Chambre Française de Commerce et d'Industrie en Italie
Ways to enter the Italian market for small and mediumsized businesses with limited financing capital
1
Introduction ……………………………………………………………………………………………………… p.5
a
PART I: THE CHAMBER OF COMMERCE
I/ HISTORY OF THE CHAMBER …………………………………………………………………………….… II/ GENERAL OVERVIEW OF THE CHAMBER’S ORGANIZATION 2.1 Statutes ……………………………………………………………………………………………… 2.2 Network ……………………………………………………………………………………………... 2.3 Financing ………………………………………………………………………………………….…
a
b
p.6 p.6 p.6-7 p.7
PART II: THE ITALIAN MARKET: OVERVIEW, APPROACH AND RUNNING OF THE MARKET b
I/ OVERVIEW 1.1 Italy’s economic situation a) Outlook on the Italian economy ……..…………………………………………………...… p.8-9 b) Key sectors of the Italian economy …....………………………………………………….... p.9 c) The Italian economic fabric …...………………………………………………………….... p.9-10
1.2 Economic relationships and overview on trade with France and Europe a) France – Italy ……………………………………………………………………………... p.10-11 - Exports - Geographical structure of trade - Economic players b) Italy – France ………………………………………………………………………...……… p.11 c) The Lyon – Turin high-speed train: a cross-border project …………………………….…… p.11 1.3 Prospects of future market’s evolution and measures to bolster up French SMEs ………….… p.12
II/ APPROACH – ECONOMIC DISPARITIES: A SPLITTED COUNTRY 2.1 Situation a) Northern Italy ……………………………………………………………………………..… p.13 b) Southern Italy ……………………………………………………………………………….. p.13 2.2 Causes a) Geographical causes …………………………………………………………………………. p.13 b) Social causes: the Mafia …………………………………………………………………...… p.14 - Organization and running - Activities, weight and impact on the economy
III/ MARKET’S RUNNING AND MARKET’S PENETRATION 3.1 Consumer habits a) Overview ………………………………………………………………………………….… p.15 b) Differences between Northern and Southern Italy ………………………………………….. p.15
3.2 Business relationships with Italian people: a cross-cultural fact a) Necessary preparation to enter the market …………………………..……………………….. b) Choosing the distribution network ………………………………………...…………........… c) Trading habits ……………………………………………………………...………………… d) Trade talks …………………………………………………………………...…………….… e) Conclusion and follow up ………………………………………………………………….…
p.15 p.16 p.16 p.16 p.17
2
a
PART III: ENTER THE MARKET: USEFULNESS OF THE CHAMBER’ SERVICES
b
I/ PREPARING TO ENTER THE MARKET 1.1 The Coface …………………………………………………………………………………………... p.18 1.2 The "Chambre Française de Commerce et d'Industrie en Italie" (C.F.C.I.I.) ………………… p.18 II/ THE SOLUTIONS THE C.F.C.I.I. SET UP TO MINIMIZE THE COSTS INDUCED BY THE PENETRATION OF A NEW MARKET 2.1 Firms’ support department a) Support services ……………………………………………………………………………… p.19 - businesses list - market research b) Direct support service ……………………………………………………………………...… p.19 c) V.A.T. recovering service ………………………………………………………………….… p.19 2.2 Fiscal domiciliation …………………………………………….……………………………...… p.19-20
III/ SETTING UP A BUSINESS IN ITALY …………………………………………………………………. p.20 Conclusion ……………………………………………………………………………………………… p.20
3
I would like to thank -
Miss Chantal Pallin Zanardi, general secretary of the C.F.C.I.I., for her trust throughout my internship period at the Chamber of Commerce.
-
Miss Caroline Besson, head of the “firms’ support department” for her support and advice,
-
The whole staff of the Chamber of Commerce for its daily support and for having me made feel welcome.
Everybody’s availability and help, enabled me to feel part of the staff quickly which contributed to make this internship very beneficial.
