{audio:0:00:05} Can we start by describing the difference in the Chinese versus the Western consumer, in purchasing luxury vehicles?

{audio:0:00:17} It’s a huge difference, actually. The difference is not really between the Chinese and the West. It’s more about developing countries and developed countries. I think China is, to a certain extent, partly a developing country, so there is still not full recognition of certain iconic brands; at least what the Western world considers iconic brands. Their approach to the brand is a bit less emphatic. They take the brand, they use it. Sometimes it looks good and they keep it, tick the box. Done; what’s next? There is multi-experiencing of different brands. There is no historical heritage. There is no loyalty. At least, there was no loyalty or heritage. Now it is changing somewhat.

{audio:0:01:22} In practical terms, what does it mean? It means that I know that to accomplish my success, I need to have a Ferrari in the garage. I buy the Ferrari, I put it in the garage and I forget about it. Maybe next time, I will buy a McLaren and the time after, I will buy a Rolls Royce, if I can afford it. There is no real loyalty. The first round of purchasing was done absolutely in that way. Now, the ripple chasing is the rule of the game. When you sold your luxury item, for the first time – and it could be true for a car, a watch, a yacht or something else – an item that is a historical brand and is very iconic in the Western world that some people wanted to have it, then they bought it. After that, there is the repurchase process.

{audio:0:02:27} The repurchase process is not automatic because people tend to have the world range of iconic brands, before they go back and fall in love with one brand. This is, I think, the real challenge. This challenge is the challenge everywhere in the world but in China, particularly, it is to get the loyalty of the client. Get him or her to repurchase your product. Once they become a repeater, in that moment, you start to establish loyalty and you can leverage the worldwide tools to retain the clients. The real key issue is the repurchase.

{audio:0:03:15} How do you approach driving repurchasing by customers?

{audio:0:03:21} Customer satisfaction with the first purchase is very important. The product you are selling should be consistent with the iconic heritage of the brand. This is very important and it’s true for everyone. If your brand, if your product, at the end of the day, is not consistent and is not up to the standard that the people expect, the risk is that they will not repurchase. It’s absolutely necessary not to underestimate the quality that the Chinese market want to receive and the ability to perceive quality from this new client. In certain cases, it’s even easier to sell to well-known and continual repeater clients because they are more accepting of certain imperfections. But when you sell to a very demanding, first-time client, you need to sell to a level of perfection – a perceived one, but also an actual one – that must really be up to the reputation of your brand. In that case, you will have a high percentage that will come back. This is so important; do not underestimate the ability to evaluate quality, by Chinese consumers.

{audio:0:05:00} How is the expectation of the product and service different in China, versus the West?

{audio:0:05:09} One difference is that, it being the first purchase, there is no background. Having no background means you have to regain your reputation, in a way. You are a brand, they know you, you are famous worldwide, but this is their first purchase. At the first purchase, you must be able to give it all. This is a little different because in other countries, especially Western developed countries and places such as Japan, which is a very well-developed country, they know what they are buying. To a certain extent it’s easier to satisfy them because they know that they are buying a set of values, behind the brands. The moment they buy the brands, they are much buying much more than the product; they are buying a status, as well. In China, they are buying a status, but the consistency and the quality of the product must be up to standard. Sorry if I am underlining this but, for us, this is a big challenge. We do this regularly because we are selling excellent products, excellent cars. But at the end of the day, sometimes, there is a scratch on the bumpers that happened during the transportation and nobody actually noticed or a small problem in sewing. Maybe a very few, small defects that, if you had them in Milan, they would go back and say, come on, I have these problems and they will say, sorry, I will repair it now. In China, this will damage your reputation in a much larger way. The net effect of a small defect is amplified in China, because it’s the first purchase and they are looking for perfection.

{audio:0:07:30} Sometimes perfection is not possible. You must be perfect when you approach a new market. You must be really perfect and this is a challenge, for every brand.

{audio:0:07:46} You mentioned how Japan is a well-developed country and, obviously, Europe and the US. Is that because of the culture and the heritage and the values of Ferrari are well-known, but also because the consumer knows and watches F1 where China is a younger demographic there? What is the reason?

