Coronavirus, the challenges of the future: interview with a well-known entrepreneur (whom football lovers know very well)

(To David Rossi)
20/03/20

Those interested in sports will certainly remember him as president and then number two of the ACF Fiorentina football club several times. Anyone who is interested in economics, remembers him in managerial positions in what he is today Italy development and in the Della Valle group.

Gino Salica is above all an important connoisseur of the Chinese market, where he has been working as a consultant for international companies for almost 15 years. We have heard it to speak of geopolitics and geoeconomics, with a particular eye for China.

Ing. Salica, many remember her as manager and first president of the reborn Fiorentina. But you are also an expert consultant for the Chinese market. What was the situation for Italian companies in China at the outbreak of the crisis in late 2019?

Italy ranks 4th among European countries in commercial trade with China, with a turnover of around € 45 billion, with a significant imbalance in favor of China. The Italian companies present in the large Asian country are around 1.700 and mainly operate in the textile, environment, agriculture / agricultural mechanization, food, sustainable urbanization and smart cities, healthcare, culture sectors. In this context, the strong and widespread presence of luxury brands (Ermenegildo Zegna, Ferragamo, Prada, Tod's, Gucci, etc.) is particularly worth mentioning, a fundamental reference point for the Chinese citizen of large cities, while starting to give some the great commercial and marketing effort that has been going on for over a decade now satisfies the tricolor food & beverage sector. From these few data, a situation emerges for Italian companies in China at the end of last year which shows a consolidated roots and interesting growth prospects.

Many complaints have arisen about the transparency, timeliness and reliability of the Chinese authorities in communicating the epidemic to the world. Based on your knowledge of the People's Republic, what was your opinion?

It is certain that at the beginning there was a guilty lack of transparency regarding the coronavirus emergency and the cloak of silence imposed on the doctors who had first launched the alarm (starting with Li Wenliang - Wuhan's doctor who later passed away just because of Covid-19, v.agenzia) risked creating major problems for China in terms of image and credibility.

When, however, she realized the extent of the problem, the Chinese leadership intervened with draconian measures, even isolating the entire province of Hubei (about 60 million inhabitants) and drastically restricting movements throughout the national territory. It has also set in motion a gigantic organizational machine that in just a few weeks has built two hospitals completely dedicated to the patients of Covid-19, has managed to convert several large factories to produce protective material, as well as fans (necessary for intensive care), has triggered a gigantic purchase operation of masks, glasses, gloves and other materials to protect against the virus.

Even in this dramatic situation, China has shown both the opacity of its information and communication tools but also its extraordinary ability and efficiency in developing infrastructural and technological solutions in a very short time.

What has changed since January for foreign investors in China?

I don't know what to answer this question, also because now it is the rest of the world that is grappling with this terrible epidemic and China is cautiously returning to normal. We are still in an emergency phase.

Chinese companies began returning to production last February. China has emerged from the crisis or, as many seem, is struggling to return to a certain normalcy, hoping that the return infections will not ignite new outbreaks ...

For over 30 years (process triggered by Deng Xiaoping in the late 80s) China has amazed us for its extraordinary pragmatism and its unique economic and political governance model in the world, which has allowed it to achieve constant growth rates of 10% per year. year (in recent years the growth rate has decreased but is always very high, compared to Europe), leading it to undermine the USA as the first world economic power. In the management of the emergency caused by the virus, with the exception of the province of Hubei, China has gradually reopened the factories both to deal with the production of protective material against the virus but also for economic reasons. With great caution but with equal determination, whole manufacturing departments have started to reopen day after day and now, about 60 days after the outbreak of the epidemic, it can be said that the so-called "factory of the world" has returned to almost 100% of its production capacity. That said, however, it is President Xi Jinping himself who preaches great caution in fear of returning infections (there have already been some cases).

In your opinion, the Conte government was inspired by the Chinese model in "coping with Cov-19" or did it choose the "lockdown" policy autonomously, focusing on Italian specificities?

