The Asia-Pacific region is a vast and heterogeneous one, but one that also offers Italian businesses a wealth of opportunities. The infrastructure market is growing, and interest remains high in luxury goods and the Made in Italy label, starting with the agro-food sector. So explains Andrea Monni, a partner at Algebra – a firm specialized in support services for Italian companies in the Asia-Pacific region – based on his awareness that internationalization and control over the production line in the case of consumer goods are essential to growth and competitiveness.
What opportunities does the Asia-Pacific region hold for Italian businesses?
Large Italian groups are already working in Asia-Pacific, and small and medium-sized enterprises are moving up. In order to take advantage of the opportunities offered by this market, there needs to be a solid project underpinning everything, with the strong support of mother Italy. Companies often make the mistake of sending inexperienced persons to Asia, or people with only marginal roles in a firm. To truly make inroads into this market, you need very capable persons with a lot of experience and a good understanding of the culture and its business practices. Starting out, this could already be enough: a person with skills, able to explore markets, design marketing strategies (in the case of consumer goods and fashion) and do public relations (essential in the case of infrastructure).
What Made in Italy sectors have more of a market in the region?
All sectors of excellence: there is no lack of market, and this is even truer if you look at luxury goods. Certainly, the Asia-Pacific macro-markets do each have their own peculiarities. Japan and Korea are mature and sophisticated, on a par with the West; other countries, on the other hand, have less segmented markets in which the mid-range in both quality and price has a harder time. In many cases, items identified as luxury have to be highly recognizable since these purchases serve to show the growing prosperity of a segment of consumers. We are seeing in the collections of major brands how labels tend to be large and very visible, and this is a request precisely of the Asian market, especially when it comes to accessories.
But it’s not only luxury items. In just a few years’ time, markets such as Singapore and Indonesia have substantially increased their interest in quality agro-food products, while infrastructure projects have Western – and Italian – companies taking advantage of many opportunities across the region. In addition to the New Silk Road, which mainly concerns continental Asia, a favorable climate is forming for infrastructure investments in various countries such as the Philippines, Indonesia, Thailand and Vietnam.
Can the trade tensions between China and the United States put Italian firms at risk?
The situation is complex and constantly evolving, but the scenario shaping up is one that sees the gradual de-risking of many companies that begin to invest in other countries of the region to avoid the tariffs on Chinese goods. This, once again, is an advantage for Italian firms. On the one hand, new factories and infrastructure will be built, especially in Southeast Asia; and on the other, new investments will expand the consumer goods market. Moreover, throughout the region, and in Southeast Asia in particular, there is a growing tendency to improve trade and unite countries and markets. A process that must attract the attention of a Europe that seems increasingly divided.
How will the new generations of Italian managers be able to grow on markets as geographically and culturally distant as those of the Asia-Pacific region?
There is much talk, and often in conflicting terms, about the quality of Italian university education. From my point of view, the average is good, and absolutely in line with that of other Western countries. The real difference lies in post-graduate experience, and that’s where does Italy lag behind. So as not to waste the good work of some universities, investments need to be made in the creation, for example of a support system for new graduates in the form of an Alumni network. The real problem, however, is that professional opportunities are not available inside companies that are often scarcely internationalized and not very willing to invest in young people and in continuing training. This is not only a question of size and capacity for investment, but a real cultural problem, especially as regards the sector of consumer goods. I am seeing companies that still consider themselves “manufacturers” whose work ends when the product is ready. This model, founded exclusively on distribution, can be comforting, but it no longer exists. For example, here in Singapore, distributors no longer invest in brand development because there are too many risks and, perhaps, due to the company’s lack of interest. In fact, to preserve the brand you have to control the entire production line; the more Italian firms understand this, the more opportunities there will be in Asia, for them and for their managers.
Andrea Monni is a partner at Algebra, a firm specialized in support services for Italian companies in the process of being launched and developing in the Asia-Pacific region; he is also Co-Founder & Managing Partner of Blue Spark Hub, a scale-up program in Asia for European start-ups. Andrea has more than 15 years of experience in business development in China and Southeast Asia in a variety of sectors ranging from luxury goods to distribution, logistics, energy and digital technologies.
