Italy is a European country located in southern Europe, bordering Switzerland, France, Austria, and Slovenia. Italy was one of the founders of the European Union and has been at the forefront of European economic and political unification. Although the financial condition of Italy is behind its neighboring European countries during the first half of the 20th century, it is currently the world’s eighth-largest economy.
Italy is famous for its tourism. The tourism sector in Italy contributes 63% to Italy’s national income and has become its unique attraction for foreign tourists. Italian cities such as Rome and Milan receive a million tourists each year. Milan is one of the most-visited tourist destinations in Europe, with almost 11 million visitors in 2019, putting it 15th in the world rank of tourist visits.
Interested or planning a business in Italy? Well, better to test the waters first before doing business in Italy to get a good grasp of how business meetings are conducted and how negotiations are made in Italian business culture.
It is important to note that close building relationships are essential in Italian business culture. Cross-cultural awareness can improve the potential of having business relations in Italy. As one of the most-visited countries in the world, Italians are typically friendly to foreigners, which can be very beneficial for your business as it gives you positive initial leverage in the market.
Italians are very attentive to looks. As a home to many world-famous designers and fashion capital cities, it is no wonder that the dress code plays an important role in Italian business culture. Formal attire is expected in every business meeting. It is also recommended that men wear darker colors. Generally, you will gain respect if you wear anything that is ‘made in Italy’ when attending a business meeting.
Initial business meetings in Italy usually focus on establishing connections rather than making business decisions. That is why you need to ensure that your Italian colleagues can trust you from the beginning. To get started, written communication is widely accepted in Italian business culture as the ideal intermediary for initial contact. You must highlight whether you speak Italian in your introduction letter as it will avoid any potential language barriers in the future.
Although punctuality is a big issue in many European countries, it does not necessarily apply to Italy. You might have to wait a little longer for your Italian colleagues as business meetings in Italy usually begin late. Business meetings are generally conducted over a long lunch, which can last up to three hours. Exchanging business cards is expected during a meeting, and yours should be translated into Italian. Ensure that your business card says your educational degrees and your full title.
Italians uphold hierarchical attitudes, so it is vital to acknowledge your business partners’ positions in the meetings. It may take a while longer to strike an outstanding business deal in Italy as companies in Italy tend to have a chain of command comprising several layers. Italian employees generally show massive respect for their superiors, and it is expected for them to report to their superiors before reaching some kind of agreement.
Why does doing business in Italy seem appealing? As a major economic force in Europe, Italy is an attractive country for investment. Italy offers well-established infrastructures for business. Its strategic geographic location also plays a significant part. Located at the center of the Mediterranean Sea, Italy is a strategic logistics hub and a gateway to the European Single Market.
Italy is open to welcome foreign investors. It has implemented several significant reforms to gain investor trust and confidence, including creating a high-level committee within the Ministry of Economic Development. The Italian Trade Agency also offers a “one-stop-shop” for pre-investment information, business set-up support, and ongoing after-care for incentives and contracts to attract foreign investors.
The Italian government grants the same incentives to foreign investors as well as the local ones, which include subsidized loans, cash grants, and tax credits. Furthermore, investment opportunities are encouraged on behalf of the government, especially in the Southern parts of the country, where the industry is still lacking.
As one of the members of the EU, businesses in Italy have duty-free access to over 50 million customers that spread all around EU members, which is in over 30 national markets within the European Economic Area. The economy in Italy is dominated by only a few large businesses. However, it strives due to more than three million small to medium-sized enterprises, most of which are owned by a family or partnership.
The manufacturing industry in Italy is massively growing thanks to the increasing integration of digital technologies in their production processes. The main attraction for foreign investors is Italy’s commitment to innovation and advanced technologies, which allow them to find opportunities in several high-tech sectors.
However, these advantages of doing business in Italy also come with various challenges. Major obstacles that companies or investors may encounter are a complex bureaucracy and regulatory framework, a slow judicial system, and competitive challenges due to high levels of bribery, corruption, and tax evasion.
Before investing or doing business in Italy, you must beforehand acknowledge that it is the local authorities who determine how to implement national laws and regulations. It is also important to note that enforcement contracts when doing business in Italy are considerably slow due to lengthy judicial processes. Italy’s corporate tax burden is also well-known as one of the heaviest in Europe. For example, businesses must pay 14 tax payments each year, and it takes around 238 hours per year to prepare, file, and pay (or withhold) the various taxes.
Despite these issues, Italy is financially developed and viewed as an ideal country for business and planting foreign investments. It is a smart business strategy because Italy is a gateway to the Mediterranean, Middle East, and European markets. It is also known for its high levels of internationalism and entrepreneurship.
Before you decide to do business in Italy, make sure that you do thorough research on their requirements and different bureaucracies. It is also essential to have a firm grasp of local laws, regulations, and business practices. As it is stated before, a trusted partner with global experience in Italy may help to ensure a smooth transition. Make sure that you establish a firm connection with local business people before entering its business scene.