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Doing business with Italy – An operative guide for foreign enterprises

Milan,

May 31st 2012

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Topics:

• Italy & Lombardy: economic outlook

• Trade with Italy

• How to export to Italy – Operative programme for economic operators

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Italy at a glance

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• Population: 60.624.442 (2010)

• GDP: € 1,548 billion (2010)

• GDP growth: 2010: 1.1% 2011: 0.4% 2012-2013: negative forecasts

• Export: € 338 billon (2010).

• Import: € 367 billon (2010)

• Main Trading Partners: Germany, France, China, Netherlands, Spain, Russia, Belgium, USA.

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• Export: Machinery, Luxury goods, Chemical products, Processed food, Textile products, Car engines, Design and fashion, Shoes.

• Import: Industrial machines, Chemicals, Transportation vehicles, Oil, Metals, Food, Agricultural products.

• Natural resources: Mercury, marble, sulphur, natural gas, fishing, carbon, agriculture.

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Number of companies 5,281,934.

Agriculture 16.1%

Industry 26.3%

Trade and Services 57.6%

Source Istat, Year 2010

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Italian Economic Environment• 9th major exporter, 8th major importer, 11th major investor, 13th destination of

investments.

• Diversified industrial economy. The great strength of the economy lays in its vibrant small and medium firms, specializing both in high quality consumer goods and in high tech design and engineering products.

• Presence of industrial clusters.

• Expected GDP growth low due to restrictive measures to reduce public debt and to international crisis.

• Strict control on inflation and public expenditure to comply with EU parametres.

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• Since the introduction of Euro economic growth and commercial exchanges slowed down.

• Import and export trends grew but Italy is losing positions in world trade ranking.

• Internal demand has decreased consistently after 2009 world crisis to 2000 levels. Italian products (with the exception of luxury goods) are suffering cheaper competition from Asia.

Italian Economic Environment

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Main trading partners: IMPORT

Year: 2010 – Source: Istat

Rank Values(€ mil.)

Total Share

Germany 1 58,531 15.9%

France 2 30,527 8.3%

China 3 28,790 7.8%

Netherlands 4 19,611 5.3%

Spain 5 16,660 4.5%

Belgium 6 13,370 3.6%

Russia 7 13,053 3.6%

UK 8 12,147 3.3%

Switzerland 9 11,908 3.2%

Libya 10 11,864 3.2%

USA 11 11,140 3%

Austria 12 9,054 2.5%

Algeria 13 7,914 2.2%

Poland 14 7,192 2%

Azerbaijan 15 5,338 1.5%

Turkey 16 5,158 1.4%

Iran 17 4,745 1.3%

Romania 18 4,531 1.2%

Czech Republic 19 4,348 1.2%

Japan 20 4,288 1.2%

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Rank Values(€ mil.)

Total share

Germany 1 43,897 13%

France 2 39,079 11.06%

USA 3 20,333 6%

Spain 4 19,581 5.8%

UK 5 18,068 5.3%

Switzerland 6 16,041 4.7%

Belgium 7 8,665 2.6%

China 8 8,610 2.5%

Poland 9 8,542 2.5%

Netherlands 10 8,359 2.5%

Austria 11 8,069 2.4%

Turkey 12 8,003 2.4%

Russia 13 7,908 2.3%

Greece 14 5,463 1.6%

Romania 15 5,170 1.5%

Japan 16 4,032 1.2%

Brazil 17 3,880 1.1%

UAE 18 3,685 1.1%

Hong Kong 19 3,610 1.1%

Czech Republic 20 3,580 1.1%

Main trading partners: EXPORT

Year: 2010 – Source: Istat

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Trade with AlbaniaItaly is the first trading partner of Albania.

Import 2010: 577.646.000 €

2011: 657.464.000 € (+13.8%)

Export 2010: 965.892.000 €

2011: 1.145.803.000€ (+18.6%)

Main products

Import: shoes, garment, tools, engines, paper products,

meat

Export: oil products, garment, leather, shoes, tools,

textiles, electric engines

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Trade with Bosnia Herzegovina

Import 2010: 457.005.000 €

2011: 494.284.000 € (+8.1%)

Export 2010: 551.396.000 €

2011: 585.730.000 € (+6.2%)

Main products

Import: shoes; chemical products, metal products, garment

Export: oil products, shoes, leather products, metal

products, plastic products, machinery

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Trade with CroatiaItaly’s the first trading partner of Croatia.

