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THE ECONOMIC CRISIS and new markets
by Diego Pastori
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The global economic crisis continues to make itself felt, but now is the time to
introduce new strategies for the future, for when the market starts to pick up
again. We need to ask ourselves a simple question: “What can I do to improve
things now, right away?”
The seemingly endless crisis affecting
the global economy has,
needless to say, also hit Italy.
However, compared to other European
countries, Italy has been less
affected: the many reasons for this
need to be considered in the light of
each business sector. On a general
note, however, the main reasons are
due to the size of Italian firms and the
fact that they are – forgive me for saying
this – “behind the times” in their
organisation.
Certainly, it’s not complimentary to
talk about Italian firms in this way, but
it’s a matter of fact. Italy has many
more small businesses than the other
European states: our multinationals
are far and few between. In terms of
global ranking (such as the list of top
businesses produced by the American
Forbes magazine) whereby the
world’s companies are judged on
the basis of their sales turnover, very
few Italian businesses are included in the lists, unlike other EU countries.
These include ENI, Luxottica, Mediaset,
Fiat, Ferrero and Benetton, plus a
couple of banks (Unicredit and Banca
Intesa). The reason lies in the individualism
of Italian entrepreneurs and
the poor organisation of State support
over the past 40 years. In fact,
the Italian State has never favoured
major groups (perhaps fearing these
might gain too much power) and so
the Italian economy has grown mainly
thanks to the efforts of many small entrepreneurs.
The same is true for tax
and how it’s organised: hundreds of
(sometimes stupid) obligations leading
to a waste of time as a business
grows. All this has led to what I would
call Italy’s “chronic lack of organisation”.
In other words, a lack of a real
managerial class in our companies,
mostly still run by the owner, the family
or other relations, assisted by just
a handful of workers. This has, however,
turned out to be an advantage: Italian firms are more flexible and so
have been able to reduce their size in
response to a fall in turnover during
the current recession, without really
affecting the way the Italian economy
is organised. Naturally, all these small
firms have, over recent years, been
aware of the fact that the domestic
market was bound to see a fall in
sales owing to its saturation and so
they have looked to foreign markets,
albeit on an individual (sometimes
confused) manner. And always without
any help from the State, whose
agencies are cumbersome and slow
to react. Italian businessmen have
penetrated new markets, with interesting
results, thus minimising the
effects of the global crisis. While it’s
true that Eastern Europe, the Far East
and South-East Asia have all felt the
effects of the global economic crisis
(negative GDP throughout Eastern
Europe, apart from Poland; currency
exchange rates down by 25-50%, with the risk of bankruptcy for countries
such as Lithuania and the Ukraine),
their need for primary goods and the
good reputation of Italian products
around the world (despite minimal
promotion by the State) mean that
Italian firms have managed to sell
“the odd item” abroad. This has offset
the drop in demand on the domestic
market. Of course, I could quote a few
remarkable exceptions, but the above
remains true if we discount a few major
markets, such as that of general
industrial machinery.
::: So what is the outlook for the
future?
The crisis is bound to pass, as all major
economic crises have in the past
(the Great Financial Crisis of 1914, the
Great Depression of 1929, the Oil Crisis
in the 1970s). But when? Sooner
rather than later, that’s for sure, as all
States are now taking action to finance the markets (though unfortunately
this is mainly aimed at supporting
the banks, who notoriously put their
own interests first, before those of the
market) in order to encourage a recovery.
We must never forget that the
GDP is simply an index that measures
consumption, not productivity: a fall
in gross domestic product basically
means that people have stopped buying,
not that companies have ceased
production. In theory, a rise in GDP
means that current product stocks
will be reduced.Foreign countries are
expected to provide a boost to the
economy, especially those already
mentioned. They all have a great need
for basic goods: well developed in industrialised
countries, but still hard to
find in such countries. Some countries
in East Europe need help in all
areas, from homes to cars. For example,
their apartments are traditionally
very small and so families, as soon as they have more available income, are
very keen to buy larger homes. This
means increased demand not only
for construction materials and fittings
(doors, windows, lifts, etc.), but
also for new consumer goods (linen,
crockery and ornaments, white goods,
etc.). In other words, it’s my opinion
that all the conditions already exist
for a turnaround in the economy, and
soon. As Machiavelli said, we need to
“unfurl our banners before the wind”,
i.e. get ready now.
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