Interview by Francesco Pacifico for Il Garantista originally published in Italian on October 16, 2014.
The cynical investor who works in Hong Kong: “I do business with China but I appreciate the pro-democracy protests” – “We are beggars with a lot of rubbish to sell. They’re getting their hands on old technology by American standards, but it’s still good enough for them. At this point, we have nothing to export, only corruption”…
“Li Keqiang is only visiting out of duty. The Chinese have gone everywhere. They even returned to Germany for the second time in one year. Then there’s the ASEAN summit in Milan. They haven’t been to Italy since 2012, during the times of Wen Jiabao. It’s nothing to get excited about.” Say that to Matteo Renzi, who in the past few hours tweeted: “Signed agreements with China worth more than 8 billion Euro yesterday. And there’s still a lot more…”
While the Chinese Premier is being welcomed at the Palazzo Chigi with honors, Alberto Forchielli went back to Hong Kong. He went to do business for his investment fund, Mandarin Capital Partners (“which is going well because it’s basically German”) or to study the Occupy Hong Kong students. Forchielli is well acquainted with the Fareast Tiger, seeing as he’s worked there since the 90s, sent by Iri and Finmeccanica to facilitate business by speaking with the CPC leaders, which has always been difficult for us Italians. Maybe this is the reason why he’s displaying his cynicism on TV or on his blog (albertoforchielli.com), the most read by foreigners.
Why is Li Keqiang going to Rome?
China is going to have a hard time penetrating the Western Block (from Mexico to Australia) if it sticks together. In this context, a weak Italy is the crowbar they can use to break this alliance.
Said by someone who does business in China and then applauds Occupy…
China has the biggest economy on earth. It cannot be avoided. If I do business there with dignity and tell them what I think, what’s the problem?
Rather, how is the Italian government positioning itself?
It’s s succubus. I’m not selling them crumbs; I’m not going to beg so that they buy Alitalia or La Cassa Depositi e Prestiti, or Reti… I have no problem staying in Hong Kong with the Occupy students or writing about their great plans. The Chinese have never created problems for me, and I don’t understand Italian moralism.
Speaking of CDP Reti, was that 25% undersold?
Maybe it was underpaid, but no one wanted it. Today, the Chinese buy what no one else wants. This is how it was for Ansaldo Breda, Ansaldo Energia, and Ferretti. The Chinese are garbage collectors. And then we discuss minority shares in oversized companies in countries teetering on the verge of default.
They’re garbage collectors and we’re the trash?
We’re beggars. And we’re taking advantage of the fact that, with so much rubbish to sell, the Chinese are very good at cleaning out the attic. And so, the negotiating table has transformed into a match where everyone wants to get the best price for a piece of junk.
Did we make a deal?
The tragedy is that—first politically then economically—we liquidated our national dignity, coupled with the aggravating factor of having transmuted an extreme act of humiliation—an Adua—in a historic victory.
And yet we’ll be able to sell our know-how.
With the levels of corruption in Italy, the only things we can export are increased work times and costs.
We’re engineering giants.
In what? Infrastructure? If after erecting millions of buildings and bridges, we could learn to build skyscrapers.
We’re on the forefront of high-speed railways.
Where? Chinese trains run at 350 kph; in Italy trains can’t even reach an average higher than 250 kph. Believe me, we’re the third world when it comes to engineering. I know this because when I worked for Ansaldo 20 years ago, I tried to sell the ETR 450, which was based on an old Siemens patent. In the end, people chose companies like Deutsche Bahn, Kawasaki, or Alstom. We were 20 years behind.
Let’s hope for the Expo’s success.
The idea on which we’re building the show in 2015 is defensive. It’s not a coincidence that similar events are effective when they’re needed to uplift developing countries. If I remember correctly, the first edition presented the Eiffel Tower. As far as the Chinese are concerned, in this phase of the crisis, they’re among the few in the world who travel to learn and stay current. Also because their agricultural market is the biggest in the world. Maybe they’ll come to Milan.
What do we need to be competitive?
To win in a competitive market, we need big businesses. And in China, where there’s a massive market, small is ugly. We’re small, and we don’t know the system.
Then why is Li Keqiang coming to sign agreements worth 8 billion Euro?
Because buying from us allows the Chinese to get their hands on technologies that are outdated by Western standards, but still acceptable for their standards. Take Ansaldo Energia for example: their gas turbines are based on an old Siemens permit. No one is interested in them. Anslado Breda is not in a position to compete with other European companies when it comes to trains, but the Chinese need a European outlet through which to sell their railway technology. On the other hand, Ferretti Yachts was finished—who knows how many times it failed—but Beijing was missing concepts for high-speed boats.
The moral of the story is?
We have obsolete technology for the West but it’s excellent for a marriage made in a landfill.
What do Italians—including the government—who want to do business with China, ask you?
Even if they asked me, I wouldn’t go; I don’t think I’d be useful to them. Primarily because I’m not going to sell Alitalia to the Chinese. Second, when the next Bassanini goes to sell shares of CDP Reti he doesn’t need advice, but a means to get slightly more per kilo than expected. For these reasons they’re staying away from me.
Renzi says that the US is worried about his relationship with the Chinese.
The US is very cautious of China. But, I don’t think Renzi is worrying the White House. It’s not like he’s making deals with Google, Apple, or General Electric. He’s someone that’s transforming this productive system’s September 8th into a victory.
How is it doing business with the Chinese?
It’s not easy: they only overpay when it’s worth it, the rest of the time they watch every penny.
Is it better here or there?
Well, even there… I’m the primary western blogger, I frequently appear on the state TV and no one denies it when I say that seeing a Chinese opera is almost as bad as a colonoscopy or that Chinese kids are all trying to run away to the US. Maybe they’re laughing, but no one ever argues.
Speaking of kids, how did things end in Hong Kong?
They’re good kids, but their demands and plans will never go anywhere in China today.
What’s happening in China today?
Compared to the past, the system is closing up. Nationalist, anti-western attitudes are becoming popular; it’s reminiscent of the Cultural Revolution. The Communist Party needs to centralize their power and take the hand of a country that’s preparing for austerity. And they need to get corruption under control; it’s eating everything.
You haven’t told us how things in Hong Kong will end?
They’ll tell them all to piss off, but without much violence.