4
Introduction
This report is the result of a 5-month internship in the « firms’ support department » of the Chambre Française de Commerce et d'Industrie en Italie (C.F.C.I.I.). This internship began midJanuary 2006 and will end at the end of September 2006; such length (nine months) makes it a real professional experience. Through the various activities I have carried out all along this internship, I have been confronted with the concrete problems of firms trying to set up abroad, their failures and successes but also their needs and the difficulties they meet when entering the Italian market.
It has also been an opportunity for my future career as it has enabled me to observe the problems French firms meet and to understand the often under-estimated complexity of the Italian market. For these reasons, I thought it interesting this report to deal with “the ways to enter the Italian market for small and medium-sized businesses (SMEs) having few financial means” in this report.
In the first part, the Chamber’s organization will be briefly introduced in order to put this report in its context and to introduce my subject. Many SMEs are willing to take advantage of the opportunities the single European market offers and wish to develop their export activities. Italy also appears all the more a good choice as it is geographically very close and similar in lifestyle to France and the Italian market offers many opportunities. This interest in Italy could be explained in part by the cultural and linguistic similarities between the two countries but also by the strong economic and cultural relations they have been maintaining for a long time. These similarities lead many businesses to misvalue the specificities of the market with more or less costly consequences. A presentation of the current economic situation in Italy, the Italian market and of its characteristics will enable us to become familiar with this reality. The second hindrance to globalization is the insufficient funds many SMEs have at their disposal. Entering a foreign market is expensive and risky, and many firms can not afford to tempt such an undertaking. Nevertheless, there are various solutions to reduce risks and costs and to optimize resources. Such solutions will be developed in the third part.
5
a
PART I: THE CHAMBER OF COMMERCE
I/ HISTORY OF THE CHAMBER
The French Chamber of Commerce and Industry in Italy was founded in 1885 by members of the French business community willing to develop their activities in Italy and to help other businessmen to develop business relations with Italy. The Chamber went through the political and economic troubles of the XXth century and faced various protectionist measures introduced between France and Italy, the First World War, the Great Depression, etc… Thanks to its dynamism and its usefulness, the organization became a reference for business relations between France and Italy so that in 1940 there were four French Chambers of Commerce in Italy: in Milan, Turin, Rome and Naples. Closed during the Second World War, they have been unified into a single head office in Milan under its current name of Chambre Française de Commerce et d’Industrie en Italie (C.F.C.I.I.).
120 years after its foundation, the C.F.C.I.I. is still a point of reference for all businesses willing to develop their activities in Italy.
II/ GENERAL OVERVIEW OF THE CHAMBER’S ORGANIZATION
2.1 Statutes Even if its activity could be compared to a public utility service, the Chamber is an association whose organization is governed by statutes. Moreover, even if it’s recognized by the French state, the Chamber is a non profit association which must comply with private Italian laws.
2.2 Network Such duality allows the French Chamber of Commerce to be a member of both the U.C.C.I.F.E. (association of the French Chambers of Commerce and Industry abroad) and the Unioncamere (Italian association of the chambers of commerce and industry). The U.C.C.I.F.E is the leading private network of French firms in the world, due to its size. It groups 86 Chambers of Commerce in over 75 countries and represents 25,000 businesses.
6
Due to this duality, the Chamber can take advantage of both French and Italian institutions to find the information it needs to carry out tasks.
2.3 Financing As it’s an association the Chamber must finance itself. The services it purposes contribute to 80% of its global financing and the last 20% comes from its members’ subscriptions. The permanent staff of the Chamber provides the services under the management of a general secretary who defines and coordinates missions according to the needs the firms express.
7
PART II: THE ITALIAN MARKET: OVERVIEW, APPROACH AND a A
RUNNING OF THE MARKET
Italy is probably the country which is the closest to France from a geographical, cultural and historical point of view. Moreover, they have been maintaining strong trade and cultural relations for a long time. But such a context is often deceptive as it leads decision-makers to not pay adequate attention to the differences existing between both countries, concerning their economic situation and manufacturing, trading habits, etc… For these reasons it’s absolutely essential to dedicate enough investment to the preliminary analysis of the market and to avoid approaching the market only on the basis of professional experience acquired in France. I/ OVERVIEW 1
The Italian market is among the leading European markets and that’s why it’s very coveted despite its difficulty to be entered.
