MOTORCYCLE – Piaggio, Zongshen Promote Cultural Exchange

In April 2004 Italy’s Piaggio Group signed a strategic business and marketing agreement with China’s Zongshen Group. The two companies formed a joint venture, Piaggio Foshan Motorcycle Co. Ltd. (PFM), to produce parts, engines, scooters and motorbikes in China based on Piaggio patents and technology.
PFM — Piaggio’s largest industrial project ouside of Italy, accounting for an investment of 50 million Euro — is 45% owned by Piaggio, 45% owned by Zongshen and 10% owned by a local authority of Foshan.
China, the fastest growing market in the world for two-wheel vehicles, boasts yearly sales of more than 10.5 million motorbikes.
PFM’s plans call for the yearly production of 300,000 vehicles within five years. Completed units will be marketed in China by PFM itself, while Piaggio will distribute them internationally in collaboration with Zongshen.
A team of Piaggio technicians and specialists is already at work in China to cooperate in the transfer of technology, to agree on the changes needed to be made to the vehicles for the local market, and to seek out and evaluate Chinese suppliers.
As part of the agreement, Piaggio and Zongshen also gave support to a cooperative project between Italian and Chinese universities to train technicians and managers who will be able to work in both countries.
The agreement, the first of its kind between Italian and Chinese universities and companies in terms of its scope and involvement with the industrial sector, was signed Dec. 6, 2004, by Professor Riccardo Varaldo of Italy’s Sant’Anna School of Advanced Studies; Professor Li Xiaohong of the Chongqing University; Roberto Colaninno and Rocco Sabelli of Piaggio; Zuo Zongshen, chairman of the Zongshen Group; and by Gaetano Micciché, corporate division director at Banca Intesa, the Italian lending group that is backing the project and supporting its development on an international level. Italy’s President Ciampi and Chinese Prime Minister Wen Jiabao also were in attendance for the signing.
Specifically, the agreement involves:
– the exchange of students, teachers and researchers to promote joint teaching and research projects;
– the opening of specialised teaching centers at Chongqing University and the Piaggio-Zongshen joint venture facilities;
– an exchange of information, documents, invitations to conference, internships, common research and education programs, masters and doctorates;
– and joint scientific publications.
Although offical figures have not been released, Piaggio says its 2004 net sales are expected to amount to approximately 1,090 million Euro, an increase of 10% on the 2003 result.
Two-wheeler sales accounted for more than 65% of 2004 net sales.
As reported when results for the first nine months were released, preliminary figures indicate that after four consecutive years of losses, Piaggio is likely to report a net profit for 2004, after a loss of 139.5 million Euro in 2003.
Net debt is expected to amount to around 305 million Euro (265 million Euro of which are trade payables due to Aprilia), compared with 282 million Euro at the end of 2003.
In other Piaggio-related news, an Aprilia S.p.A. shareholders’ meeting on December 30 nominated a new Board of Directors for the company.
Approved at a meeting January 11, the board, which will serve until Dec. 31, 2006, includes Roberto Colaninno, Chairman; Rocco Sabelli, Chief Executive Officer; Michele Colaninno; Luciano La Noce; Massimo Pirzio Biroli; and Amedeo Nodari. Gianclaudio Neri was apppointed Chief Operating Officer, and Ivano Beggio was named Honorary Chairman.

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