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The Rupp Report

The Rupp Report: Chinese "Made In Italy"

Jürg Rupp

For months, Bangladesh has been the focus of some very bad press due to the recent accidents in garment factories. The Rupp Report has informed its readers in several articles about the situation in Bangladesh. However, there is another place, and this time in Europe, that has some comparable points. The issue is the situation in the traditional textile city of Prato, Italy.

Due to a fire in a Chinese textile factory in Prato, seven people were killed a few days ago. The victims of the accident, seven dead and four wounded, were all Chinese. The fire disaster draws attention to the miserable living and working conditions for what is essentially slave labor in this town.

Many Chinese Immigrants
Among all Italian cities, Prato has by far the highest proportion of Chinese immigrants. With a total population of about 188,000 people in the city, local authorities estimate the number of Chinese immigrants to be 30,000. According to official data, 277,000 Chinese live in the whole of Italy.

At first, the reason for the fire was not clear; the flames caused the collapse of part of the factory. In this part of the building is located a sleeping area with small bedrooms for the Chinese workers. The accident shows very drastic particular attention to the grievances. The problem for the workers is the fact that they work illegally in the industrial building as well as living with their families in primitive, shack-like crates. Because plastics were lying around, the fire spread rapidly, and the barred windows on the building hindered an escape.

Taking Over Control
In the past 20 years, Chinese entrepreneurs have taken control of the apparel industry in Italy's textile stronghold. According to local information, countless Chinese people work without a residence permit and at extremely low wages in the textile factories. Due to this strong competitive pressure, many Italian textile manufacturers have been forced to close down their activities.

According to the Chamber of Commerce of Prato, there are some 4,000 Chinese companies throughout the province, specializing mainly in the field of "Pronto moda," which means fast delivery, always new models at low prices - and some 10 to 15 illegal workers in each factory.

Authorities complain that the Chinese are hardly paying any taxes and the major part of their income is sent back home to China. On the other hand, social services, schools and hospitals are hopelessly overburdened by the same people. The anger about the Chinese "invasion" is largely spread around Prato. The rage of thousands of Italian workers who have lost their jobs in the textile sector during the last few years is big and permanently increasing. Since the year 2000, the number of people officially employed in this sector in Prato has been halved to just 20,000.

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These Chinese enterprises in Prato export all over the world and supply big retailers such as Zara, and many more smaller and local textile businesses. The hourly wage is estimated to be 1 euro, and the work shift is up to 18 hours a day. Local authorities have failed so far to control the situation. The city councilor of Prato, Aldo Milano, responsible for the safety, lamented that the city had been abandoned by the government despite repeated warnings.

The Italian Way
A number of representatives of the authorities in Rome expressed their horror after the fire, and Minister for Immigration Cécile Kyenge condemned the situation at the factory as a serious violation of human dignity. However, as in previous situations, such pronouncements were never followed by action. In January 2010, Italy's minister of the interior announced a tougher fight against illegal Chinese workers in Prato. The police in this regard conducted a big raid, which was denounced by Chinese officials for its "SS methods." Apparently, nothing has changed in the meantime. Nevertheless, Mayor Roberto Cenni proclaimed an official day of mourning and called for a tougher fight against the permanent illegality in Prato.

False Labeling
The label "Made in Italy" gives a good conscience. One might think that the label stands for good Italian fashion and products that are produced reasonably fairly and still very cheap. But the customers are somewhat fooled and betrayed. The fact that the sweater is so inexpensive is definitively not only because of the low-cost fiber material. The low price is up to the Chinese companies in Prato, whose employees are working under severe and miserable conditions, as the accident shows.

Italy has long been regarded to be a non-problematic country of production. Even the global Business Social Compliance Initiative (BSCI) didn't assess the EU country to be a risk nation. For the BSCI, even after the devastating fire in Prato, Italy is not among the high-risk countries, like some 14 other EU member states, such as Romania or Bulgaria. Strange enough, the poor working conditions in Italy, especially in Prato, are not news to BSCI.

With the very speedy fashion industry, Asian working conditions have now arrived in Europe. Authorities claim that a completely deregulated paradise for Wild West capitalism was generated in Italy, which brought the so-called sweat shops into the heart of Europe.

Different Views In Prato
In the center of Prato, the second largest city in Tuscany, the recession that has afflicted Italy for several years is surprisingly less severe than in the rest of Italy. In spite of all these troubles, the president of the Industrial Association of Prato, Andrea Cavicchi, pointed out that in contrast to the situation in the rest of Italy, the local economic performance has dropped very little during the last few years. Accordingly, the unemployment rate is around 7 percent, which is significantly lower than the national average of 11 percent.

But how is that possible in a city that in the last 20 years has lost 4,000 enterprises, which represent half of its textile companies that employed 20,000 people? The answer is, here is the largest Chinatown in Italy, or in Macrolotto - the large-scale industrial district of Prato, where the majority of the approximately 3,600 Chinese apparel manufacturers are located. According to official estimates, these companies have an annual turnover of 1.5 billion euros, of which just more than 50 percent comes from exports.

Miserable Working Conditions
In the buildings of the Macrolotto, the apparel not only is stored but also is produced, mostly under miserable working conditions. Experts say that the Chinese workers would be smuggled into the country, just like the fabrics, with some help from interested parties. They work like slaves for a pittance of one euro per hour for their Chinese patrons.

And now, for the mayor of Prato, the tragedy was predictable. He complained bitterly about the Chinese, who don't follow any rules, don't pay taxes, and don't spend any money in Prato but send all the cash home. On the other side, they send their children to local schools and the hospitals are overcrowded - half of all newborn babies in Prato today are Chinese. "Prato is helplessly overextended by the Chinese invasion," the mayor claimed. But why has no action yet been taken?

The Chinese Way
Local government problems are said to include the lack not only of enough police officers, but also of legal tools. The control of the Chinese is not only due to some language barriers; it is about the Chinese starting new businesses every year or two and taking old companies out of service, basically to escape paying taxes. According to the Chamber of Commerce of Prato, the annual registration of new Chinese companies is close to 50 percent of all registered companies.

Hope Of Deliverance
On the other side, the repeatedly used image by Italian media of the Chinese destroying the traditional indigenous textile industry is said to be wrong. This is also the belief of the president of the industrialists, Cavicchi, and the local secretary of the trade union.

According to Cavicchi, a textile entrepreneur, the situation has now stabilized. Many of the remaining 2,800 Italian textile companies with some 20,000 employees achieved an annual turnover last year of more than 3 billion euros, which has considerably improved their capital situation and competitiveness. Cavicchi said that those companies are dedicated to quality and innovative fabrics, which are in high demand in Asia. He hopes that the local and the Chinese companies in Prato will cooperate in the future and combine their respective strengths. Previous attempts at cooperation have mostly failed. However, Cavicchi is confident "because already two Chinese companies became members of the Industrialists association." The last word in this Sino-Italian melodrama is not yet spoken.

December 10, 2013