Internationalization on foreign markets

The phenomenon of globalization is associated with various business processes, from production and purchasing to sales: companies seem to be following a process of progressive internationalization of all their functions in search of new competitive advantages.

We support companies in their internationalization efforts, enabling them to sell and purchase products or services abroad, establish production and sales operations, or form strategic alliances outside of Italy, including with a view to international tax planning.

We carry out specific market studies, particularly on the Chinese market, in order to:

• locate industry trade fairs in major cities, such as Shanghai, Beijing, Shenzhen & Guangzhou (Canton);
• find and analyze Italian and foreign competitors present on the Chinese market, as well as their sales systems and the market prices applied;
• find and analyze potential customers in China for the products you intend to sell;
• Check the import procedures from Italy, as well as the costs, methods, and transport times.

We implement various Global Sourcing configurations (managing cross-border purchases) to enable companies to source the most cost-effective products and services (with a particular focus on the Chinese market), offering the necessary assistance in the various stages of supplier scouting, negotiation, contracting, and shipping.

We offer a variety of market entry strategies, from creating online shops for e-commerce sales, supporting the entire logistics chain to source products from Italy to China, to building more complex structures, from sales and distribution networks to the construction of representative offices or actual industrial/commercial facilities.

In the attached file, you will find a practical case study of a preventive analysis we carried out for one of our clients in the agri-food sector: read it carefully and you will discover how it is possible to enter the Chinese market without huge investments.

Why turn to China?

Industry research speaks clearly: Made in Italy products are in high demand in China!

When we think of Italy, we often think of those sectors that have allowed it to occupy a position of excellence and which have always been characterized by a high level of specialization, namely those commonly defined as the 4 A's of Made in Italy: Agri-food, Clothing/Fashion, Home Furnishings, Automation and Mechanics.

In the agri-food sector, for example, the Chinese love Italian food: according to data released by Coldiretti, exports of Italian food products to China increase by around 30% every year.

Among the most popular exports are wine, olive oil, pasta, but also dairy products and sparkling wine. Fashion is also highly valued, so much so that any product labeled "Made in Italy" commands exorbitant prices.

China is a country with extremely interesting statistics. Despite a constantly growing population, it must be said that per capita income is also rising, with a significant increase in the segment of the population considered wealthy, which is also the one most fond of Italian products.

The increase in consumption is directed towards those second- and third-tier cities which, from an income and socio-cultural standpoint, would also seem ready to welcome Italian products, on a par with the four most "Western" cities commonly referred to as the "big four": Beijing, Shanghai, Guangzhou and Shenzhen.

A final factor favoring the sales of Italian products is the fact that China, being too large a country to consider opening a store in every city, has given a strong boost to e-commerce.

An interesting element to underline, which differentiates the Chinese market from the Western one, concerns the influence of social media: particular importance is given to videos and films, including advertising for luxury brands, disseminated online.

To be truly successful in China, it is therefore crucial to keep in mind and understand, especially for search engine positioning (Baidu is the most used search engine in China), the characteristics of the language, which is vast and varied, and composed of hundreds of distinct linguistic variants.

How to internationalize your business

Client: Chemical company producing additives, pigments, and colorants, both natural and synthetic, for the food industry; turnover of €8 million.

Problems: Declining sales, focused on the Italian market, amidst a general decline in consumption and growing competition, necessitating the identification of new sales outlets and different distribution channels.

Intervention: A 12-month internationalization plan was developed to seek new customers and strategic partners abroad. Given the high quality of the products, their ease of transportation, and the fact that some of the customers were part of multinational corporations, attention was focused on the Chinese market, proceeding through the following steps: identifying trade fairs in the most important cities (Shanghai, Beijing, Shenzhen, and Guangzhou); analyzing Italian and foreign competitors in China, as well as their sales systems and market prices; scouting for potential Chinese customers; reviewing export procedures from Italy, in accordance with the requirements of MOFCOM (Ministry of Commerce of the People's Republic of China) and AQSIQ (Administration of Quality Supervision, Inspection, and Quarantine); Analysis of transportation costs, methods, and schedules, taking into account that importing agri-food products into China is subject to VAT (a special rate of 13%, not the standard rate of 17%), customs duties (ranging between 15% and 20%), and excise duty, the latter of which is gradually being abolished for key products. The internationalization process, also supported by our Italian correspondent in Shanghai who has been present there for over 15 years, involved visiting major trade fairs and meeting potential customers, before signing the first supply contract with Unilever. Subsequently, a wholly-owned subsidiary (WOFE) was established in China to distribute the products on the Chinese market.