1.1 Italy’s economic situation
a) Outlook on Italian economy Italy is the world’s sixth leading economy and the per capita income in northern Italy is one of Europe’s highest. Italy’s G.D.P. amounts to 1,400 billion euros which is equivalent to France and the United Kingdom. Italy’s first export destination is the European Union which accounts for 60% of total exports and its first trading partner is Germany (13.5% of Italy’s total exports) followed by France (12.8%) and Spain (7.7%). However, it seems interesting to highlight that the most relevant trade surplus appears in the new member countries of the E.U. Like other countries of Western Europe, Italy is struggling with debt and unemployment, growth rate remains slow (0.4% in 2002, 0.3% in 2003, 1.1% in 2004, 0.3% in 2005). We need to take in account that these statistics don’t include the underground economy whose activity is estimated at 16% of the G.D.P. (that’s to say 200 billion euros). Such estimates rise to 28% of G.D.P. if we take the illegal activities of the underground economy such as drug trafficking, gunrunning… into account. We could even add that Italy dedicates only 1% of its G.D.P. to research and development
1
Source: most of the information contained it this part comes from sectional newsletters of Rome and Milan missions économiques.
8
(the lowest rate for an industrialised country), which leads to a lack of competitiveness in many sectors.
b) Key sectors of the Italian economy The main manufacturing sectors are the car industry, chemical and pharmaceutical good production, electric equipment and also the textile and clothing industry. Italy is also competitive in the luxury and design industries. The traditional fields of activity (clothing and textile, furnishings, leathercraft and shoes) still remain significant for Italy’s economy which means they are vulnerable to competition from countries with low salaries and costs.
c) Italian’s economic fabric Italian’s economic fabric is characterised by the relevant number of SMEs, 95% of which employ less than 10 persons. Most of these 4 million SMEs are family structures and are established in north-eastern Italy, they contribute for 70% of the added value and for 40% of exports. This overrepresentation of SMEs regarding to other European countries explains in part the flexibility, the adaptability and the dynamism of the Italian economy but also its vulnerability. It also seems interesting to mention that Italian multinationals only account for 11% of the G.D.P. as compared to 25.3% for the European average. These “industrial districts2” are the other characteristics of the Italian economic fabric. In comparison with the other European systems of production, Italian industrial districts are specific due to their industrial power and by the informal aspect closely linked to the local economic contexts. In 1991, they have been recognized by law which defines an industrial district as a “relevant number of small-sized businesses having a manufacturing activity, working in the same sector, specialised in the same industry and established in the same labour market area3”. So, industrial districts seem to be a framework allowing state and regions to implement
2
View map of industrial districts in Italy p.22 This part is the result of a most detailed research. The pieces of information this part contains are coming from various internet sources and are the result of the experience I acquired during my internship. The industrial districts are an interesting area to enter the Italian market for firms producing goods which are complementary to some traditional Italian productions. For example a French firm invented a product facilitating the laying of tiled floor. Italy is the world leader in the tiled floor sector and the main industrial district spreads from Parma to Modena. So the C.F.C.I.I. purposed the firm to establish a partnership with some producers who could have purposed its products in addition to theirs. 3
9
territorial competitiveness’ policies such as training, globalization, technological innovation… With time, cooperation between firms inside the same industrial district enables them to save money and to make profits due to a better flow of information, common purchasing (it often happens competing firms use the same suppliers and subcontractors)… Inside the same industrial district firms also often implement common services from the initial phases (research, development, prototypes…) to those of distribution (transportation, logistics…) to create an economy of scale. Sometimes they also carry out common canvassing actions abroad. Such examples of organization account largely for the success of Italian industry in exporting. The industrial districts account for 44% of total employment in the manufacturing industry and contribute to 42% of total exports. But if this model strongly contributed to growth after the Second World War, it is currently in crisis. The reasons for such a crisis are that industrial districts are still specialised in the traditional fields of activity of the Italian economy which are strongly vulnerable to the competition from emerging countries. Firms are often small-sized which reduce their investment capacity, especially in research and development, to the detriment of their competitiveness. At last, the inefficient management favours compartmentalization and prevent the implementation of inter-district strategy.
