Doing Business in Italy: 2016 Country Commercial Guide for ...

Doing Business in Italy: 2016 Country Commercial Guide for U.S. Companies

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2016. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

Table of Contents

Doing Business in Italy .......................................................................................................................5 Market Overview ...........................................................................................................................5 Market Challenges .........................................................................................................................6 Market Opportunities.....................................................................................................................6 Market Entry Strategy ....................................................................................................................6

Political and Economic Environment...................................................................................................8 Political Environment .....................................................................................................................8

Selling US Products & Services............................................................................................................9 Using an Agent to Sell US Products and Services..............................................................................9 Establishing an Office ...................................................................................................................10 Franchising ................................................................................................................................... 10 Direct Marketing ..........................................................................................................................12 Joint Ventures/Licensing ..............................................................................................................14 Selling to the Government............................................................................................................14 Distribution & Sales Channels .......................................................................................................16 Express Delivery ...........................................................................................................................16 Selling Factors & Techniques ........................................................................................................17 eCommerce .................................................................................................................................. 17 Trade Promotion & Advertising ....................................................................................................23 Pricing..........................................................................................................................................27 Sales Service/Customer Support ...................................................................................................28

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Due Diligence ...............................................................................................................................29 Local Professional Services ...........................................................................................................29 Principle Business Associations:....................................................................................................30 Limitations on Selling US Products and Services ............................................................................30 Selling U.S. Products and Services Web Resources.........................................................................31 Trade Regulations, Customs, & Standards.........................................................................................34 Import Tariff ................................................................................................................................34 Trade Barriers ..............................................................................................................................34 Import Requirements & Documentation .......................................................................................34 U.S. Export Controls .....................................................................................................................39 Temporary Entry ..........................................................................................................................40 Labeling/Marking Requirements...................................................................................................42 Prohibited and Restricted Imports ................................................................................................59 Customs Regulations ....................................................................................................................60 Trade Standards ...........................................................................................................................60 Trade Agreements........................................................................................................................65 Licensing Requirements for Professional Services..........................................................................65 Trade Regulation Web Resources..................................................................................................66 Investment Climate Statement .........................................................................................................69 Executive Summary ......................................................................................................................69 Openness To, and Restrictions Upon, Foreign Investment .............................................................70 Conversion and Transfer Policies ..................................................................................................71 Expropriation and Compensation..................................................................................................72 Dispute Settlement ......................................................................................................................72 Performance Requirements and Investment Incentives.................................................................73 Limits on Foreign Control..............................................................................................................75 Protection of Property Rights .......................................................................................................75 Transparency of the Regulatory System ........................................................................................77 Efficient Capital Markets and Portfolio Investment .......................................................................78 Competition from State-Owned Enterprises..................................................................................80 Responsible Business Conduct (RBC) .............................................................................................82

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Political Violence..........................................................................................................................83 Corruption ...................................................................................................................................83 Bilateral Investment Agreements..................................................................................................87 OPIC and Other Investment Insurance Programs ...........................................................................88 Labor ...........................................................................................................................................88 Foreign Trade Zones/Free Ports/Trade Facilitation ........................................................................91 Foreign Direct Investment and Foreign Portfolio Investment Statistics...........................................91 Contact for More Information.......................................................................................................93 Trade & Project Financing ................................................................................................................94 Methods of Payment....................................................................................................................94 Banking Systems ..........................................................................................................................94 Foreign Exchange Controls............................................................................................................95 US Banks & Local Correspondent Banks ...........................................................................................95 Project Financing..........................................................................................................................95 Web Resources ............................................................................................................................98 Business Travel .............................................................................................................................. 100 Business Customs ....................................................................................................................... 100 Travel Advisory .......................................................................................................................... 100 Visa Requirements ..................................................................................................................... 100 Currency .................................................................................................................................... 101 Telecommunications/Electric...................................................................................................... 101 Transportation ........................................................................................................................... 101 Language ................................................................................................................................... 102 Health ........................................................................................................................................ 102 Local Time, Business Hours and Holidays .................................................................................... 102 Temporary Entry of Materials or Personal Belongings ................................................................. 104 Travel Related Web Resources....................................................................................................104 Leading Sectors for US Exports & Investments ................................................................................ 106

