended sales networks and excellent management, he added. Mr Gallo is currently travelling to China with Natexis Cape chairman Simone Cimino, to discuss ideas with major companies and institutions. Freight forwarder delivers on commitment to service FREIGHT FORWARDING company Alisped is well known and well regarded in the fashion industry for its focus on customised service. The company offers air, ship and truck deliveries of raw materials and finished products in the import and export fields. It also provides customs clearance, door-to-door delivery, and warehousing and packing services for its clients, many of whom come from the fabrics and textiles industries. It is the emphasis on service, however, which makes the company stand out. Luca Lunghi: sees China expansion Our goal is not just to attract business and customers with 24-hour service. Most giants cannot cheap rates. We really try to compete with us. personalise our services to give Founded in Prato in 1968, Alisped our customers the very best, said has offices all over Europe, the United managing director Luca Lunghi. States and Southeast Asia. There are Many large companies in our branches in Hong Kong, Taipei, sector close at 5pm. Alisped is a Shanghai, Qingdao, Guangzhou and Shenzhen. The company entered the Asian market 10 years ago through a joint-venture partnership with Chinese-owned Cohesion, which has branches across the mainland. Alisped plans to open other mainland branches through the same joint venture and intends to start operating in Malaysia. We view Asia as a good opportunity, Mr Lunghi The company is optimistic about its growth potential in China. In particular, the rate of import of raw materials from the mainland to Europe is increasing. The country is also becoming an important market for finished goods. China is changing so fast. Very soon stores there will start to buy finished products. I would say in the next five years China will become our most important market, Mr Lunghi Agostino Marioni travels to the mainland regularly to build relationships with partners and customers. Alga builds bridges with ventures in Greater China LAST YEAR, ALGA supplied almost 80 per cent of the bridge bearings for a highspeed rail construction in Taiwan. The project, a joint venture with a Taiwanese partner, was the largest of its kind in the world. The three-generation family concern, started in 1942, produces components for construction and bridge bearings such as expansion joints, antiseismic devices and post-tensioning and stay cables. While it is most active in Italy, more than 60 per cent of Alga s turnover is in 40 countries worldwide, including Portugal, Greece, Hong Kong and China. Our name, high quality and reliability set us apart from the competition, said Alga president Agostino Marioni. His company aims to provide quality design and execution at value prices. It also takes pride in meeting deadlines, which reduces costs for customers. Dr Marioni, who is chairman for the European Standard Commission for Structural Bearings, persuaded the Taiwanese authorities to use state-of-the-art European standards for bearings. Alga s joint venture in the mainland with the Fasten Group, a Chinese steel strands manufacturer, produces anchorages for post tensioning. The company was established to bring together European standards with skilled Chinese workers, modern machinery and quality control. Dr Marioni travels to China regularly to build relationships with partners and customers, construction planners and contractors. One important contact in Wuhan, the Fourth Survey and Design Institute of China Railway, which oversees the design of major high-speed rails, intends to establish a permanent relationship with Alga. Alga sees China and Taiwan as key locations, and intends eventually to penetrate up to 30 per cent of the Chinese market. We need to produce in China in order to buy at a lower cost for our European market, Dr Marioni One day, our Chinese company may even exceed our operations in Italy.