Import 2010: 1.506.248.000 €

2011: 1.502.103.000€ (-0.3%)

Export 2010: 2.072.898.000 €

2011: 2.247.811.000 € (+8.4%)

Main products

Import: garment, knitwear, chemical products, metal

articles

Export: oil products, metal products, chemical products,

machinery, plastic products, garment

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Trade with MacedoniaImport 2010: 281.667.000 €

2011: 309.835.000 € (+10%)

Export 2010: 205.608.000 €

2011: 229.098.000 € (+11.4%)

Main products

Import: garment, shoes, electric energy, leather articles

Export: shoes, leather articles, electric energy, textile

products, machinery

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Trade with Montenegro

Import 2010: 26.667.000 €

2011: 38.456.000 € (+44.5%)

Export 2010: 108.456.000 €

2011: 111.638.000 € (+2.8%)

Main products

Import: garment, tools, metal articles, shoes

Export: garment, shoes, furniture, cosmetics, cars,

machinery, TLC equipment

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Trade with Serbia

Import 2010: 802.257.000 €

2011: 854.847.000 € (+6.6%)

Export 2010: 952.357.000 €

2011: 1.159.473.000 € (+21.7%)

Main products

Import: shoes, garment, knitwear, metal products

Export: machinery, leather articles, cars, car spare parts

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Lombardy: a region in the

heart of Europe

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Lombardy: General Economic DataYear 2010 – Source: Istat

• Area 23,862 Km2

• Population 9,939,000

• Density 416.55

• Labour force 4,152,000

• Unemployment rate 5.6% (Italy 8.4%)

• GDP per capita 33,647€ (Italy 26,277€)

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Lombardy: General Economic DataSource: Istat

• In 2010 Lombardy GDP represented 24% of Italian GDP.

• Lombardy imports 31.9% of total Italian import and represents 27.8% of total Italian export.

• Lombardy is considered amongst the 4 most economically developed European regions along with Catalunya (Spain), Rhone-Alpes (France) and Baden-Wuttenberg (Germany).

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Lombardy: Foreign TradeSource: Istat

Lombardy Italy %

Total import 2010 117 367 31,9

Total export 2010 94 338 27,8

(billion of Euros)

• In 2010 Milan Province imported € 65 billion and exported € 36 billion.

• Negative trade balance. • Italy is changing from a manufacturing and exporting

economy to an importing and trading one.

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Origin of Lombardy import: Europe 72.4% - Asia 18% America 5.4% - Africa 4%Oceania 0.1%

Destination of Lombardy export:Europe 69.8% - Asia 15.5 % America 8.6 % - Africa 4.8 %Oceania 1%

• Foreign trade is mainly concentrated within European borders.

Lombardy: Foreign TradeSource: Istat – Year 2010

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Lombardy: Economic StructureSource Istat - Year 2010

• Number of companies in Lombardy:823,620 (Italy 5,281,934), of which

- Agriculture 6.3%- Industry 31.4%- Trade and Services 62.3%

• Lombardy: 84.1 companies every 1,000 habitants.• More than 94% of companies have less than 9

employees

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Lombardy and Balkans: tradeLombardy Import Export

Albania 73.219.307€ 116.499.479€Bosnia – Herzegovina 146.485.598€ 129.384.062€ Croatia 181.766.203€ 436.623.402€Macedonia 20.841.992€ 36.691.801€Montenegro 6.191.632€ 19.099.805€Serbia 324.593.289€ 374.720.190€

Year: 2011 - Source: Istat

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Lombardy: most important sectorsIndustry: - Engineering

- Metallurgy- Textile, Footwear- Chemical- Packaging- Agriculture and Food - Furniture- Pharmaceutical

Services: - Finance and Insurance - Fashion

- Design- ICT- Logistics

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Cooperation Programme

with Italy

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Business development programme Aice developed a programme to foster business between

Italy and foreign countries that consists in 3 phases:

1. Business guide

2. Presentation of the programme and selection of the companies

3. Incoming mission in Italy and follow up

The duration of the programme is approximately 1 year.

