People have been warning for years that China may decimate Italy's once dominant textile industry. According to Italian Paolo Banfi, the relationship is one of love, not war.
"We are a good couple," says Banfi, when describing the relations between members of the Association of Italian Textile Machinery Manufacturers (AITMM) and Chinese textile companies.
The president of AITMM explains that Italy is among the leading producers and exporters of textile machinery and China is ranked as the top manufacturer and exporter of textile and apparel products worldwide.
"Collaboration between the two sides may guarantee Italian related businesses take full play in the world's fastest growing market," says Banfi. "And Chinese manufacturers can get the world-leading textile producing technologies and equipment for the first time."
According to Banfi, who has decades of experience in the textile industry, tradition, knowledge, and links with the Italian fashion industry are the key factors for the European nation's success in the textile machinery sector.
The Italian business model, characterized by small companies and localization of firms operating in the textile downstream within the same geographical area, makes it easier to pay attention to the customers during the manufacturing of the machine and set-up stage. This customized machinery, Banfi says, gives maximum results regarding the fibre used, the operating conditions, and the suggestions of the customers themselves.
Statistics from AITMM show that there are approximately 300 companies manufacturing textile machines and related accessories, employing a total of 22,000 people in Italy.
Last year, production for the sector chalked up 2.5 billion euros (US$3.1 billion), with exports worth 2 billion euros (US$2.5 billion). Exports represented 79 per cent of total sales; China was its third largest exporting destination.
"For the present year we have not yet forecast production and exports, but we are confident that 2006 will be better than the previous one," Banfi says.
A series of studies and analyses done by widely varying groups and institutions, such as the World Trade Organization (WTO), the World Bank, and McKinsey & Company, have all come to the same conclusion that China will dominate world trade in textiles and apparel in the future.
"The entry of China into the WTO and the liberalization of the textile market occurring with quota elimination will represent quite positive advantages for Chinese textile enterprises," says the industrial association's president.
Growing production capacity results in ever-increasing demand on manufacturing machinery. During the first five months of this year, China's textile machinery imports amounted to US$506 million, up 7.48 per cent from the corresponding period last year, say sources from the China Textile Industrial Association (CTIA).
Banfi admits that, in addition to its market size, China is one of the most sensitive to the changes taking place in Asia, which, to some extent, can be regarded as a thermometer of the continental market.
Italy keeps a leading rank among the top providers of textile technology to Chinese companies, and China is the leading market for the Italian textile machinery industry, with a 17 per cent share of Italian exports.
In 2005, Italian's textile machinery sales in the Chinese market amounted to US$420 million, up 6 per cent by the previous year and taking a market share of 13.7 per cent in China.
Of the machinery exported to China, some 27 per cent is for yarn preparation and spinning accounts, 21 per cent for weaving, 24 per cent for knitting and 15 per cent for finishing.
In the first four months of this year, Italian textile machines exported to China surged by 17 per cent on the same period last year.
"We are confident that at the end of 2006 Italian sales on the Chinese market will observe a further increase," Banfi says.
Actually, in addition to exporting machinery to Chinese clients directly, Italian manufacturers have actively taken efforts to establish joint ventures or complete industrial chains with domestic partners, says Xu Yingxin, vice secretary general of CTIA.
Italian giant textile machine producer Somet signed a US$2.8-million contract with Xiqiao, a traditional textile and clothes manufacturing town located in South China's Guangdong Province, to set up a research and development centre and plant.
So far, there are 1,256 local textile companies equipped with 30,000 sets of machines in Xiqiao, with around 60,000 employees producing capacity exceeding 1 billion metres annually.
"We aim to settle down most closely with our clients, which can facilitate us in understanding their unique demands directly to upgrade our products efficiently and, on the other hand, help them speed up technological renovation," says Luigi Gerolla, CEO of Radici Group - parent company of Somet.
Prior to the Xiqiao deal, Somet has injected US$19.8 million to set up a joint venture with Shaoxing Light Textile City of East China's Zhejiang Province and inked a technology transfer contract with China Textile Machinery Co Ltd for 260,000 euros (US$318,500).
Somet's parent company Radici is a large textile machinery group with annual turnover of US$1.45 billion and 45 subsidiaries around world.
"Though there are no specific statistics for such kinds of co-operation, we find that more and more leading Italian players are seeking relevant advice from us and accept our recommendations to connect with candidates directly," says Xu, adding that his association is sparing no effort to strengthen links with AITMM in a bid to provide a more efficient and transparent platform for the businesses.