I try to reason logically, thinking that Conte and his staff have followed with great attention the evolution of the situation in China and the measures that were being taken in the Central Empire to stem the spread of the virus. And so I believe that when they decided with the Regions to create the first red areas we also took a cue from what had been done in China. That said, however, Italy (and Europe) presents situations so different from China both in terms of size and politics, such as to necessarily require the adoption of specific and progressive measures. Speaking of Italy, however, I believe that the Government's rigorous action has sinned from an initial mistake: the suspension of flights to and from China from Italian airports. Most of the flows to and from China take place through the large intercontinental hubs (Frankfurt, Munich, Paris, Dubai, Doha, Istanbul, etc.). Having prevented Chinese carriers from landing directly at Fiumicino and Malpensa created an unnecessary friction with China and did not solve the issue of passenger flows arriving from Asia (and therefore of controls on them).

What will the financial and commercial consequences for internationally oriented companies be in the short term?

Very heavy, I would say dramatic. It should be considered that China - the factory of the world - has remained stopped since mid-January (when rumors began to chase about the virus, the period of holidays related to the Chinese New Year had started in China) until the end of February / beginning of March. Now the western countries are closing everything. In fact, companies that have mainly operated with foreign markets for over two months have had to drastically reduce, if not zero, their activities, with serious consequences on the supply side and on project deadlines. It is not difficult to imagine what the liquidity and continuity problems of these companies could be. Now let's see concretely what measures the Italian Government and the EU will put in place to counter the vertical collapse of the economy, hoping that the available resources will be made available to the production system (obviously I refer to all sectors) in the shortest possible time .

In your opinion, will the crisis put an end to the trade war between Washington and Beijing even after the coronavirus has been "normalized"?

It is an extremely complex game because there are no duties (if not a small part) at stake but the geo-political competition between the first two powers in the world. Trump's choice to trigger the war on tariffs with China falls within the category of blatant gestures and messages of the American tycoon to the world and his compatriots. But if we put this theme aside for a moment, the containment action of China by the USA has already been initiated by many other American administrations with strategic-diplomatic methods, made primarily by alliances and protection to countries that live with concern the proximity of the Asian giant (just think of Japan, Korea, Vietnam, the Philippines, not to mention Taiwan); then also through the control of energy resources (and not only), the control of the seas and trade routes, etc ... At stake there are balances between superpowers and therefore the war of duties represents only a pawn in this gigantic game of chess between titans; and how any pawn can be used (or sacrificed) according to the strategic or tactical conveniences of the moment.

Between China, Europe and the USA, who was more prepared, at least to look now, to face this crisis?

On closer inspection no one was prepared, especially given the dramatic contagion capacity of this virus. And in such a globalized world where a few hundred large planes transfer people and things to every part of the globe every day, it is impossible to suddenly block all flows. There is an inertia of the global system which, even with the best possible efficiency, causes enormous displacements and contacts before the containment actions take effect. And then the governments must evaluate, under great and often opposing pressures, the economic consequences (and also for essential supplies) of the more or less total blocks to the movement of people. In short, a devastating scenario, even psychologically, which has put a strain on the governments of almost all the countries of the world. Faced with this immense and unprecedented challenge, starting to stigmatize some apparently superficial initial approaches risks being a counterproductive exercise at the moment.

I believe that this epidemic has brought to the fore the fact that the world has found itself unprepared for the size of the problem. And this should convince us of the need for at least the health systems of all countries to start a real, transparent and constant collaboration, with the exchange of information, practices, equipment, technologies. The hope is that once the emergency is over, natural national selfishness will not prevail over the common interests of the whole world.

Finally, western countries will inevitably have to call into question the industrial policies that in recent decades have led to the relocation of all types of production, including those relating to the protection of human health. The desperation of these days for the lack of masks and other fundamental material for those who fight in the front line the spread of the infection (above all, medical personnel, nurses and all those who perform a primary service) is a stain that must weigh on all our consciences.