Fighting Qualities

01/03/2015
Rosario Alessandrello, President of the Italo-Russian Chamber of Commerce, calculates losses due to sanctions, but remains optimistic.

Our conversation took place soon after the President of the IRCC has “inspected” Italian restaurants, of which there are about 80 in Moscow and the surrounding area. In all of Russia, there are 120. And the owner of each of them is now thinking about what to use to replace Italian products subject to sanctions. Rosario Alessandro considers that there is no sense in bringing a buffalo cow from Naples into Russia, but there would be in bringing in equipment for producing the famous cheeses.
─ Signor Alessandrello, are Italian restaurants really under threat?
─ To be honest, I am very upset. There really is a threat. The point is that Italian restaurants in Russia have to be certified. But a certificate can only be obtained if original Italian products are used in preparing the dishes – for example, mozzarella, burrata, ricotta and other soft cheeses. Fresh vegetables and fruit grown in Italy are required. If this condition is not met, Italian restaurants in Russia automatically lose their certificate. For the time being, they are all carrying on by using old stock. But these soft cheeses will soon have to be taken off the menu. Furthermore, problems are now arising with fish.
Those who understand the whole seriousness of the situation are thinking about ways out of it. But some are starting to use non-original products. And next year, when they have to extend the term of their certificate, they will risk losing it. The IRCC also takes part in the certification process, by the way.
─ I hope you will not be too strict. Businessmen are not struggling because they have been leading La Dolce Vita.
─ I realise that. Furthermore, this is not the only damage to our economic relations. The import into Russia of semi-finished products of furs and leather from which footwear and clothes were made here is also subject to sanctions. So far this damage has not been that significant, but it will increase sharply as time goes by. By March 2015, Italy will have lost about one and a half billion euros, if not more. For example, Russia has always been among the leaders for the import of Italian grapes, but now that import has been cut by half. The same applies to dairy produce, tomatoes and much else. In recent years, Italian products have been sold in Gastronome No. 1 in the Moscow GUM and in such shops as “Alphabet of Taste”, “Globe Gourmet” and “The Seventh Continent”. These are the major distributors of Italian products. Muscovites have become accustomed to eating in restaurant chains with traditional Italian cuisine. There are hotels in the Russian capital which have the right to sell Italian products. All this must be preserved. Such a super-city as Moscow should not be deprived of original Italian pizzerias. But this could happen if they are deprived of their main ingredients: flour, cheeses and tomatoes.
It is not only agricultural producers and the leather industry which are suffering because of the sanctions. The supply of processing equipment for the oil and gas industry and engineering has been reduced. We shall see the consequences of this in 2015. And as for consumer-goods products, we shall feel the losses here very soon.
But all the same, I remain optimistic. I hope that by March of next year, if Russia, Ukraine and the EU come to a suitable agreement, the sanctions of each side against the other will be lifted, and relations will return to what they were before. It could happen that all the 28 countries forming the EU will refuse to prolong the boycott against Russia. And even now, some EU countries are coming out in favour of giving up sanctions. They are proving too expensive.
The Italo-Russian Chamber of Commerce at once became aware of the new situation in which we find ourselves as a result of the Ukraine crisis. Therefore, we are doing all we can to arouse interest in Italian enterprises working in Russia and in Russian enterprises operating in Italy. It is understandable that the IRCC must protect the interests of its associated members. And after the first sanctions against Russia introduced by the EU, we sent out an official communiqué, which was quite severe in relation to the economic war unleashed at a time when civil conflict was already raging in Ukraine. At the heart of it all is an internal conflict within one country. It is understandable that both the EU and Russia have been drawn into it. But anyone who takes a political conflict into the arena of trade is making a strategic error.
Sanctions against Russia, it was thought, ought not to cause any harm to American and European companies. They were intended to slow down the development of Russia’s economy. But Russia responded with countermeasures, which mainly hit European businesses, including Italian ones importing their products onto the Russian market. It turned out that we suffered even more than others, because agricultural produce forms a large part of imports from Italy. And they are all produced by small and medium enterprises.
─ Can the Italo-Russian Chamber of Commerce do anything to help them?
─ We have undertaken an important initiative. We have called on all members of the IRCC not to give up, not to panic, not to retreat from the positions they have gained. In these difficult times, one has to show wisdom and real fighting qualities. The circumstances must be resisted, and a way out of the most difficult situations must be found. The main thing is not to lose our Russian clients, not to let them go away to our competitors, to find new commercial niches. Furthermore, the same applies to our Russian partners having production centres in Italy.
I realise that this isn’t easy. There are serious problems arising in the banking field too. Many Russian banks used to top up their reserves of foreign currency through the European banking structures, and this option is no longer available. And this is a serious loss for Russia. Russians cannot get credits in European banks, which creates great difficulties, unbalancing financial schemes in force. But one must hope for the best and hold on. Everything must be done to get us out of this quagmire. Russia and Italy have a long-standing commercial market.