{audio:0:08:04} The reason is, simply, the exposure of your product to the market. China opened up in 1979 and we entered China in the late 80s, early 90s. We have less than 30 years of experience in China. While in Japan, we entered with the first model, 60 years ago. It’s mainly a matter of time and a matter of exposure of the Chinese consumer to all the Western values and iconic brands. Of course, it’s not because of ethnicity. The Chinese living in Europe or living in the US will have the same approach to the brand as an Italian or an American. It’s the matter of the people living in this country that, for a few decades, have been isolated from the rest of the world. The experience of the brand and the experience of the background behind the brand is limited.

{audio:0:09:14} Do you see any major differences in the vehicles they prefer? The type of vehicle or the willingness to customize or personalize the vehicles more than the West?

{audio:0:09:24} Again, I’ll go back to the difference between well-developed and developing countries. When you are in a developing country – and this is true for other markets, not only China, but South East Asia, India and other areas, such as Russia – when you buy a Ferrari, you want the typical, iconic Ferrari. So it must be a sports car, mostly red and, I would say, highly recognizable as a Ferrari. This is particularly true in these countries and, in other countries, there is a lot of sophistication. We have quite a broad range, with five or six different models; even more, sometimes. It depends on the special series. But, at the end of the day, we have a sports car, an extreme sports car.

{audio:0:10:24} The main difference is that, although we do have a very sophisticated client in China, broadly speaking, as a perception of the overall market, the Ferrari is red and it is a very typical sports car. To a certain extent, they are less sophisticated in choosing the model and they have less requests for segmentation. From a producer and selling point of view, it’s more difficult to explain the segmentation of the different cars. They tend to perceive the Ferrari as a typical Ferrari. When I propose a GT that is, maybe, more drivable, less flashy, with a different color, mostly they tend to say, yes, okay, but this is not really a Ferrari. It is. The only difference is that it’s not the typical Ferrari that you see on movies. So it’s a slightly different approach, in terms of segmentation.

{audio:0:11:50} Let’s talk about the customer experience for the first purchase that you mentioned is so crucial. It has to be consistent; it has to be very high quality. How do you think about curating the buying experience, from start to finish? Can you walk me through how that works? If I want to buy a Ferrari, in China, what do I do? Do I go direct to Ferrari? Do I go to a dealership? How do you curate that experience?

{audio:0:12:18} The experience is a journey because, first of all, you identify the car. We have good coverage. All the main cities have a dealership. The workshops and aftersales have a much broader coverage but we have a strategy focused only on the flagship stores, in flagship cities. We bring the client within the Ferrari family. As soon as they come into the dealership, they have to feel an experience. They have to feel the corporate identity. When they enter the dealership, they are already inside the Ferrari world and the CI, the corporate identity of the shops, the way we decorate the shop, the color the choose, all the touchpoints inside the showroom, are the same all over the world. The experience when you first enter should be similar to any other showroom in the world.

{audio:0:13:56} Once inside, you have to feel the luxury but also the exclusivity. Our products should be considered very exclusive because worldwide, we sell, all in all, 10,000 cars. When you sell 10,000 cars, there are very few cars around. Even if you consider that a Ferrari never actually dies and we never deregister a car. This is a unique situation for our brand. Somebody buys a Ferrari and they keep it forever. Or they will sell it to someone who will keep it forever. Or, this one, we sell to someone else and they will keep it forever. At the end of the day, no one actually deregisters and smash a car. It’s never a piece of metal, a Ferrari. It’s always a nice car to drive.

{audio:0:14:51} We have certain requirements for our dealerships and you have to display the whole range, in production, at that time. When you enter the showroom, you have the full range available and the person will show you around the showroom, to explain the different cars and to explain all the different types of performance and personalization that you can have in the car. We have an area of the showroom dedicated to personalization, with a nice sofa and all the samples that you can choose from, such as color. It’s quite an experience, actually. I would say that, if you come in with a precise idea of which car you want, it’s easy. You come in, you say, look, I’m very well-prepared – maybe a repeater – I know what I want. But the best solution is when you don’t know what you want, and we take you through the overall experience and we develop your awareness of the brand and we develop your demand.