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Index

Chapter I Italy - OutlookChapter II Italy and its economyChapter III Trade relations with EU and ItalyChapter IV Customs: general aspectsChapter V IncotermsChapter VI Conditions to access the Italian marketChapter VII Business with ItalyChapter VIII Tax systemChapter IX Establishing enterprises in ItalyChapter X Final considerations

The guide is developed by AICE in accordance to the needs of the partner country.

Phase I - Business guide

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Phase II - Presentation

- Road show in the hosting country to present the project and the business guide

- Meetings between AICE experts and companies to discuss about trade possibilities in Italy

- Company visits

- Selection of the companies for the trade mission to Italy

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Exporting to Italy: composition of the price

Selling a t-shirt to Italy• CIF price 100• Import duty on CIF price 9.6% 109.6• VAT 21% (base 109.6) 132.6• Distributor’s charge 50% 200• Retailer’s charge 50-100% 300 - 400

Plus:Certification costs, labelling costs etc.Advertising costs, training, etc.

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Exportable products: T-shirts code 610910

Italian Import - 2010 - € 9,040 million

Main suppliers: China, France, Romania, Tunisia, Bangladesh, Turkey

Custom duty: 12% Albania, Bosnia Herzegovina, Croatia, Macedonia, Montenegro, Serbia

0% with EUR1

VAT: 21%

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Phase III – Incoming missionAice will organize

- Business matching with Italian companies

- b2b meetings in Milan

- company visits

- Follow up of the meetings

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Associazione Italiana Commercio Estero

Italian Association of Foreign Trade

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Aice is a non-profit entrepreneurial association which, for over 60 years, has been working to promote international business relations, representing companies that are committed predominantly to commercial activities abroad as well as the services related to such activities.

What is Aice?

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Aice represents Italian companies dealing with foreign trade:-Trading companies- Exporters- Importers- Distributors- Agents- Export houses- Buying Offices- Services for FT

- Manufacturers (mainly SMEs) wishing to improve their business abroad.

Aice members

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Main sectors of activity:

Export:

- Machinery

- Industrial supplies

- Consumer products (linked to “Italian lifestyile”, like fashion, food, furniture etc.)

Import:- Agri-food- Raw materials- Electrics, Electronics- Machinery- Consumer products

Aice members

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- From very small (individual) companies, to very large (multinational) groups

- 80% of our members located in Lombardy

- Markets of interest: Eastern Europe, North and South America, Far East, Middle East, Africa

Aice members

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Representation Consulting Training Information Business opportunities abroad Promotion on foreign markets

Aice services for the members

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Aice has a web portal dedicated to the items of foreign trade in order to:

- assist Italian companies in their internationalization process.

- be the gateway to Italian market for foreign companies with interesting sections available in English (members’ db, international marketplace, b2b sites, information on Italian market).

www.aicebiz.com

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Aice is a member of:

Confcommercio Milan, Local Confederation of Trade, Tourism and Services (about 35,000 companies)

Confcommercio - Imprese per l’italia, Italian General Federation of Trade, Tourism and Services Confcommercio (about 800,000 Companies)

CITHA - Confederation of International Trading Houses Associations

Aice direct relationships

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• to get in touch with the right Italian partners (distributors, agents, clients, suppliers etc)• to receive assitance in organizing business meetings in Italy • to promote requirements/offers on the Italian market through Aice pubblication “Il Commercio con l’Estero” (Foreign Trade) and Aice website www.aicebiz.com

Why a should foreign company/organization

contact Aice?

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Aice aim is to create new business opportunities between its members and foreign companies, thus contributing to the development of international trade.

Through Aice, any company interested in the Italian market and/or products will be able to expand into Italy.

Aice: gateway to the Italian market

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Furthermore Aice works to develop collaborative relationships with international institutions and promotional bodies, as well as with entrepreneurial associations world wide, with the aim of increasing international trade and fostering a balanced development of economies in all countries.

Aice: gateway to the Italian market

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Our motto

Aice - Associazione Italiana Commercio EsteroItalian Association of Foreign Trade

Corso Venezia 49, 20121 MilanTel +39 027750320/1 Fax +39 027750329

aice@unione.milano.itwww.aicebiz.com

“Free Trade in a Free World”