The New Wave of Globalization Made in Italy at Chinese Prices

The next stage of globalization is in full swing in Prato, once the center of the Italian textile industry. After the city lost jobs to factories in the Far East, now the Chinese and their low-wage workers are encroaching on Old Europe.

Prato's old city wall is wrapped around the city like a tightly cinched belt. The pale brick wall, 15 meters (49 feet) tall and topped with battlements, encloses the city's marble cathedral, baroque churches and palaces while a river gushes beneath ancient bridges built by the Etruscans. Built in the Middle Ages, the wall once protected Prato from outsiders. Today it's little more than a picturesque backdrop.

Outsiders have long since made their way into Prato, Italy's textile-making capital in the heart of Tuscany. Luigi, a 30-year-old man with a boyish face, waits in the shadow of the wall, his black hair gelled into spikes, a constantly ringing mobile phone in his hand. Luigi is a Chinese businessman from Wenzhou. He calls himself Luigi because it's easier for Italians to remember. Practically every pizza maker in Italy is named Luigi, he says. He prefers not to reveal his real, Chinese name. It would be bad for business. The Chinese Luigi wants to keep his story a secret in Prato.

It's Sunday, an ordinary work day for the Chinese. Luigi hurries through a gate in the wall, walks down a narrow street through his neighborhood, passing the Square of the White Stone and the Palace of the Rising Moon. The names are Luigi's inventions and his way of familiarizing himself with the city more quickly. When asked what his goal is, he says: "to get rich as quickly as possible." And when asked what he calls home, he answers: "the whole world, but my heart beats for China."

The new home of 2,000 Chinese entrepreneurs and an army of low-wage workers, 25,000 strong, is growing rapidly in front of the walls of this small city of 180,000. One in five of the workers is undocumented and, officially at least, isn't even here. Meanwhile Prato's citizens look on and curse their new neighbors as sewing machines rattle through the night.

The houses in Luigi's Prato, outside the wall, are decorated with red lanterns and neon signs emblazoned with Chinese characters that might as well be secret codes. The residents of Luigi's street, Via Pistoiese, are almost exclusively Chinese. They wear blue blouses and flip-flops and have spiky angular haircuts. They have little reason to be homesick because-- after all, they have built their own miniature version of China here, one of Europe's most dynamic Chinese colonies.

They wait in line at money transfer offices and peruse job listings flickering across digital display panels. In their supermarkets, they squat between rows of good luck charms and frozen duck tongues, smoke under "No Smoking" signs in restaurants with names like "Hong Kong," blow their noses, spit onto the ground and flick their cigarette butts into the street. Non-Chinese are barred from their gaming halls and Internet cafes, where the windows are covered with layers of dark film. Global time clocks hang on the walls, a constant reminder that China is seven hours ahead.

In the evening, when the sun sinks behind the Apennine Mountains, the streets are empty and the courtyard factory buildings are bathed in neon light. Chinese workers now sit -- in seats occupied in the early 20th century by Italians who worked the looms and fought for workers' rights and unions and gave Europe's leading textile center its reputation -- in front of Juki sewing machines, their backs straight, working silently and industriously into the night, every night. Laoban, the foreman, supervises their work while carts deliver bolts of material and spools of "Made in Italy" labels. The sound of Chinese pop songs drifts softly through the windows.

"St. Beijing"

Prato's residents call the immigrant neighborhood, which has grown rapidly in the last five or six years in an area once inhabited by local factory workers, "San Pechino," or St. Beijing. When the first Chinese, their suitcases filled with cash, arrived in the early 1990s and leased their factories, the Italians laughed at them. But now that their numbers have quadrupled and they own a quarter of the city's textile businesses, where they make "Made in Italy" fashion at "Made in China" prices -- often illegally -- the newspapers are full of op-ed pieces about the "yellow invasion," low-wage competition and the Chinese mafia. The president of the city's chamber of commerce, who also happens to own a textile business, says: "We underestimated them. What they're doing here is called unfair competition. We need a battalion, an operation like the one in Iraq, to keep them under control."