5 S5 THURSDAY, JUNE 2, 2005 Feeding Europe s growing hunger for Chinese goods An 80-year-old family shipping firm hopes to build on its China business by expanding operations in the country FREIGHT-FORWARDING company Bossi & C Transiti prides itself on its long history of success, both in Italy and in China. Founded in 1925 by Giovanni Bossi and his brother-in-law Renzo Batistelli, it is today 100 per cent owned by the Batistelli family. Mr Batistelli s descendants run operations for transport by sea, land and air from the company s headquarters in the northern Italian port city of Genoa. The freight-forwarding firm transports a huge variety of goods including plastic toys, fabrics, food products and chemicals. The exclusive agents organise the shipments across five continents, connecting between major offices in northern Italy, Britain, Hong Kong and Shanghai. The agents can arrange doorto-door shipments to any location via the global network. Bossi offers a complete logistical-forwarding cycle, from production and storage, to inspections and supervision of goods. With an 80-year history in Italy and a decade of experience in the Chinese market, Bossi has become a familiar industry name. The main shipping lines and other forwarding companies know us well, said Lorenzo Batistelli, managing director of Bossi. The company also enjoys an excellent reputation for its full range of capabilities. Services include full container loads and less container cargo, which means small units are packed together in a single container. Bossi began operating in China in 1993, sending shipments to the mainland from Italy. The company immediately saw massive potential in the Chinese market. From the beginning, we focused on the development of Chinese traffic, especially the west-bound traffic from China which was increasing at that time, Mr Batistelli Today, 90 per cent of Bossi s Chinese operations involve imports from China to Italy, with exports from Italy to China making up the remaining 10 per cent. Four years after starting work on the mainland, Bossi opened an operational office in Hong Kong to provide better service to its Italian customers, including finding space on cargo ships in the east and negotiating rates from the mainland to Italy. Building on its Hong Kong accomplishments, Bossi established a Shanghai office in 2002 in a joint-venture partnership with the company s Our main focus is to give the best possible service available Lorenzo Batistelli, Managing director Bossi & C Transiti Chinese agent, Shanghai YZ. That partnership has proved hugely successful. We still co-operate very closely with our partner, Mr Batistelli Major ports in China are investing substantial amounts of money in shipping, especially in the large container vessels which are Bossi s main business. Shanghai s port, for example, plans to have 52 new berths for ships by So having an office in China improves Bossi s performance in terms of services. The operations in China were very difficult until we set up our joint-venture office, Mr Batistelli Today, Bossi has two full-time employees with Shanghai YZ who work on the Italian company s business in China. Having this presence has made working on the mainland much more straightforward. Although it is still challenging, the process is becoming easier, and the company is now considering handling operations alone in a couple of years. Next year, Bossi expects it will get the opportunity to make a 100 per cent direct overseas investment in China. Company officials said it hoped, at that point, to acquire full control of the Shanghai office. Bossi also plans to open up more mainland offices in the next two to three years. Meanwhile, the company also intends to develop its operations in Italy to assist with the Chinese expansion. Most of Bossi s Chinese customers require not only the shipment of their containers to Italian ports, but also storage services in Italy and distribution of the goods to consumers all over Europe. As the storage aspect has become increasingly important, the company has invested money not just in distribution logistics throughout Italy, but also in a 9,000 square metre warehouse in the northern Italian town of Biella. Bossi also plans, in the next two years, to open a new 20,000 square metre warehouse closer to Genoa that will be dedicated to distribution. For Bossi, the expansion strategy is aimed at providing customers worldwide with what they need in terms of efficiency, reliability and flexibility. Our main focus is to give the best possible service available, Mr Batistelli Rottapharm s Luca Rovati (left) and Professor Luigi Rovati are also considering manufacturing on the mainland. Drug maker set to begin mainland clinical trials WHEN IT COMES to markets, Rottapharm is an old Asia hand. The Italian pharmaceutical company started operations in Taiwan 31 years ago. It has been in Hong Kong for more than two decades, and on the mainland for eight years. Now Rottapharm hopes to expand its mainland presence. The drug it sells there, Viatril, is a leading compound for osteoarthritis, targeting degeneration of cartilage. With worldwide sales of about US$350 million, Rottapharm s goal is to get three new products into the mainland market within the next two to three years. To reach that goal, it is planning to start local clinical trials. We are speaking to a very sophisticated audience of doctors, said Luca Rovati, Rottapharm s managing director. In order to prepare to talk to them, we need to conduct local scientific activities and trials. Otherwise, we will never be accepted by the local doctors. In the longer term, Rottapharm is considering manufacturing on the mainland. We are waiting to reach critical mass with adequate quantities of sales, said Professor Luigi Rovati, founder and president of Rottapharm. In its more than 40 years of existence, the company has always emphasised research and development of original drugs. It has nearly 700 patents around the world on new molecules more than any other Italian company. Rottapharm s mainland competition includes the major international drug makers, as well as traditional Chinese medicine. However, the company said the makeup of Viatril and the other drugs have an all-natural appeal. It is derived from crab shells, not chemicals, Luca Rovati And the other three products that we are going to put on the market also have a very strong natural connotation.

