A practical guide to doing business in Italy

practical guide to doing business in italy

Italy boasts the second most competitive manufacturing industry in the world, whose growth is driven by the fashion, pharmaceutical and furniture industries. The focus for further development is currently on infrastructure and domestic consumption, which, in combination with the existing market forces, makes Italy a desirable target for foreign companies hoping to build large-scale, profitable businesses. This article aims at summarising the current opportunities for foreign investors and entrepreneurs doing business in Italy, highlighting the trends that will dominate the Country’s future economic growth, the industries that are most likely to benefit from it, and also addressing the potential drawbacks and obstacles a foreign company may encounter while establishing a successful business in Italy.

Market facts vs representation

There is a trend of fashionable pessimism in both the national and in the worldwide news coverage of Italian economy. A quick look at the facts, however, paints a rather different picture. The Trade Performance Index powered by the WTO’s International Trade Centre, for instance, ranks Italy in second place, right below Germany, among the main actors of global trade. The values pertaining to the textiles and processed food industries are particularly interesting. In recent years, Italy has also greatly improved its policies on sustainability, reducing waste and optimising energy consumption (on average, Italian industries currently consume 13,7 tons of petrol per 1Million Euro’s worth of product, which is 3,1 tons lower than the European average). Looking at the overall figures, what emerges is the profile of a Country that can certainly aim for higher targets, but also has been improving on past results and holding fast against the impact of the crisis that has swept across the western markets over the past decade.

Does this mean that there are no risks attached to doing business in Italy?

Of course not. It may be accurate to say that there are risks attached to doing business anywhere, but in this context we will examine the factors that tend to make investors nervous when it comes to starting new enterprises or expanding existing businesses in Italy. Government policies, of course, are critical in shaping any Country’s market, and political instability in Italy has long been a factor of economic uncertainty. While this particular aspect is undeniably true, it is also worth noting that all political forces, even those who may, at some point or other, have toyed with the idea of Euroscepticism, have eventually acknowledged the perks of the common market and do not seem likely to forego the solidity afforded by being part of a European economy.

Let’s talk about the dreaded Italian bureaucracy

Another topic that is often brought up whenever international investors discuss doing business in Italy is the dreaded Italian bureaucracy, well-known for its byzantine procedures that are puzzling enough to the locals, let alone foreign companies or entrepreneurs. While this preconception is not entirely without foundation, it is also true that subsequent Italian governments have been simplifying procedures in order to attract foreign capital, resources, innovation, know-how and investments. Obtaining visas is now easier for international entrepreneurs and investors, particularly if they choose to take up residence in Italy. In fact, obtaining a business visa as an entrepreneur or investor may now take as little as 48 hours.

Domestic consumption in Italy

Domestic consumption in Italy has reversed its decreasing trend and has been growing steadily throughout 2017. According to a recent report, it has grown by 2,6% in the first trimester of 2017, compared to the trimester of 2016 (the biggest annual increase since 2011). Post-crisis Italian consumers, however, are dramatically changed and show habits and behaviours that differ greatly from the ones registered before the sovereign debt crisis. Halfway through the second decade of the XXI Century, the average Italian consumer is well-informed, unlikely to be faithful to a particular brand or retailer, extremely demanding and interested in the ethical and ecological consequences of production and consumption, as well as in prices and value. Italy has also been bridging the gap in the diffusion of online sales that divided it from the rest of the union: Italian consumers are now just as likely to purchase through traditional or digital channels and have grown more curious towards new products and services. This is, of course, excellent news for entrepreneurs and companies doing business in Italy: the reality of global marketplaces has made it easier to get past cultural differences and the natural diffidence that the former generation of consumers showed for unfamiliar brands and products.

A realistic approach to doing business in Italy

Italy is likely to be a relatively volatile economy for the next decade: seeing this fact as a cause for opportunity and excitement rather than a cause for concern is a matter of perspective and mindset. It is a fact, after all, that times of crisis and economic recession have proven ideal moments to double down and invest. When local policies, governments and local partners are experiencing pressure and stress, new partnerships and foreign investors are likely to be welcome. A through-cycle perspective, in this case, might prove more rewarding than a traditional performance-versus-plan approach.

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Angela

She is a part-time digital nomad. She would go full-time, if only she could stay away from Berlin for long enough without pining for a Pretzel. She was born in Italy and she enjoys life as an expat, but visits home often enough and can still remember how to bake a perfect lasagna. She is passionate about writing, marketing, languages and the systematic demolition of cultural stereotypes.

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