Prato's residents are now frantically asking themselves questions to which they have no answers. Who are these Chinese? What is their objective?

The Chinese Luigi points to an unassuming apartment building where he lives with his wife, who is also Chinese. The couple sent its four-year-old daughter to her grandparents in China to learn the language and the culture -- and so that her parents can work even more. Luigi walks into a bar, its walls covered with wallpaper depicting photographed scenes of the skyline of Wenzhou, his hometown. He tells the story, quickly and soberly, of how he came to his adopted neighborhood. One of his favorite sayings is: "Success requires sacrifice."

It was the summer of 1993 and Luigi was 17. The Europeans and the Chinese were just beginning to open up their sweatshops in southern China's Pearl River delta region. But working there wasn't for Luigi, who wanted to be free and his own boss -- and was determined to be successful. He went to Italy illegally, as a "clandestino." His parents, a teacher and an office worker, put him on a ship in Shanghai. A "snakehead," a term used to describe a middleman working for a human trafficking operation, met him in Singapore. Together with 11 other Chinese, Luigi flew to the Romanian capital, Bucharest, and from there traveled by bus across the war-torn Balkans. They were shot at in Belgrade and some were arrested in Zagreb. After a two-month odyssey, Luigi finally made it to Italy after wading across a river at the Slovenian border. The remainder of the group didn't make it. At a rest stop, he called his uncle in Prato who brought him to a factory there.

Luigi spent the next two years working as a forced laborer, hemming pants 18 hours a day and earning €500 ($635) a month under the table, ten times the average worker's wage in China.

His new life began after he had sent €10,000 to his family, allowing them to pay off the human trafficking operation that had brought him to Italy. He wrote himself a five-year plan and drew up a list of Chinese contacts in Italy who would eventually lend him money, which he used to start an ironing service for an Italian textile manufacturer -- which has since gone bankrupt. In 1996, the Italian authorities awarded Luigi the status of "legalized illegal." Because he had a job and an address, he was given a residency permit and was allowed to stay in Italy.

Today Luigi owns an import-export business. He has four employees and his customers come from southern and eastern Europe. He imports cheap jeans, fake Ming vases and lighters from China. He says that if his business continues to do well, he'll start producing his own fashions soon. Like his friends in Prato, Luigi is a member of a new generation of overseas Chinese, a sort of transnational elite that thrives on guanxi, or relationships, and lives by an unwritten code whereby Chinese help each other anywhere in the world and never deceive one other. To them Europe is a chessboard. They jet back and forth, visiting old friends in Budapest, Greece and Spain, and treating Europeans as little more than extras in their lives. The Chinese have a term for self-made businessmen like Luigi, xia hai, or those who jump into the open sea. Viewed as traitors until a few years ago, they are now China's vanguard. They send know-how and money back to the mother country, are courted and are treated as models.

Luigi pulls his wallet from his jeans and extracts a €100 bill to pay for two espressos. His mobile phone rings, a sign that customers are waiting, and he rushes off in his new Audi. Many in Prato are envious of Chinese people like Luigi. His first Italian word was "vaffanculo," or "up yours!"

Winners and losers of globalization

Antonella Ceccagno, 48, a China expert, says that the people of Prato have a lot to learn about the winners and losers of globalization. She works in the city's immigration center, where her job is to provide statistics and mediate between the two worlds. She says that it was very depressing at first to listen to the stories of the Chinese immigrants, to their descriptions of conditions in the factories and their feelings of alienation in a country in which they couldn't even read their gas bills. Today, after 12 years in her position, Ceccagno has become a Cassandra of sorts, writing books with titles like "China is Coming." She warns against the parallel world she sees developing in Prato, which is fast becoming "a disastrous mix" of depressed businessmen, carelessly uninterested politicians and insular Chinese. The city, says Ceccagno, could benefit from the Chinese if it weren't for the mutual lack of trust and self-imposed separation between the Italian and Chinese cultures. "The Chinese are blamed for the crisis. But they're creating jobs, not stealing them. They are extremely dynamic and they surprised us. If they left today, Prato would be in trouble."

