Globalization and Tuscany's Hill Towns

A couple years ago I spent a few weeks exploring Italy with my wife and another couple... and my mother in-law.  I quickly found that my favorite part of the country was Tuscany, perhaps because I hail from California's wine country, but probably because I loved exploring the numerous unique hill towns.  Unfortunately, or perhaps fortunately, most tourists just see Florence and perhaps Siena and miss the real charm off the main road.  Don't go to Italy without spending a few days wandering around the likes of Cortona, Chiusi, Montepulciano, Montalcino, and Pienza!

There's another industry in the area besides wine, and that's wedding dresses.  Recently those small designers and manufacturers have run into a problem.

For more than half a century, wedding-dress maker Giovanna Sbiroli SRL built its brand and customer base by serving the Italian market. But over the past decade, the company -- one of around 40 small wedding-dress makers in and around this Putignano] remote hill town -- watched its share of the Italian market drop by 20% as Chinese imports and goods made in other low-cost countries flooded in.

Putignano's wedding-dress makers were supposed to be globalization's first victims. Most of the factories make only a few thousand dresses a year, luxurious creations that sell for around €5,000 apiece (about $7,300). The seamstresses who stitch garments by hand enjoy traditional Italian perks such as two-hour lunch breaks and four weeks of paid vacation, and earn competitive salaries.

Yes, the supposed evils of globalization hit aircraft manufacturers, computer companies, furniture, and now mom-and-pop wedding dress makers in the remote (but scenic!) crevaces of Italy.  Most companies would whine and complain, asking for import restrictions and tariffs and other trade distortions.  But not Giovanna Sbiroli and its neighbors.

"Fewer orders were coming in, and we began to realize that we were losing our customers," says Gianpiero Lippolis, a principal in the firm. "If we didn't react and attack these markets, then we risked having to shut our doors," he says.

About a decade ago, with its Italian business dwindling, the company began aggressively seeking export opportunities. By the early 2000s, Mr. Lippolis, a Putignano native who holds a master's degree in business administration from the University of San Diego, had made inroads into new markets in Japan, Spain, Russia and Israel. About three years ago, he decided to travel to China, where increasing wealth is creating brisk demand for wedding dresses.

There, he visited wedding-dress retailers, checked out products and examined their quality. He learned that the Chinese like vibrant red dresses for weddings and richly ornamented fabrics. He returned to Putignano with pads full of notes and impressions of the market.

This has created success for both the company and the industry.

Today, Giovanna Sbrioli exports to 18 countries, and foreign sales account for 30% of its business. Though it employs only 50 seamstresses, down from 80 a decade ago, it has made up for its smaller workforce with new technology, and annual sales have remained steady at about $7.3 million.

Giovanna Sbrioli's evolution is part of a broader transformation of the Italian economy, as its small, specialized and family-run makers of wares from women's stockings to wooden furniture have turned themselves into globali tascabili -- so-called pocket-size global firms that aggressively market their Italian craftsmanship and style. Once thought too small to survive in a global market, these companies have carved out niches around the world.

That last statement gives a clue to their success.  In addition to aggressively going out into the world to find new customers, these companies also turned a perceived liability into an asset.

As Giovanna Sbrioli lacks the scale and financing of its Asian rivals, Mr. Lippolis had to find a way to turn the company's most obvious weakness -- its small size -- into a strength. For decades, the company had built its business by forging deep personal ties with its Italian clients. To distinguish the company, he devised a system to replicate that kind of relationship with clients far away. The company's export manager, Beatrice Dongiovanni, recently emailed a new client in Russia photos of modifications to a made-to-order dress, and then put in time answering the client's questions by email.

Mr. Lippolis is also trying to turn another liability -- his company's remote location -- into a selling point. This month, he is bringing about 20 Chinese buyers to Putignano, among the olive groves in the Italian countryside, to get a first-hand view of the factory where uniformed seamstresses hand-sew appliques and put the dresses together. The company makes about 6,000 dresses a year, and each takes about 15 hours to complete.

The competitive pressures wrought by globalization can create difficult business situations.  But if instead of complaining it is looked at as an opportunity to leverage internal competencies you may be surprised... and rewarded.

Comments

[Tony]

Chinese brides love red not because it's vibrant, but because in Chinese culture red signifies happiness.

In the US, most Chinese brides wear a white wedding dress (basically Western style) for the wedding ceremony, and then a red dress (sometimes more than one) at the reception.

[Larry Paine]

Boeing should read this post! Giovanna saw his problem and solved it. How simple can it be?

LP

[Scott McLeod]

This is exactly the kind of ongoing relationship development / permission marketing that Seth Godin advocates. If you haven't, check out Meatball Sundae (and Permission Marketing and his blog...)!