─ An import replacement process is under way in Russia, new trade partners are being sought. Those same Italian cheeses are now being produced in Tverskaya oblast, brought in from Turkey…
─ We realise that countries not belonging to the EU have been given a chance to become established in the Russian market. This applies mainly to the Asian-Pacific region and Latin America. But it must be understood that Italy makes special products of exceptionally high quality. No-one can make fresh burrata cheese from the cream and milk of buffalo and other cows better than the Italians. It was first made in 1920 on the Biancini farm, and the secret of its production is kept there to this day. Of course mozzarella can be imported from Turkey, and it is even equivalent in composition. But it is not the original product, embodying all the characteristics which it should have. That’s why it tastes different.
We do not want to lose clients who understand this taste. If they become accustomed to a lower quality product, it will be much more difficult for us to return to the Russian market. Large-scale procurement of equipment is now going on to enable Italian cheeses to be made here in Russia. We are importing not only the equipment, but even the people who know how to use it.
─ So maybe it will be Italian entrepreneurs who bring in not products, but equipment and technologies?
─ Maybe. Indeed, they are already doing so. They are seeking Russian partners for opening joint ventures. Of course, every effort must be made to ensure that the mozzarella made here in Russia is as close as possible to the original. But all the same, all the ingredients for its production will not be enough. You can’t bring buffalo cows here from Naples to produce the milk for real burrata cheese. It takes years to import cattle into Russia. And the pastures here are not the same, and the climate is not so suitable. What sort of milk will that be? For example, Parmesan is produced throughout the world, but believe me, real well-matured Parma cheese can only be obtained in Italy. It takes months to ripen. These are complex technologies and production systems which have been developed in Italy over several decades. And then the cow must be fed in a certain way if her milk is to be made into cheese like that…
─ All right, let’s leave the cows grazing in Italian meadows. But then what can Italian investors bring to Russia?
─ It is not possible to bring the entire production chain here. Only some of the equipment and technical personnel can be brought to Russia. And the same soft cheeses are being made here from raw material supplied from Italy. There are already examples of this in Tverskaya oblast, Rostov and Vladikavkaz.
There are even more examples of Italians transferring the production of building and finishing materials to Russia. This is all somewhat easier than cheese. It is mostly technologies and equipment that are needed. As long ago as 2005, the Russian company KERAMA became part of a major Italian producer of building ceramics, the MARAZZI GROUP. The result of this union was the KERAMA MARAZZI group, a leading Russian producer of ceramic tiles and ceramic granite. The creation of Atlas Concorde Russia is a new step in the process of the growth and Russian market share of Atlas Concorde. Way back in 1993, this company was one of the first Italian manufacturers to start exporting its ceramic products to Russia, and it won leading positions in quite a short time. The Italian company Mapei has also become established in Russia, selling construction chemicals. This market segment is not affected by sanctions, and investors need have no fear of entering it. And another reason is that a real construction boom is taking place now, not only in Moscow but throughout Russia.
Many furniture production facilities have also been created on Russian territory with the aid of Italian investments and technologies. Mobilitalia is operating successfully here as a representative of Italian furniture factories in Russia. And this field continues to have good prospects, because Muscovites and Russians as a whole realise that Italian furniture is not just a brand, but primarily a sign of quality. And although the consumer goods market is in recession in Russia today due to the lower rate of the rouble, I do not think that this will last long. Russians recover amazingly quickly from any crises.
─ Are you explaining this to those of your fellow countrymen who are potential investors? Or are they waiting for the lifting of sanctions?
So interest in Russia has not been lost, rather the reverse. This applies to widely different fields, beginning with projects for creating high-speed railways, and ending with the development of fast food chains. There is considerable interest in the field of urban construction. The Italian firm Land Milano srl recently won the open international tender for an architectural concept on Khodynskoye Field in Moscow. And this is not the only architectural studio from Italy which is represented in Russia.
─ I regularly bring to Russia Italian investors who are ready to open joint ventures here, or to represent their interests here. They are willing to work in Russia even though they can see that there is a wide range of problems here in many fields. For example, in the transport infrastructure: on the railways and motorways, and at airports. They can suggest ways of solving all these problems, and this is precisely the purpose of my activities. The point is that investors want not simply to sell their goods, but also to find a reliable Russian partner. The Chamber tries to help them in this.
Italians are not averse to building motorways, bridges and underground railways here, and building them at a contemporary level of technology. I personally know several such businessmen. When they find out how much money is being allocated for these purposes from the Russian state budget, they dream of entering this market. Furthermore, unique experience has been built up in Italy of turning transport hubs into full-scale commercial projects, where people can buy something and enjoy their leisure. The new railway terminals in Milan and Bologna are positive examples of this. Our experience in organising suburban transport is equally interesting in view of the active development of this field in Moscow now. And no sanctions hinder our cooperation here.

Fonte:http://www.bigrussia.org/post/read/239

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