The city has become the scene of a clash between two cultures: the young, dynamic Chinese, who are willing to take risks and unafraid of being taken advantage of to further their own goals, and the Italians, who allow themselves to be intimidated and worry that Prato could soon spin out of control unless the Chinese and their companies are forcibly legalized. Prato is now a setting for globalization's next step. The first was when China took away Europe's jobs, and in the second they are now conquering the cities of the old continent.

Most Chinese in Prato come from Wenzhou in Zhejiang Province, 370 kilometers (230 miles) south of Shanghai. The city of 7 million sits in a basin between mountains and the East China Sea. Because of its proximity to Taiwan, Wenzhou was cut off from the rest of China until 1990. It had no rail service and no airport, making it a two-day journey to the nearest city. In the 1980s, when trade was still frowned upon in China, the people of Wenzhou borrowed money at high interest rates and smuggled their family members overseas.

They are said to have capitalism in their blood and have a reputation for being cunning businesspeople, doers and not thinkers, notorious for their clannishness and their network of 300,000 overseas Chinese worldwide.

A few Wenzhou expatriates who had managed to make a living in Florence weaving straw hats reported to their families in China that Prato was an ideal place to start a new life. Prato, they said, had everything the overseas Chinese needed to get a foot in the door: factories, real estate, textiles, machines, customers, small family businesses that would make the ideal takeover target and, most of all, it was far away from Beijing and beyond the Chinese Communist Party's reach.

Pronto Moda

The first Chinese in Prato were virtually invisible. They worked at home, making woolens and leather goods for Italian subcontractors who then sold the merchandise to big-name designers like Gucci and Versace. They served as a stopgap for Italy's textile industry, taking jobs the Italians no longer wanted and making sure that "Made in Italy" remained competitive in the global market.

But then came the crisis in the textile industry and Prato lost 5,000 jobs. A few Italians moved their production to the East and the Far East, while others shifted their focus to high-quality yarns and fabrics. Meanwhile, more and more Chinese were following in their relatives' footsteps. They were cheaper than Italian workers and faster than Chinese workers in China. They became competitors, penetrating the supplier industry and taking over their contracts and factories. It was their first chess move in a struggle for independence.

The new generation, successful transnational Chinese like Luigi and his friends, are now leading the second wave, as they buy up dyeing companies, form trading companies and, most importantly, produce their own fashion in their own companies and set their own prices for their goods. Their biggest competitive advantage is that they can produce locally but at Chinese prices and are extremely flexible. Instead of waiting weeks for containers and paying import duties, customers can buy merchandise from local Chinese-owned firms, merchandise that in many cases can be produced in a single night. Best of all, the labels say "Made in Italy," a synonym for style and quality. "They have completely reshaped the city's industrial zone with this invention," says Antonella Ceccagno. "Prato used to be a textile city. Today it's a low-cost fashion district."

The Chinese invention is called Pronto Moda. Although it's only been around for two or three years, billboards along Italy's highways attest to its success. The companies that populate the world of Pronto Moda -- about 400 so far -- have innocuous names like "Nuove Tendenze," (New Tendency) "New Europe" and "Round the World." They operate out of sensible, unadorned buildings densely packed in industrial zones and as faceless as garages.

Pronto Moda is inexpensive, off-the-rack fashion with which the Chinese flood the market within days of the Milan and Paris fashion shows. Its approach is straightforward. The new bosses sit in their offices, behind closed blinds, imitating but not exactly copying the latest trends. They hire Italian fashion illustrators who, although they're more expensive than their Chinese counterparts, have the necessary taste and experience with fashion. The illustrators flip though Dolce & Gabbana's sample books and "Collezioni," a magazine devoted to fashion shows, and scan the designers' Web sites on the Internet. Their bosses point out photos that interest them, tell the illustrators what they want tweaked or modified and that they have half a day to produce new illustrations, which are then dispatched to low-wage workers who sew together the new "creations" in the factories.

