Italy – China: what does the future hold for businesses?

On Thursday, November 24th, the Italy China Economic Cooperation Forum, organized by Italy China Council Foundation (ICCF) with the collaboration of AICE and the Chinese Chamber of Commerce in Italy, took place at the headquarters of Confcommercio in Milan.

The forum was an opportunity for Italian and Chinese institutions and the business community to discuss the economic and trade relations between the two countries.

The scenario that was shown is that of two countries that want to continue to cooperate despite the obvious difficulties resulting from a struggling global economy and China’s strict policies to manage the Covid-19 pandemic. This is evident from the data on Made in Italy exports, which reached a record $30 billion in 2021, and maneuvers to strengthen bilateral relations such as the 14 reinstated and new direct airline flights soon to be opened or the invitation for Italy to be the guest of honor at the international consumer goods and luxury fair in Hainan.

The report “Cina-Italia: quali prospettive per le imprese” (“China-Italy: what perspectives for companies”) edited by the ICCF Study Center and presented during the forum, illustrated how in 2022 the trade figures depict an Italian trend in line with those of other European countries. Overall, it grew by 9 percent y/y in the first ten months of the year, driven by Chinese exports to the Peninsula (+23 percent y/y or $43 billion), while imports recorded a 10 percent y/y drop ($23 billion).

To date, the main imports of Italian products in China come from the fashion system and the agri-food, cosmetics, furniture, construction, mechanical engineering, instrumental mechanics, machine tools, agricultural mechanics, and automotive sectors.

Since 2017, China has been the second country, after the United States, with the largest inbound investment flow. In 2020, China was the fourth largest destination of Italian FDI worth €1.55 billion (+1891% over 2019), leading China to become the 11th largest country for Italian investment stock, with a value of €11.45 billion (+9.4%).

Interesting results emerged from the survey (over 8000 responses) conducted by ICCF to Italian and Chinese entrepreneurs that show Italian entrepreneurs see China not only as an “outlet market” for their products and services, but also as a bridge for access to neighbouring markets, and equally Chinese entrepreneurs consider Italy a strategic hub in the development of R&D activities thanks to the high level of specialization of its workforce.

Another fact that emerges from Italian entrepreneurs is which sectors are of greatest interest for future investment in China, in order of importance:

  1. pharmaceuticals
  2. medical equipment/machinery
  3. information technology
  4. food and beverages

The survey also made it possible to draw up a series of recommendations for Italian and Chinese institutions: investment in digital, aid to facilitate the establishment of collaborations with local partners, more training and information. In addition, Italian companies especially ask the EU to strengthen diplomatic cooperation with strategic partners outside the Union, while maintaining stable relations with Beijing, increase trade and better protect intellectual property; while Chinese companies, in redefining relations with the EU, ask the Chinese government to foster deeper cooperation in joint R&D activities and cultural exchanges.

In this scenario of opportunities, Roncucci&Partners, with its many years of experience in consulting, is able to support Italian companies planning to invest in China, through a path of internationalization that starts from the identification of a partner to the digitization of products.

 

 

Chiara Origlia

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