“The crisis may be going much more smoothly than in 2008” TIME ONLINE

The corona virus has a catastrophic impact on the Italian economy – and also hits those companies that were previously the flagship of the country, the fashion and luxury industry. Jean-Christophe Babin is the head of Bulgari, known for watches, perfumes and jewels. As a result of the pandemic, he had to close many outlets worldwide.

ZEIT ONLINE: Mr. Babin, am I just calling you at the home office?

Jean-Christophe Babin: No, I am at London Heathrow Airport and am waiting for a flight to Switzerland. I’m almost alone here. It feels like the world has stopped.

ZEIT ONLINE: How do you protect yourself?

Babin: I am speaking to you through an FFP2 mask. In addition, I often wash my hands and make sure not to get close to anyone. But that’s not difficult, because as I said: there is hardly anyone here. Everything is closed, you can’t even have a coffee.

ZEIT ONLINE: You once said that you heard about Corona for the first time in mid-January, how has your life changed since then?

Jean-Christophe Babin
© David Atlan

Babin: We have been surprised. We had already had experience with the Sars and Mers viruses and were expecting it to be in China would spread. But we would not have thought that almost the whole world would be shutdown two months later – and that the signs in China were increasing that the crisis had been overcome there. We had assumed that the virus would initially spread further in Asia. Now the new reality seems to be that Europe and America will be the most infected continents.

ZEIT ONLINE: How did you react?

Babin: First of all, we tried to protect our own people. We first supplied respiratory masks and disposable gloves to our stores in China while they still existed. Then we closed stores all over the world and adjusted our plans. We are now investing even more in e-commerce.

ZEIT ONLINE: Bulgari is known for jewels and fragrances. Now, like many other companies, you have started to produce disinfectants and make them available to civil defense free of charge.

Babin: Yes, we have handed over tens of thousands of disinfectant gel hand bottles to the Italian government, which we made at our factory in Lodi, southeast of Milan.

ZEIT ONLINE: Does a luxury goods manufacturer have the capacity to produce really large quantities of medical devices?

Babin: Of course. We usually make millions of perfume bottles. The production line in which we process alcohol was converted within a week. We will produce several hundred thousand bottles in the next two months. We cannot sell fragrances at the moment because the shops around the world are closed. So we were faced with the choice of closing our Lodi plant or using it for something else. And disinfectant gel for medical personnel is no longer available anywhere in the country, it is sold out everywhere.

This has nothing to do with PR, but with solidarity.

ZEIT ONLINE: You could also think of it as a PR campaign.

Babin: This has nothing to do with PR, but with solidarity. But it is also better for us if our people work and do something useful than if we have to release them. I think our employees also find it better to work than to sit at home with reduced pay. They are proud of it too. You want to help that virus to fight. Disinfectants are urgently needed. I think any factory that can help in this situation should do the same. We lose money in the process, of course, but it is part of our self-image that we act like responsible citizens in times of need. That’s why we also donated medical equipment to research the virus.

ZEIT ONLINE: Their perfume production is in Lodi, a city that is badly affected by the virus. What do you hear from there?

Babin: Fortunately, we have no one in our factory who is infected with Corona. There are only seven Corona cases in our company worldwide – with 5,000 employees.

ZEIT ONLINE: Do you already know how much your company will be affected by the economic consequences of the crisis?

Babin: It is not foreseeable. In China, the situation has almost returned to normal within eight weeks. The losses were very large, but only over a short period of time. If that is in Europe and repeating the United States like that would be the most mild outcome.

ZEIT ONLINE: Is the happening in China comparable to Europe?

Babin: The development in China was rather soft compared to Europe: the virus only spread in one region and there was no need to shut down an entire nation. Here in Europe, however, we are currently experiencing that an entire continent is being paralyzed. Large companies can take it. Bulgari itself is part of the LVMH group. But this puts a lot of pressure on smaller companies with fewer reserves.


