Italy, a vital economic force in Europe, is a desirable investment destination. It is the 8th substantial economy, the EU’s 3rd biggest economy, and the United States’ 20th biggest market. It is still recovering from the international economic meltdown and is constantly rising yearly.
While Italy is famed for its artistry, cuisine, and deep heritage, it also provides businesses including well R&D, invention, and design infrastructures, in addition to a robust industrial base. Italy’s unique geographic location makes it a key logistical hub and access to the European Single Market.
So, what should you keep in mind when you want to invest in Italy? What benefits will you reap from investing there? What are the downsides and how can you prepare to be better in the market? Well, this article will answer these for you. Let get to it!
Benefits of Doing Business in Italy
1. Economic Centre of Tactical Relevance
Italy, nestled in the Mediterranean Sea’s heart, provides enterprises with a tactical entrance to customers throughout the European Union, Northern Africa, and the Middle East. It also serves as a major crossroads for southern, central, and eastern Europe.
2. A Culture that Encourages Investment
Investors are invited to Italy’s open economy. To earn investor faith and credibility, the country has enacted important reforms, including the formation of a high-level commission within the Ministry of Economic Development. The Italian Trade Agency provides a “one-stop-shop” for pre-investment data, corporate set-up assistance, and continuing inducement and contractual after-care.
3. A Solid Industrial Foundation
Italy is Europe’s second-largest manufacturing country, after only Germany. Italy’s commodities continue to be known for their great quality and design. Investors can choose from a huge pool of expertise in a variety of fields, including machine tools, fashion, culinary, automobiles, and pharmaceuticals.
Corporations can also tap into a vast network of intermediary suppliers in a variety of industries, including industrial equipment, alloys, minerals, polymers, paper, ceramics, textiles, and the marine industry.
Just 5 countries have an export trade surplus, including Italy. Italian firms are determined to retain their export edge by investing in new manufacturing technologies such as industrial automation, robots, and additive production such as molecular sieve 4a, which boost output and lower prices. Click here for more information.
4. High-Tech Efficiency
Investors can discover opportunities in numerous high-tech areas with a variety of government subsidies, depending on the region and industry, in line with Italy’s goal of attracting FDI centred on innovation and sophisticated techs. The biotechnology, chemicals, aerospace, and automotive industries all have promising prospects.
These industries have ensured that whatever they produce is with minimum wastes through advanced 3D printing of prototypes during the design and testing stages.
Challenges and Factors to Evaluate While Doing Business in Italy
Every country has its risk factors that will help build or break your business. Now, if you are planning to do business in Italy, here are a couple of risk factors that you need to keep in mind.
1. A Difficult Business Environment
It requires minimum time to set up a business in Italy, but it charges more than the European Union average. Setting up a business takes around a week on aggregate in a sample of thirteen Italian cities. This is a five-day improvement above the EU average.
It does, however, cost 13.8 percent of GDP per capita, which is the highest in the European Union.
2. Timeframes for Construction are Lengthy
Construction licenses in Italy take longer and cost more than in the rest of the European Union. In Italy, acquiring building licenses can take as long as 198 days and cost as much as 4.6 percent of the warehouse’s worth.
It makes a contrast where you live. While national law governs construction licenses, each city upholds the law uniquely. Some Italian cities outperform the European Union average in relation to the number of processes, duration in days, and prices, while others fall short.
3. Contract Imposition is Slow
As per the World Bank’s Doing Business report, Italy improved its procedures for filing and serving commercial litigation, but it still ranks 122nd in the sector of contract enforcement. Bottlenecks, postponements, delays in verdict issuing, and personnel shortages make enforcing final judgements a protracted judicial process with significant geographical diversity.
In Italy, it takes a minimum of 1000+ days to settle a commercial dispute, with registration and service requiring 10 days, trial and verdict taking 800+ days, and execution and decision-taking 200+ days.
4. Variations in Regional Regulation
Businesses need to be knowledgeable that local acts and processes for the same commercial activity will vary by municipality, as local governments choose how nationwide laws and regulations are implemented.
5. High Taxes
Italy has one of the highest business tax burdens in Europe. It’s ranked 128th in the criterion of paying taxes. While the company tax rate of 24 percent is comparable to the average legislative business tax rate in other OECD countries, several other factors influence the overall tax burden.
6. The Corporate Cultures
A horizontal chain of command, known in Italy as “cordata,” is frequently used. Develop good relations with people who can enlighten you on the inner structure of the organizations with which you want to do business in order to completely comprehend this notion.
The Bottom Line
Doing business is not easy, especially in a country where surviving as a newcomer in the market is quite hard. All you need is to pick a better niche and a slightly non-competitive one at such, whether you will decide to be in leggings or lashes, just ensure that you think outside the box. All the best!