{audio:0:16:34} To be honest, I think this is quite common in luxury business, overall, whether you’re talking about cars or watches. You need to accompany your clients during their journey and everyone has their own journey. The process and the model is the same but then everyone has their own journey and you take them through the different aspects.

{audio:0:17:07} Let’s assume you decide on the model and you want to personalize. We have different grades of personalization. You can go from, simply choosing the color of the car or the color of the interior, to decide and build up your own color. We have hundreds of colors, but you can decide which color you want, even if it’s outside our enormous choice of colors that we have. You can go up, up, up to what we call one-off, where you build up your own car. There are a very few limitations, mostly linked to the chassis. But once you have the chassis, then you can build up your own car. This is not very common, to be honest, because you need to be quite affluent to do that. But it is an experience. So you can personalize your car, from simply choosing a color, to go up and up, to the maximum level of personalization, which is the one-off car. This is the choosing the product part.

{audio:0:18:30} Once you have chosen your product, you will have what we call a contact plan. Normally, you have to wait to have a Ferrari. This is what typically happens. Not because we want to have a waiting list, but because the capacity is relatively limited. As I said, it’s about 10,000 and the demand is much higher than the capacity. Simply, there is this lag and you have to wait. There are different waiting lists, for different models. It can go from a minimum of 12 months, to a maximum of 36, where you have to wait three years for your car. From the moment you place the order, to the moment you receive your car, there is what we call a contact plan. The contact plan is very interesting, because there are several things in it. Basically, you take the hand of your client, the day they place the order, after the personalization has been completed, and then you keep in touch with them, showing them where the car is and what level of completion it is at. You send some models of the car. We have a cooperation with a very nice modelling company,  called Amalgam – it is British, I think – we have an agreement with them and at a particular moment in the contact plan, they build up a similar model, extremely detailed, of the car that the client is going to receive, at a later point. For example, if it’s an F8 Tributo, and it’s yellow, with a brown interior, you will receive a yellow F8, with brown interior in exactly the same configuration of the car that you will see, a few months later.

{audio:0:20:30} Then we have several other things inside the contact plan. It changes slightly, depending on the culture and the countries but, roughly, we keep you updated about where your car is and how long it will be until you receive it. Then there is the delivery of the car. The delivery of the car is a ceremony. We have a ceremony, inside the showroom. There is an area dedicated to delivery. You receive your car with certain additional things, such as the certificate of the car. We emphasize this part a lot, because we believe that when you buy a Ferrari, especially if it’s the first one, you have a sense of accomplishment. For example, if you are a banker and you make a big deal and you buy a Ferrari, if you are an entrepreneur and you do some big business and you buy a Ferrari or you are an actor or a football player and you sign a big contract and you buy a Ferrari.

{audio:0:21:51} There is always an accomplishment behind the purchase of this car and so we celebrate this moment. Then the moment you have the car and you become an owner, then you enter the club of the Ferraristi. In the past it was less built up. Now, with the digitalization of society, it’s becoming easier. We have one app, where you subscribe and then you become part of the family. Whatever events we have in the future, in your area or in any area in the world that you would like to join, such as a cavalcade or a reunion, you can go to. There are plenty of things we do. You can join the Ferrari Owners Club that organizes social events, social gatherings and many other things. But becoming part of the family is an essential part of the post-delivery experience.

{audio:0:23:18} Coming back to your question, the journey starts when you enter the showroom and you actually buy the car. But then, it will never finish, over the years to come, until you have the ownership of the car. The more cars you buy, the more you enter into our more and more select area of clients, that you can access new models, special models. For example, if we launch a special model, normally we have certain criteria to allocate the cars. The cars are not on the market. You don’t come with the money, buy and go. You will need to have certain criteria. Every time, it’s different. Normally, we tend to deliver or to allocate special series cars, limited editions, to collectors.