1.2 Economic relationships and overview on trade with France and Europe The Italian market still offers many opportunities to French firms, especially in the service industry in which Italy is still behind. As regards the manufacturing industry, France and Italy have been cooperating for a long time and interdependence of these economies is strong. For these reasons, the Italian market is one of the 25 markets4 considered vital for French foreign trade.
a) France – Italy
- Exports If Italy absorbs 4% of all world’s imports, it absorbs 9.3% of French exports. It is also the second trade partner of France and its fourth export destination after Germany, Spain and the UnitedKingdom. As a comparison France’s exports to Italy are more important than these accumulated to the U.S.A, Japan and Brazil. Moreover, the current going on is positive for France whose market shares in Italy have been growing by 47% over the last ten years.
4
South Africa ; Algeria ; Germany ; Brazil ; Canada ; China ; South Korea ; U.S.A ; Hungary ; Israel ; India ; Italy ; Japan ; Malaysia ; Morocco ; Mexico ; Netherlands ; Poland ; Czech Republic ; United-Kingdom ; Russia ; Taiwan ; Thailand ; Turkey ; Tunisia.
10
- Geographical lay-out of trade French exports to Italy are mainly made with northern Italy (76% of them as compared with 10% for Southern Italy and 14% for the central regions). The region of Milan which counts for 26% of Italian G.D.P. imports twice as many products as the whole of South America. As regards the investments, they are much more concentrated: 87% in the North and only 2% in the South. More than the half of French exports to Italy are coming from five regions: Ile-de-France (14.8%), Rhone-Alpes (14.5%), Nord-Pas-de-Calais (9.1%), PACA (8%) et Alsace (5%)5.
- Economic players 22,700 French firms export to Italy. If we refer to customs’ office statistics, 88% of SMEs account for half of the exports to Italy. A small number of big firms undertake an extensive part of these exports, especially in the energy and car industries.
b) Italy - France As regards Italy, France is the second trade partner, the second customer (12.6% of Italian’s exports) and the second supplier (11.3% of Italian’s imports). It is also the third country for Italian investments after the United Kingdom and the Netherlands. More than 400 Italian firms are established in France6, providing approximately 100,000 jobs. More than the half of these companies are in the Rhone-Alpes region because of the geographical closeness and the specialisation of plastic and mechanical engineering industries in the region. c) The Lyon – Turin high-speed train: a cross-border project 7 The high-speed rail link between Lyon and Turin is quite an old project. It deals with the construction of a high capacity railroad link for both freight and passengers. In the long run, it’s forecast that 85% of the trains using this railroad will be devoted to merchandise transportation. The goals of this project are: - To relieve congestion in the Alp valleys - This project is part of a greater European-wide project which will link Lisbon to central Europe8. - To save energy. Railroad transportation reduces energy consumption by 5 over long distances.
1.3 Prospects of future market evolution and measures to bolster up French SMEs
5
It is interesting to note that the soly south-east region counts for quite a quarter of total exports (22.5%) to Italy. Map of Italian companies in France p.23 7 Source : www.transalpine.com Web site about the Lyon-Turin rail link project 8 Map of the European project p.24 6
11
As briefly mentioned before, Italy figures among the 25 countries considered vital for French foreign trade. All these countries are considered to have huge potential and the presence of French firms is considered insufficient. We could divide them into 3 categories: emerging countries, strategic markets with which France has a steady profitable business flow (Germany, U.S.A.) and the border areas (especially North Africa), we should boost the economic take-off in order to stabilise Europe’s borders politically and economically. Italy obviously is considered to be in the strategic market category. We note indeed that the number of SMEs exporting to Italy is 700 lower than the number of SMEs exporting to Spain and 4,100 lower than the number of SMEs exporting to Germany. So, in France there is an high potential of exporting firms regarding the Italian market.
