Italy needs to support companies' growth in China

MILAN - Italy needs to support the growth of its companies in China, chairman of Italy's insurance and financial group SACE Giovanni Castellaneta told Xinhua in an interview Thursday.

As the Chinese market has stepped into a "mature" phase of increasing inner consumption and high-quality production, there are now a variety of fresh opportunities for Italian companies, Castellaneta said.

The Asian country is attractive to companies that see it as their destination market, especially for those who see China as a new platform for growth and development, he said.

SACE supports the competitiveness of Italian companies abroad by providing credit insurance, safety bonds and financial guarantees.

Some 2,000 Italian companies have established themselves in China with diversified investments. "However, Italian companies' penetration rate in the Chinese market is still inferior to the potential," Castellaneta said.

"The contradiction between the Western world considered as a big market, and China seen as a big exporter has been finally overcome" as highlighted by several professionals during the China Capital Summit held in Milan on Thursday to deepen mutual knowledge between Chinese investors and Italian businesses, he said.

The old model has been overtaken by a new balance "in which European and Chinese companies can compete fairly and transparently on a level playing field," he said.

Castellaneta said Italian companies should firstly broaden the range of their products, as domestic consumption, mainly among the urban population and younger generations, is growing in China.

Secondly, the companies should start penetrating into second- and third-tier cities, which have been developing fast in recent years, he said.

In his view, the three concepts fundamental to supporting the growth of Italian companies in China are "presence, innovation and competitiveness."

Investing in "presence," Castellaneta said, means strengthening the relationship with local companies and institutions and having a profound understanding of Chinese culture, which are the prerequisites to enter that market.

Then it is vital to enhance their competitiveness through better financial guarantees during a phase "in which production quality is not sufficient anymore" to survive in the Chinese market, as China itself is increasingly investing in technological innovation, he said.

"Only an approach based on active and broadminded internationalization can lead to success," Castellaneta said.

"Dimension also plays a key role," he said, calling on the Italian small- and medium-sized enterprises to join forces and adopt a systematic approach, so as to be qualified as main actors on the Chinese market.

Castellaneta said that SACE, whose insured transactions reach approximately 72 billion euros ($90 billion), has continued to play a strong role in supporting the internationalization of businesses in the current difficult economic climate.

However, the group's insured transactions in China presently amount to only two billion out of the 72 billion euros, he said.

Therefore, one of Castellaneta's main objectives is to further support growth by cooperating with Chinese financial actors, while encouraging Italian companies to show their "creative spirit and typical lifestyle."