It is crucial for Italian and Sicilian small and medium-sized companies to find the ways and means to open up to global markets, producing a trade surplus through exports that would also contribute to bolstering Italy’s local economies. The Italian economic system – explains Foreign Minister Paolo Gentiloni – supports SMEs, offering a whole set of instruments that are illustrated today in Palermo at the Roadshow for the internationalisation of Companies (Editor’s note: at the Albergo delle Povere in Palermo).
Minister Gentiloni, with this Roadshow you have been promoting the internationalisation of companies city by city in the past three years. Can you explain the benefits of internationalisation for Italian companies?
“Figures speak for themselves. During the past ten years, companies only operating in the domestic market have reduced their turnover while those active in international markets are recording a constant rise. In the past few years, foreign markets have shown a tangible reaction to the crisis of internal markets. Suffice it to think that the weight of export has risen to 25% of our GDP (in 2015, 414 billion euros of exports out of 1,642 billion of GDP). Now, finally, also domestic demand is showing signs of recovery. However, foreign markets remain crucial.”
What does a company need in order to grow abroad and what are the instruments made available by Italian institutions?
“We need to focus on small and medium-sized enterprises that are not sufficiently structured to face international markets and competition on their own and that still underexploit existing public support instruments. The Government runs a Situation Room for Internationalisation (which last met at the Farnesina on 27 October), which gathers around the same table Ministries, local administrations (the Conference of Regions) and business representatives and defines strategies to support the internationalisation of companies. One of the Situation Room’s main results is the identification of priority Countries in which to focus promotional activities and especially “Italy” missions, taking account of the market opportunities for our companies on the one hand and the need to strengthen our comprehensive security on the other.”
Going international means opening up to global markets to grasp the best opportunities. This implies trying to boost exports, but what is the demarcation line with the risk of offshoring businesses?
“For small and medium-sized enterprises internationalising mainly means diversifying their offer, thus compensating the drop in internal demand with the rise in foreign exports. The point is not to establish companies abroad with a view to reducing costs. Quite the opposite. In many cases diversifying production phases has made it possible to make investments more efficient (often also increasing the value added) and to invest more in Italy, with a positive fallout on jobs and on developing supply and production chains which would otherwise risk disappearing.”
For the time being the international scenario is not all that reassuring: the Middle East is ablaze, there is tension with Russia, international trade agreements are being reviewed, the Brexit, Trump’s possible protectionism…How does Italy’s foreign policy help companies around the world?
“First of all through efforts to promote trade and to discourage walls and protectionist barriers. The Foreign Ministry offers the Country the professional skills and capabilities to fully understand and interpret these complex scenarios through its diplomatic and consular network. This is an intelligent network that interprets the new global equilibria and the consequent market changes, both in the more mature markets (in Europe and North America), in the growing markets of Asia and Latin America and in the African markets, which are strategic for our future.”
Sicily is at the heart of the Mediterranean. But today the Mediterranean is a complicated sea, with its problems more than its development making the headlines. How can Sicilian companies revamp and expand on global markets and how are they supported in this by institutions?
“Sicily, with its invaluable cultural heritage and unique territory, holds a privileged position in the Mediterranean. Its yet unexpressed potential could be revitalised by fully exploiting the existing public support instruments that will be illustrated today. Important Sicilian export items, ranging from agricultural products to chemical and electronics products, can draw new lymph from the support provided by institutions: I’m referring to the support of the agro-food sector contained in the Extraordinary Plan for Made in Italy products, the financial support of the Cassa Depositi e Prestiti and also actions by the Foreign Ministry. On their part, companies need to make an effort to upsize, which is the limit often penalising our SMEs on international markets. This is why we encourage production chains and forms of aggregation like corporate networking, especially in a land as rich as Sicily.”
Mr Minister, to what extent does the stability and credibility of Government affect the internationalisation effort? In other words, how much impact can the referendum result have?
“I don’t want to sound any alarms. You can’t vote for a long-awaited reform out of fear. Having said this, it is understandable that at international level people hope that Italy’s recovery may continue on track.”