II/ APPROACH – ECONOMIC DISPARITIES: A SPLITTED COUNTRY
This global approach of the Italian market enables us to understand that Italy is a privileged partner of France which still offers many opportunities. But such a global approach doesn’t enable us to show the relevant disparities existing between the different regions of Italy. It is very important for those who plan to sell products in Italy to have at least a global idea of these disparities and their causes as the choice of the launching area in such a compartmentalized and regionalised market is essential. Infrastructures and local development, as well as “cultural” differences, have to be taken into account. From the economic point of view, Italy is divided into two parts. Northern Italy is highly industrialised and holds the majority of the country’s wealth. It accounts for 55% of the national income but only 45% of the population. As regards Southern Italy, agriculture remains prevalent and unemployment reaches peaks.
2.1 Situation Territorial disparities are more relevant in Italy than in many other countries and are striking between the centre-north and the south of the country. Despite encouraging prospects, unemployment remains four times higher in the South than in the North. At the same time, equipment and infrastructures are under the national average and the Mafia has a deterrent effect on investment in the South.
12
a) Northern Italy9 The regions of the North-West of Italy are the destination of more than half of the direct foreign investments in Italy. The unemployment rate is between 6 and 9%. As an example, Lombardy accounts for 26% of Italy’s G.D.P., receives a third of the foreign investments in Italy and shows an unemployment rate of 7%. b) Southern Italy9 As regards the Mezzogiorno10, it receives less than 20% of foreign investments granted in Italy and the per capita income is 40% lower than in the North. The unemployment rate is officially between 17 and 25% but the occupation rate for women is the half of that of men’s. The growth rate remains low (less than 1%), and the weak export capacity of the firms in that area leaves the South behind in foreign demand. This situation has an impact on household consumption which grows three times more slowly than in the north and incites many persons to adapt to a minimum income. Undeclared work can vary by as much as 100% between the North and the South.
2.2 Causes This situation is the result of historical factors but it’s also the result of political mistakes and local disadvantages. It’s also essential to understand these hindrances to be able to adapt to local differences.
a) Geographical causes The geographical location of Italy partially explains this situation. The Po’s plain is the commercial crossroads between Western Europe (especially France and Spain), Central and Northern Europe (Germany, Austria, Hungary…) and Eastern Europe (Russia, the Balkans…). There are numerous, modern transport infrastructures avoiding the Alps. Commercial ports are intersections for Central and Northern European exports at the ports of the Adriatic Sea, Middle East and Northern Africa. Moreover, the proximity of wealthy markets offers beneficial possibilities to Italian exports. As regards Southern Italy, transport infrastructures are insufficient and inadequate, proximity markets (Tunisia, Greece, Albania, Libya…) don’t offer opportunities to Italian firms and the very regionalised and compartmentalised local market offers few development opportunities. Southern Italy is considered a dead end by many investors.
9
Sources: report of the Banca d’Italia about the evolution of economy in the various Italian regions.
13
b) Social causes We could add to this geographical cause a socioeconomic cause as a negative factor in Southern Italy: the Mafia. Even if it could seem a little stereotyped to speak about the mafia when speaking about Southern Italy, it’s a reality in which influence and power must be taken into account.
- Organizing and running The Mafia’s influence and power are due to its organization similar to that of the society in which the lower classes must carry out the dirty work (drug dealing, smuggling, murders…) and the upper classes composed of lawyers, judges, politicians, high-ranking civil servants, company directors... Its power is due to its ability to infiltrate civil society and institutions at every level. The Mafia’s goal is to control its area secretly using state structures in order to run its activity with maximum tranquillity.
- Activities, influence and impact on the economy Contrary to the common idea, the Mafia’s activities11 are not restricted to illegal activities and its political connections enable it to control the most relevant local activities (shops, civil engineering, building industry…) enabling it to have a significant impact on the economy in Southern Italy. Its main “fields of activity12” are drug trafficking, gunrunning, prostitution, extortion, usury and various crimes linked to businesses. Its global turnover was estimated at 44 billion euros in 2002. Crimes linked to businesses are its second source of income, after drug trafficking, to an amount of around 7.5 billion euros. The most common of these crimes are rigged invitations to tender, money laundering and creation of dummy companies for various objectives. Whole sectors of local economy are also controlled by the Mafia. As an example, in the region of Palermo 90% of building industry is controlled by the Mafia and over 75% of Sicilian businesses pay patronage fees. The Mafia infiltrates clean businesses by buying shares, which allows it to take control legally. Moreover, influence peddling, business racketing and embezzlement (of European, national or regional aids) are a reality.