"At first I was ashamed," says one illustrator in her late forties. "But it just so happens that the Chinese like to copy. First they copy us, and then they copy their fellow Chinese from across the street. Look, it works." The showrooms are packed and the factories are filled with the sharp odor of textile dye. Eighty percent of customers are wholesalers from neighboring European countries. They come to Italy's Chinese producers to buy flowered T-shirts, viscose blouses and sequined jeans, pay cash, load the merchandise into their Mercedes sports cars and drive home to Germany, Poland or France. The merchandise, which has a relatively short shelf life, ends up in discount department stores, on bargain tables and in street markets.

Now that their city is in demand once again, Prato's residents are suddenly claiming that Pronto Moda was their idea all along. The Chinese, they say, are ruining the Italians' reputation with their cheaply made versions of Italian style. It shouldn't be tolerated, they say, because, after all, slavery is both the secret and the Achilles' heel of the Chinese immigrants' success.

Meng, a pale, thin girl with bangs hiding much of her face, lives on a small street in Prato's old section. She says she is 22, but she looks more like a child. She works long, grueling hours as a seamstress for one of the new Pronto Moda bosses.

She has a few hours off and is sitting in an Italian friend's kitchen, drawing brassieres and strapless evening gowns on a sheet of paper -- the kinds of clothes she'll never be able to afford. She wears a loose-fitting jacket and pulls down the sleeves whenever she moves her arms. A charm bracelet dangles from her delicate wrist, hiding unsightly scars.

Like many others here in Prato, Meng, whose name translates as "Dream," grew up in Wenzhou. Because her older sister was already married and her younger sister was still in school, the mother decided that Meng would be sent to Prato to prospect for Italian gold. She hid in her grandparents' house, but that didn't help. Her mother had already paid for the airline ticket and had hired a trafficker. Three years ago Meng flew to Rome and then went to Prato, where the usual torture began: working 15 or 16-hour shifts in the factory, occasionally even 30 hours during the high season. "Gold?" Meng said to her mother in their first phone conversation, "there isn't any gold here!" Last summer, after two-thirds of the €15,000 she owed the traffickers had already been paid off, Meng had an accident that changed everything.

She says that she fainted in the factory and stumbled into a glass door. The broken glass sliced into her arms, forehead, temples and nose. The foreman was furious and had her sent to a hospital, where she spent the next two weeks. A short time later, an Italian found her on a bridge in the old section of Prato. When she told him that she wanted to jump off the bridge, he took her in for a few days and then enrolled her in an Italian language course. A few days later she was caught riding a bus without a ticket and, after being told that she now faced deportation, Meng went underground for a while. She has been working again for the past four months, this time in a different factory where her sewing duties aren't as intense and she is encouraged to draw models, as she does now in the Italian friend's kitchen.

After eating her meal, she goes into the hallway and sits in front of a mirror, but without looking at herself. She calls her mother in Wenzhou, as she does every Sunday, and tells her about the clear blue skies over Tuscany. She never complains about her life as a slave laborer, knowing full well that her family wouldn't understand. She's homesick and wants cosmetic surgery. But she lacks the €2,000 she still owes the trafficker, a ticket back to China and her mother's permission to return home.

The Italian who saved Meng works for the city of Prado. He prefers not to identify himself, and he says that all he can do for Meng is occasionally invite her to his apartment for a pasta meal. Meng shares a bunk bed with another illegal worker in the foreman's house on a nondescript street on the other side of the wall.

Bankrupt without the Chinese?

Prato's town hall isn't far from Chinatown. Girls like Meng walk past the building every day in giggling groups, carrying plastic bags, coming from their factories and walking home to their neighborhood. Marco Romagnoli, Prato's 56-year-old mayor, greets visitors in an office decorated with oil paintings of famous textile merchants. He was once a communist and is now a socialist. He talks about a game he played as a child. His older brother would stand in front of the wall while he stood on the other side. The brother would call out: "I am from Prato and you are an idiot from the countryside." It's a game that no longer works today, says Romagnoli, because local patriotism is no longer appropriate. "We can no longer afford the luxury of ignoring the Chinese. The world has stumbled into our house and we have to deal with it. But at what price? Don't ask me!"

