Forchielli, founding partner of Mandarin: “they’re specialized in buying distressed assets, like Ansaldo Energia. Certainly not gems like Ducati.”
“They’re like a big garbage collector, buying by the kilo”: Alberto Forchielli, president of Osservatorio Asia and founder of Mandarin Capital Partners, the biggest Sino-European private equity fund, doesn’t mince his words: “They’re specialized n buying distressed assets, they only buy what’s cheap, assets of little value, that don’t have an international market.”
And yet they’re now buying strategic assets.
“Italy has an annual trade deficit with China of 15 billion Euros and China is using some of that money to buy Italian businesses. Our country is in crisis and China knows it can buy at a discount, they’re stockists, this is their acquisition model. Look at what they’ve bought until now: Ansaldo Energia, which is certainly not a successful case history and no one in the world wanted to buy it during the many years that it was for sale. And now they’re negotiating the sale of Ansaldo Breda, which is certainly not in good health. They didn’t get close to gems like Lamborghini or Ducati, who were purchased by Audi.”
They also bought luxury brands like Ferretti Yachts.
“True, but even Ferretti was a distressed sale and for the Chinese it was logical for the defense sector in order to make small, fast boats adept at controlling small islands. In general, China has too much money and can’t allow itself to be too selective; it buys what it can, potentially where there’s no competition from western buyers. China has a gigantic surplus to invest. And it’s easier in Italy, because we’re among the cheapest and accommodating countries like Spain and Greece. Investments in Southern Europe did not skyrocket by chance, but because of the Euro crisis: the Chinese have bought half of Port Piraeus in Greece, the electrical grid in Portugal, and a sizable portion of struggling Peugeot in France.”
Infrastructure investments pose a potentially high rate of return.
“Yes, true, but the Chinese aren’t looking to restructure, but rather a guaranteed return. They need to allocate enormous resources; they’ve only invested spare change in Europe. And then, aside from a few exceptions, they can’t buy assets in developed countries like the US and Germany, nor Japan, therefore they need to settle for the weakest European countries.”
Is a political strategy apparent?
“This is also the point. The central bank, The People’s Bank of China, owns shares in all the major global companies. Normally it keeps a low profile, it buys just enough to stay below the threshold that automatically obligates public disclosure of the sale. Suddenly in Italy, where the threshold is 2%, Beijing is continuing to make investments that only slightly surpass this limit. It means they want to be noticed.”
This desire to be noticed started, coincidentally, after the incident in Prato where a fire killed 7 people. Prato is China’s mirror in Italy. According to a study conducted last July by the Pew Institute, an independent research center, that sought to determine how China was viewed by public opinion across the globe, Beijing is seen in very negative light by 75% of Italians. The only country that saw China in worse light was Japan. I mean, we can’t stand them, we can’t stomach them. Instead, the Chinese want to be loved and respected and they’re conducting a large-scale campaign. Furthermore, China’s prime minister, Li Keqiang, arrives in Italy next week, and they want to create a positive scene.
To make themselves seen they revealed that they invested money in important, strategic groups.
“Without a doubt everything they bought, large or small, was a Trojan horse for expansion in Europe. An expansion following the one in Africa, where they’ve taken control of strategic nodes tied to raw materials. They want to break the US-Europe bond. Now that they’ve reestablished good relations with Russia, they want to rope Europe into a new block. Just like the end of the Second World War, they want to recreate their own Marshall Plan, revolutionizing the international political attitude. But how can you blame them? They own the world today.”