11 12
Source : book « padrini » by Roberto Olla ; published by Mondadori Source: estimated digits and the main fields of activity come from the wikipédia online encyclopaedia.
14
III/ RUNNING MARKETS’ AND MARKET PENETRATION 3.1 Consumption habits
a) Overview Italian buying patterns just like the evolution and trends in the market are similar to those in other Western European countries. But Italy is the country of creation and design and appearances have a relevant role. We note that the buying criteria for durable consumer goods can be ranked by importance: design, safety, comfort and facility of use, price.
b) Differences between Northern and Southern Italy Buying patterns are different according to economic development, that's why they are more modern and sophisticated in Northern Italy, whereas, in the South, consumers tend to attach more importance to the price. Buying patterns also reveal the difference in living standards as we notice that the average family spends less than 19% of its income on food whereas this proportion reaches 24% in the South.
3.2 Business relationships with Italian people: a cross-cultural fact
a) Necessary preparation to enter the market A good preparation for initial meetings is essential as it will enable your interlocutor to estimate your ability to meet requirements, like reliability and the involvement of your firm. You must adapt your products and your documentation to your interlocutor and take into account the existence of potential specific norms. As many SMEs have limited financial resources, they need to determine sales volumes and targets compatible with such capacities. An efficient after-sales service and a quick decision making will be appreciated by Italian firms which are often family structures and in which decision-making power vests in the hands of a few persons. Knowledge of Italian is not essential as many persons are able to trade in English or in French. Nevertheless, being able to speak Italian will be all the more an advantage in a country where personal relationships represent a special significance, as Italian isn’t usually spoken abroad.
15
b) Choosing the distribution network 13 Choosing the right distribution network in Italy is often complex because of the compartmentalization and the regionalization of the market. Moreover, Italian distribution is still strongly traditional and the situation could be very different from one region to another. In general, Italy is behind most other European countries. The North is more modern than the South which remains more traditional, but the global situation tends to change due to the implantation of foreign distributors, especially French (Carrefour, Auchan, Leclerc…). As an example, French mass marketing firms account for 30 to 40% of Italy’s total distribution capacity. As regards other categories of products (especially those destined to businesses), it’s advisable to contact first professional associations to obtain useful information on the distribution network used for their products. Establishing partnerships with local wholesalers or importers is a successful way to enter the market.
c) Trade habits Trading with Italians means being confronted with a multicultural context. It’s a hard task which supposes the knowledge of the Italian culture. An Italian will accept to meet you if he views an opportunity do develop business or to make profits. If you have to establish a partnership with an Italian firm it’s advised to pay a particular attention to meetings and to human relations because of the particular attention Italian people pay to conviviality. Friendly and open-minded, Italian people, however pay particular attention to formalities and are very attentive to appearances. You will also be judged according to your image. You must avoid the quibbling behaviour of Italian people and absolutely avoid unmentioned elements and insinuations they could exploit.
d) Trade talks You must be direct to arouse the interest of your interlocutor quickly and to respond to his first objections. Holding a meeting will depend on the business prospects your interlocutor has interview. Italians are attached to titles and it is important to mention them (Dottore, Ingeniere, Avvocato…). Astute in trade talks, Italian argue and trade with a great sense of commerce. You should be firm because every concession on your part without compensation will be considered a weakness by an Italian trade partner.
13
Many businesses ask the C.F.C.I.I., lists of potential partners but also information about distribution network. The pieces of information this part contain are the result of the experience I acquired during my internship.
16
e) Conclusion and follow up In Italy, a decision can be taken very quickly and if an agreement is reached, it won’t be discussed further. However, every point must be confirmed in writing. You must keep on maintain personal relationships, because in Italy the best deals are made with friends.