{audio:0:24:22} It’s a complex way of saying that you enter the family and, if you like it – because it sometimes happens that they don’t like to stay in, but very few – you become a member of our global club, with several local branches, and you become part of a family. We treat the clients, one by one. This is an effort.

{audio:0:25:10} Are they very active on the app and the club? Is it an active society? Do they communicate much?

{audio:0:25:17} Yes, yes; absolutely. Like every club, you have a part that is very active and a part that is more silent. But in general, the Ferrari Owners Club and the Ferrari owner family is very active. It’s a way to enter society, to a certain extent. To afford a Ferrari, you need to be affluent, as I said before. You need to be successful, in one way or another. Whether you are an artist or an entertainer or a banker. But in your own field, you must be a success. It’s an exclusive club.

{audio:0:26:05} What part of the process do you think drives the most exclusivity? Do you think it’s that club part, at the end, where they get accepted into the club?

{audio:0:26:21} It’s definitely the product. The product is the generator of exclusivity. When you drive a Ferrari, you drive a Ferrari. Full stop. It’s where everything starts from. All the rest, of course, are many bricks that will build the overall experience. But everything starts from the product. To drive a Ferrari is a unique experience. In fact, honestly, for us, the main difficulties in finding new clients, is to identify people and let them sit in the car. Let’s say, if we put 10 people sitting in and driving the car – the right people, of course – you can be sure that between three and five will buy the car. The experience related to driving this car is very unique. I think, truly, everything starts with the car and from the product and experience. The exclusivity comes from there. A Ferrari is an exclusive product, by definition.

{audio:0:28:04} Other brands choose a different way of doing things. They decide to reduce the entry level and they leverage a lot on the brand. Some German cars, for example. They used to be very exclusive, in the past and then, step by step, with the introduction of more affordable models, they leveraged the brand to sell a lot of cars. This is not for us. We believe that when you buy a Ferrari, you will be in an exclusive position for the rest of the life of the car. The protection of the residual value of the car is one of our missions. When somebody buys a Ferrari, they should be reassured that this car will never become a piece of metal, ever.

{audio:0:29:15} The protection of the residual value, the pre-owned market, for us, is a priority. As the founder of the company always said – and I want to repeat it, because it very clearly explains the philosophy of the company – we should always sell one car less than the demand; we will never sell one car more than the demand. You will never find a Ferrari dealer or a Ferrari manager, like myself, pushing. We never push. Ever. For us, the most important thing is to always have the correct amount of cars in the market. Even if we can sell more, we refrain from selling, because we have to protect the exclusivity of our clients, whether they buy a new Ferrari or a pre-owned Ferrari. This is a key element of the business model. But it’s a philosophy more than a business model. It becomes a business model, later on, because the people look to our philosophy and transform it into a so-called business model. But the philosophy, the passion behind it is, the car is unique. When you buy it, you make an investment for life. This is important.

{audio:0:30:50} How do you deal with the challenge of finding new customers and putting those 10 people in the seat of the car? What approaches do you have, for finding those people?

{audio:0:31:04} Let’s say, that having such a powerful product, when we launch a new model, I would say that between 30% and 50% of clients are repeaters. Normally, those who purchased the car in the past will purchase again and again and again. Sometimes, keeping them all and sometimes, simply selling the old one and buying a new one. The relative number of repeaters is very high. This protects us against big surprises.

{audio:0:31:55} Then, of course, especially launching and opening our brand to new segments, when we entered the GT segment, more than 10 years ago, like it used to be 50 or 60 years ago, in Ferrari. Ferrari produced GT since the beginning, but then became famous for sports car. With the launch of California that was the return of Ferrari to the GT market, of course, we enlarged the number of potential clients. There were a lot of new Ferrari clients. How do we get them? There are several marketing ways to collect prospective clients but, at the end of the day, the key issue is to have people sitting in the car and have a test drive. This is the real selling point. No matter how beautiful the car is, no matter the level of personalization and color, the real difference is always the driving. The driving experience is what makes a Ferrari completely unique.

