Italy and China FDI, business environment and challenges. Carlo Ferrari FDI ICE

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1 Italy and China FDI, business environment and challenges Carlo Ferrari FDI ICE Rome, June 18th,

2 Attraction of FDI, a steep road ahead, but with a great potential Souce: Unctad- FDI flows, 2012 FDI attraction, Italy vs. competitors in 2012 Italy: Greenfiled FDI share in 2012 Billions of USD, % Billions of USD, % +44% -96% -84% -40% -22 % -35 % Delta vs ,7 5,3 4,4 58,9 62,5 Average 29,1 17,5 0,9 1,3 5,3 18% 4,5% France Germany Italy Spain UK USA Total Brown Field Green Field Workforce 2

competitors in 2012 Italy: Greenfiled FDI share in 2012 Billions of USD, % Billions of USD, % +44%

3 CHINA ITALY FDI Stock and Flows Millions of Dollars China to Italy Italy to China Stock In USD Flows In Eur Source: IMF (USD) and EUROSTAT (EUR) 3

456 812 832 2009 2010 2011 2009 2010 2011 Flows In Eur

4 Italy s economy in the global crisis: the Italian Government achievements Description Pension reform Fiscal consolidation Liberalisation Simplification Enhances the medium and long-term sustainability To reach a balanced budget in 2013 (= primary surplus of 5% of GDP), To encrease competition. No unnecessary limits, permits, licenses for business start-ups; in public services Certificates online, Digital agenda, Labour reform Privatization To remove rigidities and achieve a flexible and fair labour market More than public assets amounting 54 billion euros will be presented to potential investors 4

No unnecessary limits, permits, licenses for business start-ups; in public services Certificates online, Digital agenda, Labour reform Privatization To

5 End2end approach in the management of the life cycle of the investment Coordination the Ministry for Economic Developmnent Our network abroad Offer Support Players Embassies, Consulates, ICE offices, Chambers of Commerce Invitalia MED Regions Invitalia MED Attività Lead Generation Scouting First level support Partnership PTF mix Operating support After Care 5

Embassies, Consulates, ICE offices, Chambers of Commerce Invitalia MED Regions Invitalia MED

6 Company support and promotion model of the new ICE Agency Guidelines to follow Some examples Bidiretional approach to the internazionalization process Export promotion - core ICE Agency 1 Manage the change New offices in strategic areas Comprehensive strategic plan Focus on serving the needs of SME Internazionalizati on Supporting Italian companies investing abroad through strategic collaboration with SIMEST 2 FDI attraction amplify the potential Lead Generation and Scouting on site Generation of a Ptf of opportunities Initial global support 6

strategic plan Focus on serving the needs of SME Internazionalizati on Supporting Italian companies investing abroad through strategic

7 Our footprint China is a priority - Beijing - Guangzhou (Canton) - Shanghai - Hong Kong - Chengdu - Tianjin 7

8 A Case Study 8

9 The Chinese yacht and boat market In China the yacht and boat market is at its dawn, but it is growing fast: In 2010 in China there were only 60 superyachts (longer than 46 meters). In 2012 the number of superyachts in China reached 120 units; today, as first semester 2013, the total figure is about 150 units On the supply side, domestic production continues to improve and an increasing number of Chinese yacht manufacturers are exhibiting at different international boat shows in many key coastal cities. Exports of yacht and pleasure vessels increased 17% from million USD in 2011 to million USD in 2012 due to the global economy recovering from the downturn in On the demand side, interest in yachting continues to grow, imports grows 45.2% from million USD in 2011 to million USD in Italy exported million USD to China in 2012, accounting for 26.9% of total yacht imports in China; Italy re-confirms the #1 position as the leading exporter to the China yacht market as in

increasing number of Chinese yacht manufacturers are exhibiting at different international boat shows in many key coastal cities. Exports of yacht and pleasure vessels increased 17% from 223.

10 In 2012 SHIG - WEICHAI GROUP invested in Ferretti Group 10

11 The SHIG-WEICHAI deal The Deal Total value of investment: 374 millions euro; 75 % of equity, the remaining 25 % in the hands of Royal Bank of Scotland and Strategic Value Partner; President: Mr. Tan Xuguang Managing Director: Ferruccio Rossi WHY? 11

of Royal Bank of Scotland and Strategic Value Partner;

12 Technological Excellence Highly innovative hybrid propulsion system enabling yachts measuring over 20 meters to sail in zero emission mode for the very first time 12

13 High-end Brands and an International network 13

14 The bad and the good The Ferretti case Bad Burocratic burden (i.e. company and personal documents, certificates, etc., time consuming procedures, delay in the issue and renewal of visas, almost one year for getting the entry visa for one of the top managers of the WEICHAI group); Language barriers; Lack of coordination among the Italian Authorities; New Approach and good Positive attitude of the Italian authorities The largest Chinese investment in Italy in 2012; Investment in manufacturing facility; 14

the top managers of the WEICHAI group); Language barriers; Lack of coordination among the Italian Authorities; New Approach

Time to strengthen economic relations between China and Italy

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