Time to strengthen economic relations between Italy and China Marco Ranieri CIRPET - Research Centre on Transition and Developing Countries Department of Economics University of Turin (Italy)

Contents Macroeconomic data Trade indicators Italian FDI in China Selected sectors for further economic cooperation Other measures for cooperation Main Sources: World Development Indicators database, World Bank (1 July 2008) Italian Institute for Foreign Trade 1/21

Macroeconomic data (2007) ChinaItalyRatio Surface (Km 2 ) Population (mil.) GDP (bil. US$)3.280 (4 th )2.107 (7 th )1,6 Per capita GDP (US$) (99 th ) (18 th ) 0,07 Growth GDP+11,4%+1,5%7,6 Stock FDI at home (bil. US$) ,3 Stock FDI abroad (bil. US$) ,2 2/21

Trade interchange Italy-China (bil. US$) June 2007 Italian expo In China 4,315,086,446,938,614,8510,21 Italian impo from China 4,826,659,2311,6915,9810,0821,17 Total interchange 9,1311,7315,6718,6224,5914,9331,38 Balance for Italy -0,51-2,08-2,79-4,76-7,37-5,23-10,96 3/21

Import of China - Italian share (June) 1,561,461,231,151,051,091,12 Main origins of imports (2006): Japan 14.6%, South Korea 11.3%, Taiwan 10.9%, US 7.5%, Germany 4.8%, Malaysia 3.0%, Australia 2.4%, Thailand 2.3%.....Italy (23 rd ) 4/21

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Export of China - Italian share (June) 1,501,471,521,551,531,651,84 Main destinations of exports (2006): US 21%, Hong Kong 16%, Japan 9.5%, South Korea 4.6%, Germany 4.2%, Netherlands 3.2%, UK 2.5%, Singapore 2.4% 6/21

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Italian FDI in China (2007) FDI in 2007: 74,80 bil. US$ ….Italy 18 th with 0,35 bil. US$ in 2007 (UK 10 th, Germany 11 th, Netherlands 13 th, France 14 th ) 1Honk Kong 2Virgin Islands 3South Korea 4Japan 5Singapore 6USA 8/21

Italian FDI in China - Sectors 2000 companies in “traditional” sectors for the Italian economy: Machinery & mechanical industry Chemical industry Textile industry Forwarding companies Legal and consultancy firms 9/21

Italian FDI in China - Forms Mainly Representative offices Buying offices Show rooms Joint ventures ONLY 10% of FDI are made by SMEs (in Italy 99% of total companies are SME, 95% has less than 10 employees) 10/21

General delay in comparison with other EU countries Italian companies mainly active in import (export) and not much in investment and selling in the local market Thanks to official meetings, fairs and promotional events, lately the image of China changed and companies started to invest more and sell on the local market Italian FDI in China - Features 11/21

Further economic cooperation – General Strategy => need to overcome the general lack of knowledge and negative perception (fear) of China, especially among SMEs Italian investors should think about China as market and not only as a “factory” To capitalize on the growing importance of the “second and third-tier” cities 12/21

Further economic cooperation – General Strategy Italian investors and authorities should promote the “Italian way of life” in all its components (fashion, furnishings, gastronomy, related machineries, culture) After Made in Italy, investors and authorities should promote the idea of Designed by Italy and Made by Italy 13/21

Further economic cooperation - Sectors Fashion and Luxury (China expected to pass Japan as bigger buyer of luxury products) Italian food and beverage House system (building materials, furniture, house appliances, lighting equipment, bath furniture, etc.) 14/21

Further economic cooperation - Sectors Machinery (packaging, textile machinery, light machinery, food and zootechny processing, wood and plastic processing) Bio-technology and medical appliance Harbors infrastructure and boating 15/21

Further economic cooperation - Sectors Design and styling for Chinese products Tourism (in both directions) Infrastructure in renewable energy and environmental sector (SICP) 16/21

“The Sino-Italian cooperation for environmental protection (SICP)” Launched in 2000 by the Italian Ministry for the Environment and Territory Main Chinese Partners: State Environmental Protection Administration, Academy of Social Sciences, Ministry of Science and Technology, Beijing, Shanghai, Nanjing and Suzhou Municipalities Aim: realize pilot projects for natural resources protection, energy efficiency, renewable sources promotion, low emission transportation systems and technologies, sustainable agriculture 17/21

Other measures for cooperation Spread information to overcome the general lack of knowledge and “fear of China”, especially among Italian SMEs Boost exchange in technology 18/21

Other measures for cooperation Open to Chinese investment in Italy to acquire technology, design, brands (COSCO shipping in Genoa; ChangAn and Jac Anhui Janghuai automotive, Hisense household appliance in Turin) Boost exchange of experts and university students (visa facilitation) 19/21

Study in Italy “Marco Polo Project”, promoted by the Conference of Italian University Rectors (CRUI) Italian Cultural Institute in China open a dedicated website: University info on the Italian Embassy in China page for visa: EU Erasmus Mundus Programme, aimed to attract third-countries students 20/21

Marco Ranieri CIRPET Research Centre on Transition and Developing Countries Department of Economics University of Turin (Italy) 21/21 Thank you for your attention!