{audio:0:33:20} I also, aesthetically, love the cars. Some more, some less. With competitors, you can also choose the colors. They have hundreds of colors and they also have personalization. There are not too many competitors in our segment but, at the end of the day, we have five, six, seven that we see as our competitors. They are all very good cars. But our car is unique in the driving experience. There was one of my previous CEO who said that, when you buy a German car, you buy, most probably, a perfect car. But it’s like buying a perfect refrigerator. It’s perfect, fantastic, but it’s cold. When you buy a Ferrari, maybe sometimes, we are not perfect. As I said before, maybe sometimes we have small problems or we have some very little issues, but you are buying a passion. You are buying something where you sit in the car and you feel the difference in the engine, in the soundtrack, in many things.

{audio:0:34:49} When we design and we build engines, we are not only thinking about power and rate of 1-100mph. They are the parameters, of course, and are used as the selling points. But for us, the soundtrack is absolutely important. One of the engineers once told me, the engine was perfect, but it didn’t have the right sound. So sorry, we don’t want it. They have to redesign the engine, because it didn’t have the right sound. The sound of the car is an integral part of the experience, when you drive. When you sit in the car and, overall, you have the driving experience, including the soundtrack, you fall in love with it. I think we have one of the highest conversion rates in the industry. You drive it, you want it.

{audio:0:35:56} How do you manage a team that has to deliver such a high and unique experience to the customer? What do you tell your team and how do you manage them, to deliver that experience?

{audio:0:36:12} I don’t want to simplify it or make it seem too easy but, again, the technology that we have in our products, this is the Formula 1 advantage. We are experiencing new technology every single Sunday, in every single track in the world. You only think about Formula 1 but then there are tens or hundreds of different competitions that we are in and we continuously develop and experience new technology and we transfer it to the commercial production. At the end of the day, for us, we are in the same building. Not exactly in the same building, but one in front of the other. It’s really the same people. You go to eat at the canteen and you sit together with the guy that’s developing F1. Ferrari has the ability to translate it into commercial technology, the extreme technology, which you experiment with, every time, in the racing, especially Formula 1. There was not one single race, in Formula 1, without the presence of an official Ferrari. Ever.

{audio:0:37:44} Ferrari is the core, the heart, of Formula 1, together with some other teams, but we are the core. We leverage that experience, not only for the brand awareness, not only for the obvious things, but specifically and especially, to transfer technology to the commercial production.
{audio:0:38:07} To be on the edge of technology, together with a long experience in managing the aesthetic aspect of the car, we never compromise on performance. To answer your question, it’s easy for the people selling Ferrari, because really, they just have to let the customers sit in the car and drive. Of course, it has to be the right client. My mother, for example, would never sit in a Ferrari. She would crash it after a few hundred meters. To give you an example, if someone is able to drive the car and have a test drive and is going to really try the car, our conversion rate is amazing. The job of our people in the dealership is to identify the right person to take and drive the car. But then, it’s an easy job.

{audio:0:39:20} Can I go back to the point you made that Ferrari will always sell one car less than the demand, to maintain that brand equity. How do you deal with that, as a manager, to not push your team and to be willing to really stay true to that? Keep the waiting list long, not pull demand forward and drive production. How do you deal with that and how does the culture deal with that?

{audio:0:39:57} I understand the nature of the question, because people tend to say, okay, we’ll sell more to have more profit and so on and so forth. But this is not our business. We work in a different way. The target of our salespeople is generating orders. It’s not generating sales. The sales will come one year later, the aftersales. Invoice, sales, P&L, profit. The order I’m doing now is 2021 P&L. Now I’m delivering cars that were sold between 12 and 24 months ago. My P&L is influenced by sales from two years ago. Our people know that the key issue for us is to let the client understand the product, explain the content very well and keep the level of desire very high. The rule of the game is to have the desire for the car. This is what the good salespeople of Ferrari should do.

{audio:0:43:27} Now Ferrari is a public company, do you think it will be tempted or pressured to pull demand forward and reduce the waiting list, now they have shareholders?