6 S6 THURSDAY, JUNE 2, 2005 SOUTH CHINA MORNING POST Historical links are helping to boost trade Lloyd Triestino has been sailing to China with a rich cargo of business for more than a century and is keeping up with changing market demand Chairman Pier Luigi Maneschi says Lloyd Triestino s motto is forwards. THE HISTORY OF trade links between Italy and China is long and distinguished, and includes tales of seafaring explorers, such as Marco Polo in the 13th century. Such adventurers ensured the two countries, although thousands of miles apart, maintained close ties over the centuries. Italian shipping company Lloyd Triestino continues this tradition. The company began life as Lloyd Austriaco. Founded in Trieste in 1833 by the Austrian government, it was used for many years by the Austro-Hungarian Empire as a political tool. In 1919, control passed from Austria to Italy, and the name was changed to Lloyd Triestino. Starting as an insurance firm, the company provided information to merchants, insurance brokers and shippers on markets and maritime trade in Europe and Asia. It became involved in the shipping industry in 1836, making it one of the oldest sea trade lines in the world. The company initially focused on goods shipping, and added passenger services in the early 20th century. In the mid-19th century, Europe was looking eastwards for trade opportunities. Lloyd Triestino played a significant role in establishing a route from the Mediterranean to the East. In 1869, the company s ships were among the first to cross the Suez Canal, a watershed event that opened up trade to the Asian markets. Since its original incorporation, it was clear that the line would represent an important link with the Far East, said Lloyd Triestino chairman Pier Luigi Maneschi. The company was a pioneer in the shipping route between Europe and Africa and Australia, Although Lloyd Triestino had a network of links to markets worldwide, it was not always smooth-sailing. The second world war damaged the company to such an extent that the fleet was reduced from 75 ships to just five. Later, the growing popularity of airlines in the 1970s resulted in a severe decline in the use of passenger ships. Lloyd Triestino overcame these challenges by building up its container shipping business right through the 20th century. In 1998, the company was privatised by the Italian government, and some private partners including multinational Taiwanese company Evergreen were brought on board to bolster finances. Today, the firm offers 24 services, operated directly or in partnership with other companies. In the six years since privatisation, the number of services offered has tripled, enabling the organisation to cover new routes and world markets. Lloyd Triestino s partnership with carefully chosen companies has expanded its range of services and its flexibility. Joining forces also stimulates creative ideas and solutions. Meanwhile, the number of vessels run by the fleet has grown threefold, and more ships and marine terminals are expected. People do not always appreciate the challenges and complexity of operating a shipping line, Mr Maneschi We want our customers to let us help them. His company is committed to a vision of constant improvement in logistics quality, services and technology. During all these times of change, one relationship has remained constant. Lloyd Triestino has always operated in China, and today has offices and agents throughout the mainland. The firm inaugurated its first route to Hong Kong and Shanghai in 1881, and opened its first office in Shanghai in Since before 1900, Lloyd Triestino ships have been connecting Europe and China with direct, weekly services, Mr Maneschi Today Shanghai, Ningbo, Yantian, Xiamen and Qingdao still represent our traditional Chinese ports. In 1972, the firm incorporated a new company, LT Pacific, which has offices in the main ports of south China. The company s long history in China has earned it a high level of recognition. We are very well known in China, because we were present there when many other lines didn t even exist. Another advantage is the company s strategy of extensive investment in the country. China needs investment in terms of ports, intermodal and sales offices. You cannot simply establish a representative office and expect to be successful, he Lloyd Triestino is enthusiastic about sustaining its level of investment. China represents a substantial portion of our capacity, which is why we are determined to build our presence there, Mr Maneschi We make every effort to follow