“Companies are coming to this market,” said Dr Ing Luigi Galdabini, president of UCIMU-Sistemi Per Produrre as he explained Italian companies’ recent activities in Southeast Asia at a business matching workshop in Singapore.
From January to September last year, figures from the association showed that ASEAN market volume increased by 16.9 percent when compared to 2012. This trend looks set to continue as Dr Galdabini has said that Italian companies would like to improve their position in the ASEAN market with offerings, which he added are “the right products for this market.”
According to him, Italy has been exporting machine tools actively over the years. As a matter of fact, he revealed that more than 75 percent of the country’s output is exported to all corners of the globe, cementing the country’s position as the third largest exporter of machine tools in the world.
Currently, Italian machine tool builders’ activities in Asia largely centre around China and they have been fairly successful. “One in every six machines that go to China is an Italian machine,” he said.
This is a significant amount given that the country’s total machine tool output in 2013 was almost €5 billion (US$6.85 billion). However, as the fourth largest producer of machine tools in the world, they believe they can do better in Asia and have targeted Southeast Asia as their next port of call as they muster resources to make a big push in the next few years.
Eye On Indonesia
In order to have a meaningful presence in this region, companies have to cater to local needs. According to Dr Galdabini, Italian builders are primed for such endeavours.
He said: “Italian (companies) are very good in making special solutions with high technology. In Italy, companies specialise in niche programs. We use the same technology as the Japanese and Germans but tune the solutions for you. Our culture is that we are very good in manufacturing, particularly in small batches, or even unique pieces.”
He added that they usually target to position themselves in the medium to the high end spectrum of the industry but with the ability to offer special solutions.
Before the event in Singapore, the companies also visited Indonesia, as they sought opportunities to conduct business there. “(In) Indonesia, the market for us is still small and we are not satisfied,” said Dr Galdabini, who signalled his intent to have a larger presence in the archipelago.
Although the country undoubtedly has potential for development with its large middle class growing day by day, 2014 may yet prove to be a challenging year as the weak Rupiah may present a barrier for machine builders eager to sell their machines into the country. For UCIMU however, it is more important to sow the seeds first before they can expect a bumper crop.
“If the Rupiah is going down, (there will be) probably less purchase this year. However, we cannot go in when it is booming and go away when it is not booming as our kind of business is a long term relationship. You need to be in a country for years before being profitable,” he said.
For Giovanni Zacco, market development manager of the BLM Group, currency fluctuations may prove to be a problem in the future, but that is a bridge he is quite prepared to cross when he gets to it. For now, the important thing is to make contact.
“The movement of money (currency rates) is normal in different periods. I don’t see this as our biggest problem at the moment. This is a secondary problem,” he said.
Exploring Opportunities
Along with Dr Galdabini and Mr Zacco, six other Italian companies also participated in the workshop. Most of them have little or no presence in the region of Southeast Asia. However, it is fair to say that they all feel this is a region with tremendous growth potential.
“We are still not present in Southeast Asia and we would like to be. The first step is to find a trading agency to promote our products, to let people know not only BLM, but (also) the Italian machinery industry. The main purpose (for now) is promotion,” said Mr Zacco.
Many companies are also taking the same stance and dipping their toes into the Southeast Asian market for the first time.
“We are here to find out the right strategy (for this region). As we operate in a very small niche market, we need more agents or local support that could help us find a possible end user,” said Stefano Dellacqua, sales manager of Somo.
“The target of our visit is Indonesia. We see that these areas have big potential. The reason we are here is to know about the approach to enter into this market,” said Ennio Zaffaroni, MD of Zani.
Unlike their counterparts, Omera already has some initial success in Southeast Asia and they are looking to expand their operations here. Dott Massimo Carboniero, GM of Omera and also the VP of UCIMU-Sistemi Per Produrre told APMEN that they have sold machines into Thailand and the Philippines but it is “very important” to try to enter the markets of Indonesia, Malaysia and Singapore.
Another company successful in Thailand is Produtech, a company producing sheet metalworking machines. Calling it a country with “big potential,” Dr Andrea Pedrini, sales manager of the company, remains optimistic about the country despite its recent political turmoil.
“I am positive in any case because the middle class is growing and that means the country is growing too. My forecast is positive for this part of the world,” he said.
Increasing Presence
For many Italian companies, Asia is China and as such, most of them have a respectable presence in the country. Moving ahead, they will be looking to expand their playing field in Asia and many companies will export more products into Southeast Asia as a result.
Veronica Just, VP of Millutensil, revealed that her company’s Asian operation takes up “about 10 percent” of their total export and there is ambition to grow that number. She said that in the next five years, she hopes to improve that value.
Thinking along the same vein was Filippo Gasparini, the CEO of Gasparini. His company currently exports some 20 percent of their production to China and he plans to gain more market share in Southeast Asia.
When asked about his export target for this region, he said: “To reach 10 percent in South Asia in five years.” He added that in order to do so, they need to find the right customers as they supply “very customised lines.”
In the metalworking community in Southeast Asia, people are quite familiar with German, Japanese, South Korean, Taiwanese and Chinese machines. If the companies are successful in their charm offensive in this region, people can soon add Italy into the ever-growing list of nations looking to sink their teeth into the lucrative Southeast Asian machine tool market.
