News & Events
Blog 3 Interview – International Business Experience
- November 18, 2020
- Posted by: Aradhana Pandey
- Category: Education
This weekend, I had the pleasure of interviewing Italian business owner and head of Modi Systems, Rudi Bianchi. Through our discussion, I learned a lot about what it takes to start and successfully run a company in Italy. His company deals with the manufacturing and sale of roofing and building products such as waterproofing materials, piping, vents etc to various markets. As of today they have been in business for 35 years.
In Italy, as in any other country in the world, the level of difficulty one faces in starting their own business varies greatly across different industries and sectors. Mr. Bianchi said he couldn’t speak for all kinds of businesses but he thinks that opening and running a company in the construction materials industry is no easy task. “This is a highly competitive market where only a few firms control the vast majority of market share and resources. If you want to even have a shot at opening your own firm and being successful, you have to have a wide range of knowledge in things such as supply chain management, material properties and uses, product marketing etc. And of course, it definitely helps if one can secure a substantial amount of capital from backers for investment.”
While there are many advantages to doing business in Italy such as the pro innovation and investment culture, strong manufacturing base, or even the location itself, like anywhere else in the world there are also downsides. According to Mr. Bianchi, the high amount of bureaucracy and regulations is at the forefront of those disadvantages. High taxes and costs for licenses or permits present big challenges for Italian businesses, as well as the difficulty in getting credit and securing loans.
When it came to the licenses required, Mr. Bianchi says you first have to draft an Atto Costitutivo (memorandum) and Statuto (articles of association) through a notary. Then you have to draft the Atto Pubblico (incorporation agreement). After registration, the company gets a reference number, tax ID number, and the VAT number. If you are starting a manufacturing company, you need to secure a license to build a plant and then more licenses to operate it and produce your product. After that you need various licenses to transport your product within the country or abroad.
Modi Systems is based in Italy and sells its products all over Europe and the United States. In the US, they mainly ship and sell their products on the East Coast, but in the last few years have worked hard to steadily build up their presence in the West Coast as well. For a little while, Modi systems only operated in Europe but then decided to expand their client base with the American market, setting up base in New Jersey. At first, American construction companies and contractors were unfamiliar with his products and sales were slow, but over time and with some adaptation, they eventually became a staple at roofing and construction suppliers.
When I asked him about the sort of strategical changes they made in order to become successful in the American market, Mr. Bianchi said that for example, they had to make a few revisions in the chemical formula of the Modified Bitumen product for it to be distinguished as a high quality and easy to use material. They also changed their marketing approach to work directly with suppliers to promote their materials, sometimes giving way free items for customers to use as samples. They held demonstrations and seminars on the application of their materials, led by experts on their team, to generate interest and awareness for their brand. “In the European market where we are more established, we operate more on referrals and media or outdoor advertising such as radio announcements and billboards. In the American market we rely more heavily on supplier promotions and online advertising.”
Technology in Italy plays a bigger role than ever. Mr. Bianchi says, “Digital advertising today probably makes up the majority of marketing activities in Italy, but I think this is probably true about most developed countries in the world right now. Our company has a well-functioning website, which we primarily use for online promotion. Social media is another great and relatively inexpensive way to market your business or product.”
Unlike the US, the Italian system goes above and beyond to protect workers. Labor unions, various benefit programs, paid sick leave, parenting leave, and vacation time off are part of life for members of the Italian work force. As a business owner, you have to take into account all these expenses that go into maintaining your staff. However Mr. Bianchi did not view these expenses as a cause for concern. “The business owners I know are happy to take good care of their workers. It is just part of our culture and it pays off in the long run through things like low turnover rate, higher worker loyalty, experience etc.”
Unfortunately, many Italian businesses are being heavily affected by the political and social issues that the country is facing right now. Unemployment, immigration, a divided government that is slow to implement policies and changes, and of course the recent Covid pandemic and the multiple shutdowns it has brought are the first things that come to mind. In recent years, the government has been in somewhat of a standstill due to the power struggle between the right and left wing groups. Despite many compromises, they still haven’t reached an agreement on how to effectively run the country. There have been several voting periods and referendums but since Italy has a multi-party political system, it is isn’t as simple as choosing red or blue. According to Mr. Bianchi says that since different political groups have very contrasting views and policies, the main challenge for business owners is to anticipate how those policies will affect their company and industry.
On the Covid crisis and its implication for the economy, Mr Bianchi said, “The economy is tough for everyone right now with the shutdowns and pandemic but we are lucky that the construction materials industry is in many ways an essential one and our sales haven’t taken as big a hit as some of us first expected when the situation began.” The bigger challenge he explains, is keeping the manufacturing plants and systems open and running smoothly, despite the restrictions, to produce enough material to meet demand. However, he remains confident that Modi systems will be able to overcome this obstacle and emerge even more united than before.
Branden is an International Business major with an emphasis in Italian and Western Europe.