CHINA INVADES ITALY

By RACHEL DONADIO, N.Y.Times

PRATO, Italy — Over the years, Italy learned the difficult lesson that it could no longer compete with China on price. And so, its business class dreamed, Italy would sell quality, not quantity. For centuries, this walled medieval city just outside of Florence has produced some of the world’s finest fabrics, becoming a powerhouse for Made in Italy chic.

And then, China came here.

Chinese laborers, first a few immigrants, then tens of thousands, began settling in Prato in the late 1980s. They transformed the textile hub into a low-end garment manufacturing capital — enriching many, stoking resentment and prompting recent crackdowns that in turn have brought cries of bigotry and hypocrisy.

The city is now home to the largest concentration of Chinese in Europe — some legal, many more not. Here in the heart of Tuscany, Chinese laborers work round the clock in some 3,200 businesses making low-end clothes, shoes and accessories, often with materials imported from China, for sale at midprice and low-end retailers worldwide.

It is a “Made in Italy” problem: Enabled by Italy’s weak institutions and high tolerance for rule-bending, the Chinese have blurred the line between “Made in China” and “Made in Italy,” undermining Italy’s cachet and ability to market its goods exclusively as high end.

Part of the resentment is cultural: The city’s classic Italian feel is giving way to that of a Chinatown, with signs in Italian and Chinese, and groceries that sell food imported from China.

But what seems to gall some Italians most is that the Chinese are beating them at their own game — tax evasion and brilliant ways of navigating Italy’s notoriously complex bureaucracy — and have created a thriving, if largely underground, new sector while many Prato businesses have gone under. The result is a toxic combination of residual fears about immigration and the economy.

According to the Bank of Italy, Chinese individuals in Prato channel an estimated $1.5 million a day to China, mainly earnings from the garment and textile trade.

Profits of that magnitude are not showing up in tax records, and some local officials say the Chinese prefer to repatriate their profits rather than invest locally.

The authorities also say that Chinese and probably Italian organized crime is on the rise, involving not only illegal fabric imports, but also human trafficking, prostitution, gambling and money laundering.

CHINA IN ITALY’S BACKYARD

According to the Prato Chamber of Commerce, the number of Italian-owned textile businesses registered in Prato has dropped in half since 2001 to just below 3,000, 200 fewer than those now owned by Chinese, almost all in the garment sector. Once a major fabric producer and exporter, Prato now accounts for 27 percent of Italy’s fabric imports from China.

Resentment runs high:

“You take someone from Prato with two unemployed kids and when a Chinese person drives by in a Porsche Cayenne or a Mercedes bought with money earned from illegally exploiting immigrant workers, and this climate is risky,” said Domenico Savi, Prato’s chief of police until June.

According to the Prato mayor’s office, there are 11,500 legal Chinese immigrants, out of Prato’s total population of 187,000. But the office estimates the city has an additional 25,000 illegal immigrants, a majority of them Chinese.

With its bureaucracy, protectionist policies and organized crime, Italy is arguably Western Europe’s least business-friendly country. Yet in Prato, the Chinese have managed to create an entirely new economy from scratch in a matter of years.

“The Chinese are very clever. They’re not like other immigrants, who can be pretty thick,” said Riccardo Marini, a textile manufacturer and the head of the Prato branch of Confindustria, the Italian industrialists’ organization.

Prato’s streets have slowly become more and more Chinese, as the Chinese have bought out Italian-owned shops and apartments, often paying in cash. Public schools are increasingly filled with Chinese pupils.

Outside a supermarket selling foodstuffs imported from China, an electronic job board flashes a running ticker of garment-industry jobs.

The work — long hours at sewing machines — takes place in back-room workshops with makeshift sleeping quarters. The heart of the “fast fashion” sector is an industrial area on the outskirts of town, Macrolotto, filled with Chinese fashion wholesalers.

Here, vans from across Europe line the parking lots as retailers buy “Made in Italy” clothing to resell back home at a huge markup. By buying in relatively small quantities and taking advantage of the fluid borders of the European Union, most manage to avoid paying import tariffs.

On a recent afternoon, a couple from Montenegro loaded racks of cotton summer dresses into boxes in the back of their van. The wife wielded a label gun, tagging each dress “Made in Italy.”

Since founding Luma in 1998, Mr. Zhang said, he has exported clothes to 30 countries, including China, Mexico, Venezuela, Jordan and Lebanon. He said that his biggest order was for the Italian retailer Piazza Italia, but that he had also sold to wholesalers who said they had sold to Zara, Mango, Top Shop and Guess, European retailers specializing in bargain chic.

The raids, he said, are hindering business, unsettling the local Chinese community to the point that many workers had gone into hiding.

“People are afraid,” Mr. Zhang said. “This was a political decision. At first, they left us too free. Now they are tightening things too much.”

“How can China leave a mark like this in the E.U.?” the mayor, Roberto Cenni, asked. “Noise, bad habits, prostitution. People can’t live anymore. They’re sick of it.”

The mayor has also stepped up raids on Chinese businesses. Critics say they are little more than media spectacles, but local Chinese have seen them as unwarranted attacks.

On a rainy recent morning, a team of police officers, tax collectors and other state officers swooped in on two Chinese workshops in a residential and industrial area just outside Prato’s downtown.

Tucked behind apartment houses, the garage-like space was filled with rows of sewing machines, with white fabric strewn about and lace shirts lying unfinished on the concrete floor.

ITALY’S IMMIGRATION WOES

But crackdowns like these can only do so much. In the first half of this year, the authorities raided 154 Chinese-owned businesses — out of more than 3,000. To do the job, “We’d need an army of people,” said Lina Iervasi, the head of the Prato Police Department’s immigration office.

Many illegal Chinese immigrants arrive by bus from Russia or the Balkans, and either destroy their passports or give them away to the organized crime groups that help bring them. Many others overstay their tourist visas.

Instead, he argued, what Italy is witnessing in Prato is “a precise strategy” on the part of the Chinese government to create an economic foothold in Europe.

Italians in Prato are feeling less sanguine. “At 20, I was sure the world was mine,” said Mr. Nesi, 45, the culture commissioner and a writer whose family sold its three-generation, high-end textile business in 2004. “It’s hard to accept that all this happened in a short time,” he said, bewildered. “It makes us feel old and without hope.”

The problems will not be resolved easily. “There’s no plan,” said Xu Qiu Lin, a local entrepreneur and the only Chinese member of Confindustria in Prato, echoing a widespread sentiment. “There’s no plan; that’s the problem.”

Dr. Pinna says:

When I was studying medicine in Bologna, Italy, there was a small Chinese community there. They worked hard and were part of the leather industry. But, at that time the Chinese government was weak, and Europe was strong. There was no E.U. The borders were tight. No Visa with photo, no entry.

Today, Europe is a “No man’s Land.” People come and go, like flies in a garbage can. Every country is the same. We saw in a recent article, published here, how the Roma have invaded France. The E.U. is a large open and unprotected pile of cities with an aging population.

Unlike Asia, the FAMILY LIFE is gone! Young people do not marry. This is a sign of a society in decay. The E.U. is being invaded by those who want to use it as cheap factory.

Germany is beginning to turn back to its original pride, but the other countries are dying.

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Filed Under: Economy • The E.U

Tags: CHEAP GOODS, China, featured, IMMIGRATION, ITALY, MADE IN ITALY