{audio:0:43:45} I don’t think so. On the contrary, you can go check, the company has an extremely high – it could be higher – performance. Our business model has proved to be consistent with the request of the shareholders. Honestly, I don’t know. It’s already been several years that we have been listed and, so far, the company is very consistent with the business model and the philosophy to sell one car less than the demand has never changed; nobody has even considered it. Maybe in the industry, yes, but we are not the only one in the world to sell forward. There are watches, sometimes, following the same approach. Even for some leather bags for women. There are several brands that follow this process. It’s not something unique.

{audio:0:44:59} What does brand equity mean to you?

{audio:0:45:05} For an Italian, especially, working for Ferrari is a very special experience. I don’t know if you like football, but it’s like you are the coach of your favorite football team. You are part of your passion. You’re working for your football team. You combine your favorite hobby or passion, with your job. It’s something very unique, actually. It’s not only for Italians but, specifically for Italians, it’s something unique, I think.
{audio:0:46:12} Sometimes, in my previous experience, in different countries – not China – I felt as if I was the ambassador. Just being a Ferrari representative, you could have access to certain profiles and people that I could never do if I wasn’t with Ferrari. It’s difficult to explain.

{audio:0:46:42} How would you explain this family feel of Ferrari? You mentioned how everyone is at Maranello and you said you can eat next to the Formula 1 guys or the engineers. How would you explain the feel and the culture of the business and what it’s like working there?

{audio:0:47:01} I’m not from that part of Italy, from Milan, but from Emilia. Most of the brands in the sports car category, come from there. Lamborghini is 50km away, Bugatti was there, Ducati is there. There is a spatial feeling in that area, between the people and the population and the car business; especially racing cars. There are many passionate people, building the engines. There are many components of this. For sure, there is this culture of respect; there is the regional respect. There is the fact that Ferrari represent – together, at the beginning, with Alfa Romeo, but recently, alone – Italy in all the competitions, where the colors come from. In the early stage, when they decided to compete, every nation received a different color. Italy received the red color, which was mainly for Ferrari and England received green, France received blue, German received grey. It was a, sort of, second flag for the major competitors during the racing period, in the early stages, the 50s and so on.

{audio:0:49:00} The company became a, sort of, national champion. It was the national champion, actually, representing the country in competitions, like the national team, in the World Cup. These things all combine together and bring out this sense of belonging, of being part of the team. When you are there, whether you are 1,000, 2,000, 3,000, you are part of the team. This is the combination of many factors. Coming from that area of Italy, it’s famous for being the area where most of the brands come from.

{audio:0:49:57} As a leader, how did you think about fostering or encouraging this Ferrari culture, in China?

{audio:0:51:10} Already we have done many good things. We are continuing our penetration in awareness. Of course, Formula 1 helps a lot. As a matter of fact, having a Grand Prix in China, for the last 15 years, it helps a lot to help people know our brand, to know our heritage and help us to have space in the media. We are not in a rush; that’s our advantage. We are not in a rush and we don’t need to push. This is a philosophy that works for everything. We don’t need to be pushing too much. We have time. I don’t want to look as if I don’t care about the result and I’m not motivated enough. For us, of course, the financial result is very important and we are working, as you said before, to satisfy our stakeholders, whether they are shareholders or not.

{audio:0:52:32} But, at the end of the day, the philosophy is, make your client happy and be sure that you deliver the right value, up to the expectation of the client. If you work like that, you work with a medium to long-term perspective, and maybe you don’t get 100% of the profit you can get if you use a short-term approach, but you build up more and more brand value and your equity value, because we believe that that is the real value of the company. It would be easy to come along with a very low-priced Ferrari, say half the price of today, and sell thousands and thousands of cars. Then what? Then, in five years’ time, you are just another brand. You are no longer the most dreamed of car in the world. You are one of the many. That’s not our target. We have to protect our uniqueness, our exclusivity to the end. As I said before, for me, the key point is – sometimes this is true, it’s not easy to let the Chinese consumer aware of it – when you buy a Ferrari, you buy for the rest of your life. You are not buying a car for the next three, five, eight years. You buy it and you will always be a Ferrari driver, a Ferraristi, no matter what.

