Our Portfolio NewsMarch 30, 2020by Pavel0Made in China


Home-quarantined Italians and Spaniards those days sing from the balconies. In Spain, we hear the anthem every night. In Italy, one hears also Volare or Il Canto della Verbena. People are doing this to maintain and strengthen linkeage and interconnections: only defense people have against their own fragility today. They feel, that to a large extent their state and its EU counterparts have failed their trust.

Few today point a finger at the asymmetric information how a new biological weapon was dumped in the heart of industrial Italy. Why this matters to investors? Because buy and sell times are around the corner. Russia did not wait a minute to dispatch support where China long ago bought up assets. Europeans do not trust Europe will work to bail us out this time. Weierstrass, a 19th century mathematician, has an approximation theory which says problems based on wrong assumption have no right answer.  EU is at risk that it will be bought, piecemeal, by players who have cash and are willing to shed it.

Ms. Merkel made the point last week to the Spanish and Italian prime ministers. The lack of consensus over the creation of new tools like the coronabonds left the European Stability Mechanism as one of the few options available to Italy, and possibly to Spain, down the line. ESM won’t kick start SMEs in either country. It is a mix of steps that will. Most entrepreneurs we know are dismissive of accepting state injections in exchange for equity and some states are trying to go down this route.

By 2014, several hundred Italian businesses were already owned by Chinese investors, not including the ones owned by Chinese living in Italy by then. China’s central bank held stakes in several Italian blue chips like Fiat, Telecom Italia, Generali, and Eni.

While the public 5 years ago was seeing  “do not buy “Made in China” items” signs, cheap imports from China were inferior knock-offs, from clothes to pasta. This changed over time and even an online portal—vendereaicinesi.it, which means “sell to the Chinese”. Human tragedy is not to mix with business examples but one must think long term before inviting the quickest investors who have cash. Reaching to existing partners is the best way out.





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