Pirelli implements a “local for local” strategy by setting up production sites in rapidly developing countries to serve local demand at competitive industrial and logistic costs. This strategy improves Group competitiveness in the face of resurgent trading blocs and growing protectionist measures (customs barriers or other measures such as technical prerequisites, product certification, and administrative costs connected with import procedures, etc.).The Pirelli Group adopts this strategy for its operations in countries (Argentina, Brazil, Mexico, Russia, China, Egypt, Turkey, Venezuela and Indonesia) where the general political and economic context and tax systems might prove unstable in future. In fact, structural risk factors persist in the Latam area, particularly those involving the political and economic situation in Venezuela and Argentina, and in Egypt, where political and social instability remains dominant and which has altered normal market dynamics over the last three years and, more generally, business operating conditions. In order to adopt prompt (or even preventive, when possible) measures to mitigate the possible impact stemming from changes in the local context, the Group constantly monitors the evolution of political, earnings, financial and safety risks associated with the countries where it operates. Moreover, in situations where the production capacity of certain factories is underutilised, production can be reassigned to other Group plants.
The different colors represents the so called "country risk" (source: IHS Global Insight, 2014), which is a measures of risk that takes into consideration the economic, political and security sphere.