{audio:0:54:36} What do you think it is about the philosophy of, we don’t need to rush? We don’t need to push. Is it the Italian roots? Is it the founder? It’s quite unique in the sense that it’s not always pushing full throttle.

{audio:0:55:01} Honestly, also many other brands, not Italian, are doing the same.

{audio:0:55:11} Exactly. If you look at the fashion industry, there are brands that open tens, hundreds of showrooms, around the world and there are brands that keep a limited number of showrooms and that much more exclusivity and you have a waiting list to get a bag. On this, I would say, business model wise, we are not completely unique. It’s a matter of exclusivity. If you push, there is a trade-off. If you push, you lose the exclusivity. The exclusivity gives the value to your company. I’m not playing the game of being totally outside the economic dynamics. We are in and we have to deliver good economic results, which are satisfactory for all the people involved. But we will never sell one car more than demand, because if you do that, the result is that you reduce your profitability, because in order to push, you have to give in. We never give in. It’s not that we don’t rush or we don’t push. We push in our own way. I will never discount a car, so if you want a discount, there is another showroom over there. We are selling unique pieces and we are selling something that is forever, that maybe you will drive and you will give to your son or the son of your son. There are Ferraris around, from 50 years ago, that are precious like a painting. You can see all the classic cars that can be sold for 10, 15, 20, 30 million. That’s our thing. We’re not pushing, because we believe that our car will never be a piece of metal.

{audio:0:57:29} If you follow that philosophy, you must be consistent. Just to be clear, it’s not a state of mind. It’s simply a very rational decision because we know, very well, that the moment you push, you decrease the value of the pre-owned and you trigger a negative circle that, business-wise, is not profitable.

{audio:0:58:02} And it hits your brand equity and it ruins the exclusivity.

{audio:0:58:07} It’s not a state of mind. Again, it’s a very rational decision.

{audio:0:58:20} It’s a business model. What is your biggest challenge, as an Italian leader, in China?

{audio:0:58:29} I’ve been in Asia for several years and, I think, it’s a simple thing. But as with all simple things, it’s probably the most complicated one. My daily challenge is to be sure, together with my managers, that we are heading towards the same understanding, that we are looking at things with the same glasses. Sometimes, you have a meeting, you discuss, you apparently agree; you understand me and I understand you and you take it for granted. I can tell you, most of the time, it’s not like that. We discuss, we have an agreement. You understood A; I understood B. We are totally convinced that we have the same understanding but we don’t.

{audio:0:59:36} My main challenge, most of the time, is just to be sure that we have the same understanding, we are on the same page and that we understand each other and we are going in the same direction. This is true every time you are dealing with huge cultural differences. In the past, I have been in charge of Japan and Indonesia and I’ve often worked with Korea. Every Asian country is a bit different from each other, but they all come from Confucianism, so they are really coming from a different place. We come from the Greek culture in Europe and they come from Confucianism, most of the Chinese. You are really putting two different worlds together. Without being too philosophical, if you are not 100% aware of this, the risk that you are convinced that everybody understood and, in fact, nobody understood, is a big problem. It could be a huge problem, in partnership, in managing, in private life; in all aspects.

{audio:1:01:17} So the big effort is to be able to have everyone who has their own mechanism, to be sure that you always double-check that everyone is on the same page. This is easy to say and very complex to do. But once you do it, you have, I think, in China, the best people you can find, because they are very determined and very eager to accomplish. They are hard workers, who don’t spare anything. The assumption is that you must have the personal tools that you develop both by studying and with experience on the field, to be able to have your checking system, all the time. The cockpit must always be on. If you switch off the cockpit and you think, okay, auto-pilot, sometimes you crash.

{audio:1:02:30} What practical advice would you have for me, if I was a young working professional, moving to China, or Asia, to manage a team?