17
PART III: ENTER THE MARKET: USEFULNESS OF THE CHAMBER’ S
SERVICES
I/ PREPARING TO ENTER THE MARKET
Once you know the market you must find the most efficient means to sell and promote your product on the Italian market. Obviously, you could have to face and to adapt to unexpected situations and difficulties. 1.1 The COFACE14 The Coface is the French Insurance Company for Foreign Trade offering a credit insurance service to firms willing to protect their domestic or export transactions. Such services are available for firms of all sizes, all nationalities. The COFACE could be a very useful partner for a firm exporting to the Italian market. We note indeed that Italy’s unpaid rate15 is higher than the world average and that payment deadlines are among the world longest. Unpaid delivery or lengthy payment times may have heavy consequences. COFACE services could also enable you to receive payment prior to delivery.
1.2 The "Chambre Française de Commerce et d'Industrie en Italie" (C.F.C.I.I.) It is non-profit association complying to Italian laws whose mission is to assist and advise French firms which want to export to Italy.
II/ THE SOLUTIONS THE C.F.C.I.I. SET UP TO MINIMIZE THE COSTS INDUCED BY THE PENETRATION OF A NEW MARKET Along with the various measures the government set, the C.F.C.I.I. has implemented some services to facilitate the evolution of firms. Even if French firms are mainly concerned, every business could take advantage of them without distinction of nationality.
2.1 Firms’ support department Its role is to help and advise French firms willing to enter the market. The department’s mission consists in two lines of services: support services and setting up assistance
14 15
Source : Web site of the Coface ; www.coface.fr View annex p.25
18
a) Support services
- Business lists Anyone can ask for suppliers, potential partners or subcontractors’ lists. Requests are usually about firms working in a specific sector or in a particular geographic area. But it could also be about organising meetings, translation missions… The goal of such a service is to make it easier finding partners in France or in Italy.
- Market research The C.F.C.I.I. works in partnership with the different Chambers of Commerce in France. It allows firms which are interested in the Italian market to have a contact in Italy. After a first meeting with the head of the firms, the C.F.C.I.I. will make a market research to value the prospects, the risk and the best area to launch its activity. If the firm accepts the estimate, it will take advantage of the experience and the support of the C.F.C.I.I.
b) Direct support service The commercial support service consists in acting as the sales force of a firm in Italy. It is generally used by businesses whose volume of sales is too low to incite it to hire someone. A certain number of hours will also be dedicated to manage customers and the business of the firm in Italy.
d) V.A.T. recovering service French and Italian firms can file for reimbursement of foreign V.A.T paid back. At this goal, they just need to prove they are established in a E.U country member and that they are not physically established in the country subject of the refunding request. Not all firms know they can request a V.A.T refund; the repaid amounts can be quite significant.
2.2 Fiscal domiciliation Many firms don’t want to stand the costs of a set up in the country. It is also possible to dispose of an accountant and fiscal service without being taxable. Choosing between a fiscal representative and the setting up of a subsidiary mainly depends on the volume of business in the country. Fiscal domiciliation is also advisable for firms having an export activity in Italy and willing to bill the Italian V.A.T., which will enable it to act on the market as an Italian firm. Moreover, the service offered by the C.F.C.I.I. offload the business to all administrative formalities of internal E.U trade.
19
III/ PHYSICAL SETTING UP IN ITALY
It is the last phase of the process and it enables the business to act under the same conditions as its Italian competitors, to be closer to its customers and to have a better control over its approach and logistic costs. In order to optimise its setting up, it’s advisable to have local consultants especially lawyers and “commercialisti” (both chartered accountants and fiscal experts).
Thanks to its geographical situation, Italy could be the starting point to enter other markets, it’s also interesting to know that there are two free zones in Trieste and Venice. Foreign goods can be imported to the E.U. without paying customs duties if they’re part of the production of goods destined for export.
Conclusion As regards this internship, it has been very profitable as I have had to do various tasks from translation to market research and research on potential commercial partners.
This experience also enabled me to take a professional view at the Italian market and I think it will be very beneficial for my future career.
20
ANNEX INDEX
Annex 1:
Map of industrial districts in Italy
Annex 2:
Map of Italian companies in France
Annex 3:
Map of the European project
Annex 4:
Italian unpaiment’s rate
21