Northern Italy is in a state of emergency

Rome Italy’s north is in a state of emergency. At the beginning of the week there is a fifth death and the number of those infected has risen to 219. The number of infections is primarily concentrated in the two northern Italian regions of Lombardy and Veneto.

Since eight o’clock on Monday, a total of eleven towns have been quarantined there – ten in Lombardy and one in Veneto. The civil protection crisis committee meets again at noon in Rome.

Prime Minister Giuseppe Conte is preparing for a further increase in the infected. “I don’t think the quarantine measures can be lifted in a few days,” said the prime minister.

Around 500 additional security forces are on their way north to control a total of 35 barriers to affected cities such as Codogno.

Codogno has around 16,000 inhabitants and is located 58 kilometers southeast of Milan in economically important Lombardy. “The situation is not easy because if Lombardy and Veneto are blocked, it means endangering 40 percent of Italy’s gross domestic product,” said entrepreneur Giordano Riello, chairman of the board of N-Plus, a technology startup, on a radio program Monday morning ,

Northern Italy is strong in exports

Lombardy and Veneto together generate 31 percent of Italian economic output, which is around 550 billion euros. Northern Italy is also strong in exports, accounting for 40 percent of total exports.

The two quarantined cities of Codogno and Castelpusterlengo alone generate 1.5 billion euros a year. Near Codogno is the headquarters of the mineral oil and energy company Eni and one of the major logistics centers of Amazon,

Security forces in Codogno

Additional security forces in northern Italy are supposed to control the blocked cities.

(Photo: Reuters)

There is also an infected person in the Italian economic metropolis of Milan. The city, like the companies in the region, took security measures. The Milan Cathedral and the Scala are closed, classes in schools and universities are canceled all week.

In Milan, most company bosses have given their employees in writing that they should work from home. That applies to the two big banks Unicredit and Intesa Sanpaolo, for the insurers Generali and Zurich, for the energy companies Enel and Eni and for the telecommunications giants Vodafone and wind that are located in the north. TIM is in Rome. Also Heineken and Luxottica urge their employees to do home office.

The tire manufacturer Pirelli, whose headquarters are in Milan, has put special security measures in place: business trips in Italy and abroad have been canceled for the coming days in order not to increase the risk of infection. All training measures are also canceled.

Canceled fashion shows

The fashion industry is particularly affected. The Milan fashion fair, where the big houses present the spring collection, ends this Monday. The fashion labels Armani and Laura Biagiotti let their shows take place as planned, but without an audience behind closed doors.

They were only broadcast in the livestream. All shows on Monday were canceled. Armani closes all production facilities in Milan and the surrounding area for a week, Gucci has not yet made a decision, the shoe manufacturer Tod’s relies on home office for its employees.

And the French luxury group LMVH, which many Italian brands of Bulgari via Fendi to Kenzo and Acqua di Parma, has instructed his managers not to go on business trips to Italy. The quarantined towns are deserted: banks, companies and shops there remain closed, only the ATMs work.

So far, China has been the center of infections, and there are also numerous cases in South Korea, Japan and now in Italy. The virus epicenter in China, the city of Wuhan and the surrounding Hubei region have been in quarantine for weeks.

Numerous airlines have suspended their connections to China. Italy was the first and only country in Europe to stop air traffic with China at the end of January.

Chinese businessmen cancel trips: At the Milan fashion fair, 1,000 Chinese buyers were fewer than last year, reports an industry service.

With the lack of tourists from China, the turnover figures of the luxury boutiques in Milan also decreased. A quarter would come from customers in China.

It is too early to quantify the damage in Italy, but the coronavirus hits the country at a time when the already weak economy is again on the way to recession. And the industrial heart of the country is in the north.

The government in Rome is already working on a “Marshall Plan” for the companies concerned and is considering tax relief and the suspension of loan payments – a permissible burden for the highly indebted state.

More: After the surge in the number of infected people in Italy there is an alarm. South Korea calls the highest alarm level because of the virus.