and, whenever possible, anticipate the Chinese market s expansion. We are responsive to market demands, while we cater to the many opportunities for traffic growth. Lloyd Triestino plans to open more branch offices in the country, and is negotiating terminals in Ningbo and Shanghai. Forwards is the Lloyd Triestino motto the same motto used when the firm was founded more than 150 years ago. With a century of investment in China already behind it, Lloyd Triestino is looking ahead to a future of further success in China and around the world. Fiocchi grows as it fastens on to the Chinese market WHEN DESIGNER LABEL manufacturers need trimmings, they go to Fiocchi, the world-renowned Italian producer of metal fastenings for clothing. Fiocchi has been part of the German-based Prym Fashion Group since Prym Fashion is a world leader in fastening systems with facilities worldwide and subsidiaries in the apparel industry s most significant markets. A pillar of Fiocchi s success is its typically Italian style, as well as its flexibility and creativity. To attract and serve customers in China with its wide range of products, Prym Fashion Asia Pacific was established in Hong Kong in Ningbo Prym, a factory in the mainland, was opened in Through Prym Fashion Asia Pacific, we compete with local companies in the top segment of the market that requires added value, harmonised quality, and reliability from the trims, said Marzio Maccacaro, vice-president sales and marketing. Ningbo Prym produces mainstream products for the local market. Despite the highly competitive nature of the fashion business with radical and frequent changes, Fiocchi has managed to remain successful. The company s strength lies in its flexibility, understanding of customer needs Marzio Maccacaro of Fiocchi. and technological expertise. Mr Maccacaro said: It s tough for metal button manufacturers in fashion, because they have to take the designs created by stylists and transform them into a feasible technological product. A good relationship with the customer and the market is another pillar. Prym Fashion Group considers the mainland a key market and is considering expanding there. Probably in the future we shall make investments to strengthen our production and transfer our know-how, Mr Maccacaro To grow locally you have to be well organised and you have to have the tools to give you a leading edge over local competitors. China is a huge market with many opportunities for major manufacturers around the world who can, in return, contribute their know-how and experience. Firm s chemistry attracts businesses across Asia THERE ARE a huge variety of invisible chemicals in everything that we touch, eat, drink, wear and drive each day. And Lamberti Group s speciality chemical products are used in almost all of them, from shampoo, toothpaste and newspapers, to the cloth and leather materials used to make suits, shoes and bags. Lamberti has been producing speciality chemicals for almost 100 years for the textile, leather, paper, ceramics, coatings, construction, building materials, oil drilling, personal care and food industries. Building on entrepreneurship and an Italian tradition of innovation and research and development, the firm is extending its presence in foreign markets. Its international operations represent 70 per cent of turnover. Lamberti s affiliates are active globally in Europe, North and South America, South Africa and Asia. Lamberti began exporting to China in the 1970s, established its regional head office in Hong Kong 13 years ago, and now employs 120 people in Southeast Asia. It has branches in Shanghai and Beijing, a joint venture manufacturing facility in Wuxi in Jiangsu province, a commercial/ technical office in South Korea, and a manufacturing plant in Indonesia. In China, Lamberti is best known for its leather specialities Roberto Porro and textile printing and spinning products in the Guandong and Shanghai regions. We have decided to invest even more substantially in China, said Roberto Porro, Lamberti Group general manager. The Chinese and Southeast Asian markets nowadays require a much stronger and local operation. Specialisation has sustained the company s competitive edge. Lamberti can tailor products to specific customer needs. At the same time, it is committed to protecting the environment, the safety of the workplace and the community. China is the largest potential growth area for us in the world, Mr Porro We understand customers requirements, and can adapt Italian technology for high quality products in a virtuous cycle.