The city, says Romagnoli, is paying for the negative aspects of its own growth. "There is no question that Old Europe is bankrolling the success of the Chinese." But Prato, he says, is certainly benefiting. The city would be bankrupt without the Chinese, who are buying houses, cars and fabric, creating new jobs and filling old jobs. And Prato's citizens are reaping their share of the profits, charging astronomical rents for dark, poorly ventilated and dilapidated factory buildings without toilets or doing a healthy business in forged documents.

"Economically they're a blessing," says Romagnoli, "but they are a catastrophe for the community." The Chinese live in their closed society, with four Chinese-language newspapers and their own TV programs. With the exception of the new business owners, hardly any of them speak Italian. The city pays for interpreters, hospitals, schools and even Chinese courses to encourage its Chinese population not to send its children back to China but to Italian schools instead. "They don't respect our rules. If we shut down a factory, they reopen it under a new name. Many don't pay taxes and are polluting the environment," says Romagnoli.

A few months ago the mayor met with the then opposition leader and current prime minister, Romano Prodi. Prodi's advice to Romagnoli was to find a visionary who could provide solutions to Prato's problems. He told him that after spending 15 years paying the social cost of supporting such a large immigrant population, Prato should find ways to turn its problems into profits. Attract Chinese tourists and export your "Made in Italy" products to China, Prodi told the mayor, and cooperate with the Chinese instead of working at loggerheads. "We're still looking," says the mayor with a wan smile.

On Sunday evenings the new generation of overseas Chinese dines at the Borsalino Restaurant, which has adapted to its new clientele by specializing in raw fish. Luigi and his business friends with their adopted Italian names, Marco and Gabriele, are sitting at a rotating table, spearing slimy oysters and crawfish with their chopsticks and downing bottles of ice-cold Barolo Beer. They are self-confident and in high spirits. They say that they are helping Prato grow, and they wonder why Europeans are lazy and yet insist on earning hefty salaries.

One of the men at the table is Xu Qiu Lin, 39, a Chinese textile manufacturer with an angular crew cut and a Buddha smile, a touch heavier than the others and not as boisterous. The Italians call him "Signore Giulini" and, in a reference to automaker Fiat's chairman, the "Montezemolo of the Orient." He is the only Chinese member of the city's chamber of commerce and, as far as the mayor is concerned, a model Chinese entrepreneur, because his workers are legal, he pays his taxes and he sends his staff, 10 Italians and 15 Chinese, home at 7 p.m.

Xu Qiu Lin's factory, between Chinatown and the city, is orderly and clean. Fashionably dressed, blonde Italian women serve espresso to guests, the walls are decorated with photos of Chinese politicians and Xu Qiu Lin shakes hands with his visitors under banners with words like "Forward." When Xu Qiu Lin came to Prato 16 years ago he worked as a leather cutter for Benetton. Today, after having recognized that there is no real future in cheap goods, he emphasizes quality. Competitive pressure has become too strong since trade barriers for textile imports were reduced and China began flooding the market. He produces high-quality, "Made in Italy" leather and down jackets. The price is right, and so is his label's international image. Xu Qiu Lin, a Chinese entrepreneur in Italy, has signed a fellow immigrant, from Argentina, as his label's spokesman: Gabriel Batistuta, a former star forward for Florence's Fiorentina Football Club.

Xu Qiu Lin will be successful. His annual sales have already reached 15 million. He stands in his office and looks out the window. His gleaming, black Porsche Cayenne, upholstered in pale leather, is parked in the courtyard below. Someone has spray-painted the words "Out with the Chinese" on a wall a few buildings down the street. Xu Qiu Lin flashes his Buddha smile.

He's already taken his business a step further. He recently opened a factory in Shanghai, where 300 workers produce clothing under Chinese conditions. Perhaps this is the third stage of globalization, this future that seems to be taking shape in the office of Xu Qiu Lin, the man the Italians call Signore Giulini: Now that the Chinese have infiltrated Europe, they're back to producing their goods inexpensively in China.

Translated from the German by Christopher Sultan

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