Pirelli CEO Sounds Alarm on Chinese Influence

Pirelli CEO Sounds Alarm on Chinese Influence

The Lede: China's increasing influence over an Italian tiremaker Pirelli is causing mounting pressure, as the CEO warns against the potential loss of independence because of the company’s Chinese state-owned shareholder Sinochem.

What we know:

  • Pirelli's CEO, Marco Tronchetti Provera, informed government officials in Rome this week that Sinochem was attempting to intrude upon Pirelli's management, violating the agreement made when Chinese state-owned chemicals company Sinochem acquired its stake in 2015 for over $7.7bn, the Wall Street Journal reported.
  • According to documents accessed by the Financial Times, internal communications within Sinochem indicate that Pirelli executives were directed to notify Beijing in advance of meetings with foreign government and diplomatic officials and that company events involving foreign or Italian officials should be coordinated directly by Beijing. Communist party representatives within Sinochem issued guidelines for all group companies, including Pirelli's Chinese subsidiaries, emphasizing the implementation of Xi Jinping's three-year action plan and the exercise of party leadership in company governance. Sinochem clarified that these instructions specifically apply to Pirelli's operations in China, while Pirelli declined to comment, the Financial Times reported.
  • Last month, two anonymous sources informed Reuters that the Italian government, in the process of evaluating Pirelli's new shareholder agreement involving Sinochem and Camfin, expressed concern about the possibility of Sinochem gaining the ability to appoint additional board members and potentially select future CEOs. Rome is reevaluating Pirelli's future within the framework of regulations that grants the state the authority to carefully examine foreign investments in critical assets. According to Reuters, the decision from Giorgia Meloni’s government is coming end of June.

The background: For years Pirelli's collaboration with China has been focused on expanding its market presence, leveraging Chinese manufacturing capabilities, and exploring technological advancements in the tire industry. In 2015, China National Chemical Corporation (ChemChina), a state-owned enterprise that later merged with Sinochem, acquired a majority stake in Pirelli, marking China's significant move to expand its presence in the global tire industry and rising concerns about national security implications. The initial sale of Pirelli did not undergo a national security review but since then, considering modern-day challenges, Italy has expanded its "golden power" rules, broadening the definition of strategic assets to include transportation, sensitive data, and technology. In general, the Italian government is currently evaluating whether Pirelli's technology has any implications for national security. More specifically, they are also considering measures to limit Sinochem's influence, such as reducing their voting rights or requiring them to decrease their current 37% stake. Pirelli is engaged in the development of technology aimed at integrating sensors into tires to improve performance and gather data.

Within the same legal framework, Italy’s former Prime Minister Mario Draghi vetoed the purchase of Verisem, an innovative seed company based in Italy, by Syngenta, which is owned by ChemChina. After Syngenta appealed the decision, the Italian administrative court upheld the veto.

Likely outcomes/Takeaway:

  • Like other Western European nations, Italy is trying to strike a balance between maintaining economic ties with China and safeguarding its strategic interests. Meloni’s government acknowledges that severing all trade and business relations with China would not be economically viable, but aims to restrict China's impact on critical assets, such as Pirelli. Prime Minister Giorgia Meloni has also signaled Italy's intention to disengage from the broader Belt and Road Initiative led by China, which Italy joined in 2019.
  • Depending on the results of the Italian government's evaluation, there could be potential restrictions imposed on Sinochem. The outcome of these developments, expected to be announced by the end of June, will determine the future trajectory of Pirelli and the level of influence exerted by Sinochem.


  • “It is possible to have good relations with Beijing, also in important domains, without them necessarily being part of an overall strategic plan.” – Italy’s Prime Minister Giorgia Meloni.
  • “Being an Atlantist, a member of NATO doesn’t mean that you can’t make deals with China. If we go toe-to-toe fighting with China, dragged by this vision of decoupling, we cripple our economy.” – Michele Geraci, Former Undersecretary of State at the Italian Ministry of Economic Development as told to Politico.

Good Reads:

Italy prepares to quit Xi’s global building megaplan (Politico)

Pirelli’s Italian CEO Seeks to Curb China’s Grip on Tiremaker (The Wall Street Journal)

‘Pirelli is in peril’: Pressure rises over Chinese grip on Italian tiremaker (The Financial Times)