{audio:1:02:43} It depends on the role or responsibility; it depends if you are a student or if you are banker. It depends on many things. If I were to make a general comment, I would say that, in Asian countries, especially Japan and China, but China is the biggest one, so let’s take China as a reference, when you come to a civilization like that, I think, for a long while, you should learn. You should come in with a level of humility that, most probably, even if you don’t have, you have to find inside yourself. You need humility to start all over again.

{audio:1:03:34} I have two things that I normally say to my managers. The first is that, when you come to China, even if you have a doctorate degree, you should behave as if you have come back to primary school. You are a primary school student, when you come to China, no matter your background or your age. When you come here, your mindset should be, primary school; I’m learning all over again. Then, of course, the industry and the business is the same. I’m not saying that it’s a totally different country, in terms of business and the mechanics of business. But from a human point of view, from the approach to your colleagues, your boss and the people, it is like primary school. Then there is an old saying between the people that spend many years in Asia, and they have the longest periods in China, which is my opinion but is something that is shared between many experienced colleagues in this area. If you stay six months in China, you think you know the country; if you spend one year in the country, you think you are able to write a book; if you spend three years in the country, you shut up, because you understand that it is so complicated to understand, that it’s better to continue learning.

{audio:1:05:34} What about any advice to young working professionals around business and what business means to you, what you’ve learned about working at companies like Ferrari and Pirelli?

{audio:1:05:50} I’ve worked for big multi-nationals and maybe Ferrari, in relative terms, is the smallest company I’ve worked for. In terms of business, I think that when you approach China, you have to consider China as a continent. In all Chinese, Han is the name of the country. China, in Chinese, is Han. Chinese is an ethnicity. It’s as if you have a country that is Caucasian. Basically, inside China, you have a civilization where you have different countries, under the same ethnicity. You have to approach China with a degree of humility, as I said before, because you are opening a totally different box. But with an awareness of not being in one single country. If you go to Hangzhou, they have their business way, if you got to Beijing, they have their business way and the same applies to all areas. Of course, they are all Chinese but they have many different business practices.

{audio:1:07:26} First of all, when you arrive, you have to see where you are in China. How do you approach the market in the areas where you are not present or where you don’t have a stable organization? Maybe the most similar country is the US. It’s not the same thing to be in New York, in Minnesota or Los Angeles. It’s the same in China. When you change geography, the mindset of the people completely changes. Only the flag is the same. You must be extremely careful, from a business point of view. The risk is that you launch a product and you’re doing well. You’re doing very well in the Shanghai area and you think, okay, I’m doing well in China. No. You are doing well in the Shanghai area. Then you have to expand your market in other cities. Maybe it will go well in some cities and in others, it will go badly, because there are different tastes, different business practices, different climate; many things will be different.

{audio:1:08:38} This is my business suggestion. Be careful, because there are many Chinas, inside China. The second thing, that is even more important, is that when you come to China, as a company, you may say, let’s go there and try. Now, to be honest, it’s a bit different. That is an approach from 10 or 15 years ago. Now people are fully aware of the difficulties and of the opportunities, as well, but you have to face the China story as a big one. If I am a company and, for historical reasons, I’m not in the US and I have to approach the US or the European Union, or whatever, I have to plan carefully, because I’m coming to Europe and I have the Germans, the French, the Italians, who are all different.

{audio:1:09:39} In China, it’s the same story. So when you approach the country, you have to approach it keeping in mind all the different cultures inside the country, but also the fact that you are approaching a continent. Financially, you must be strong enough, if you attack the whole country. Normally, many people come – again, it was particularly true in the past, but it’s still sometimes true – with very aggressive business plans, with the famous story of, if I sell one product to every Chinese, I will become a billionaire. Forget it. That’s not China. China is a conglomerate of different countries, all together; at least four or five different geographical clusters. You are approaching a continent. You must take it extremely cautiously, with humility and be aware that you have great opportunities there because, actually, the people are starting to enjoy life and consuming. But at the same time, you must be extremely aware of the fact that, if you crash, you do it big.

The Ferrari Way

Current CEO at Ferrari, China

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Giuseppe Cattaneo

Current CEO at Ferrari, China

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The Ferrari Way(May 6, 2020)

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