Agricultural Sector .................................................................................................................. 106 Alternative Fuel Vehicles ........................................................................................................ 110 Airport and Ground Support Equipment .................................................................................. 114 Biotechnology ........................................................................................................................ 117 Cosmetics and Toiletries: Beauty Products .............................................................................. 122

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Cybersecurity ......................................................................................................................... 125 Pet Products ........................................................................................................................... 129 Medical Devices and Technology.............................................................................................133 Renewable Energy .................................................................................................................. 136 Safety and Security Equipment ............................................................................................... 139 Smart Grid Technologies ......................................................................................................... 142 Travel and Tourism ................................................................................................................. 145

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Doing Business in Italy

Market Overview

Italy is the world's 8th largest economy with a GDP of 1.6 trillion euro in 2015. Although Italy emerged from recession in the first quarter of 2015, Italian GDP remains well below its pre-crisis peak. Italy's GDP grew by 0.8% in 2015. Analysts predict that the Italian economy will see modest growth in 2016.

In 2015 Italy was the 21st largest market for U.S. exports, which totaled approximately USD 17 billion, and the 6th largest export market in the EU, following the UK, Germany, Netherlands, Belgium and France.

U.S. exports to Italy are increasing steadily and are concentrated in high-value sectors such as transportation machinery (12%), pharmaceuticals (11%) and electrical machinery (8%).

In 2015, the United States was Italy's third largest destination for exports ($39.4 billion), following Germany and France. The U.S. is Italy's 8th largest supplier.

Based in part on structural reforms by the Italian Government, the Italian economy is beginning to move into a solid recovery after its longest recession in recent memory and there appears to be political momentum for improvements to Italy's investment climate.

Italy's cumulative inward FDI investment equaled 17% of GDP, well below the EU average of 49%, in 2014. U.S. direct investment in Italy totaled USD 26.7 billion in 2014, ranking Italy 8th in Europe and less than half of U.S. investment in France and one-fourth the size of U.S. FDI in Germany. U.S investment in Italy is concentrated in manufacturing, computer services and software, and energy, with significant industrial relationships in the aerospace and automotive sectors.

The United States remained Italy's largest non-EU export market and was also Italy's fastest-growing export market in 2015.

In 2014 Italian foreign direct investment in the U.S. totaled $28.8 billion, supporting 130,900 U.S. jobs. Top industry sectors for Italian FDI include industrial machinery, automotive components, metals, software and IT services, communications and consumer products.

Italy has a population of approximately 61 million. Industrial activity is concentrated in the north from Turin in the west through Milan to Venice in the east. This is one of the most industrialized and prosperous areas in Europe and accounts for more than 50% of Italy's national income. By contrast, Italy's southern region, or "Mezzogiorno" is less developed.

The Italian economy is driven in large part by the manufacture of high-quality consumer goods produced by small and medium-sized enterprises, many of them family owned.

Italy's current government formed in February 2014 when now 41-year old Florence mayor and Democratic Party (PD) leader Matteo Renzi replaced Enrico Letta as Prime Minister. Renzi's center left PD dominates his governing coalition, which includes the center-right "Popular Area" and the Civic Choice party.

Renzi's government has ambitiously sought to increase Italy's growth potential through labor market, public administration, justice, and education reform, and by streamlining Italy's political institutions. As the Renzi government implements new reforms, opportunities for U.S. companies are likely to arise in many sectors.

The Transatlantic Trade and Investment Partnership (T-TIP) with the EU is an ambitious and comprehensive trade and investment agreement that will promote transatlantic international competitiveness, jobs and growth. Negotiations are ongoing as of summer 2016, and both sides are eyeing the end of the year for concluding the negotiations.

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