OPPORTUNITIES FOR ITALIAN BUSINESSES IN CHINA-2021
In 2020, Italy and China celebrated 50 years of bilateral diplomatic relations. Throughout antiquity, the two countries had unofficial contacts, through cultural and economic exchanges. 50 years after the formal signing, the friendship between the two countries is solid. This was demonstrated by the aid sent by China to combat the health emergency in which Italy found itself at the beginning of 2020.
This 50-year anniversary is a symbolic milestone, which acts as a stimulus and a flywheel of new opportunities to expand the institutional and economic dimension, intensify the collaboration between companies, schools, universities, and, more generally, between the two countries.
2020 was also the year of Italy-China Culture and Tourism; and among other important events, we remember the Joint Meeting of the Italy-China Government Committee, whose tenth session will be held in Beijing. Given the obvious difficulties the world is facing right now, we hope that the situation will re-establish itself soon.
HISTORY OF CHINESE AND ITALIAN RELATIONSHIP
The Italians were among the first in Europe to start trade with China. The Silk Road united these two ancient civilizations and allowed frequent economic and cultural exchanges between them.
After the founding of the People’s Republic of China (PRC) in 1949, Italy formally recognized only the Republic of China (Taiwan), making the existence of formal relations with the PRC incompatible. However, in the 1960s, China began to establish unofficial economic, cultural, and political relations with Italy.
Bilateral relations between Italy and China officially began on November 6, 1970, a date that marks the start of a long phase of collaboration.
HOW THE RELATIONSHIP BETWEEN THESE TWO COUNTRIES WAS IMPLEMENTED?
Over the past few years, the intensity of the dialogue between the top executives of the two countries and the flow of visits at the top and governmental level has strengthened institutional interaction and made possible multiple initiatives in various sectors. Furthermore, instruments have been set up to guarantee continuity to the bilateral relationship.
Among these is the Italy-China Government Committee; the Mixed Economic Commission; the Bilateral Cultural Forum and the Business Forum. On 23 March 2019, Luigi Di Maio – then Vice President and Minister – signed three Memorandums of Understanding on Electronic Commerce, Startups and – the most discussed – on the “Belt and Road Initiative”.
The objectives that Italy has set itself with participation in the BRI – also known as New Silk Roads – are mainly: increase in exports to the Chinese market; involvement of Italian companies for the implementation of infrastructure projects along the Silk Roads; inclusion of Italian ports in international trade routes.
ECONOMIC AND COMMERCIAL COOPERATION
Italy confirmed its position as China’s fourth supplier among European countries. Exports amounted to 13.2 billion euros, reporting a decline of 2.4% in 2017; while imports amounted to about 30.7 billion – an increase of 8.1% over the previous year. The export and import dynamics produced a trade deficit for Italy of 17.6 billion euros in 2018 (approximately + 18% compared to the previous year).
Italy mainly exports machinery, instrumentation, cars, clothing, pharmaceutical, and agri-food products; from the People’s Republic of China, it imported especially textiles and clothing products, chemicals, mechanical and electronic components.
Made in Italy products in the food sector are highly appreciated and associated with a good quality of life, according to the report by the Italian Embassy in China, Italy is the leading supplier of chocolate and pasta; the second of olive oil, mineral waters, and sparkling wines; the third for wines.
OPPORTUNITIES FOR ITALIAN BRANDS: THE RESULTS OF ECCO L’ITALIA
Over 4.7 million euros in made in Italy products sold in two hours on Tmall and 21 million views. These are the results of Ecco l’Italia, an event conceived by the China Media Group with the support of the Italian Embassy in Beijing and the Italian Chamber of Commerce in China. This is the first streaming sales event dedicated to Italian products organized in China. The occasion is the 50th anniversary of the establishment of diplomatic relations between the two countries.
The brands on sale were Moschino, Golden Goose Deluxe Brand, De’Longhi, Barilla, Acqua Panna, Marvis, Acqua di Parma, Rilastil. Over the past two years, there has been a rapid development in streaming sales in the People’s Republic, a modality that has promoted a new consumer experience and has enabled the exploration of new channels for quality products and better after-sales services.
This year not even the city lockdown has affected streaming sales, on the contrary, they have become a very important way to stimulate consumption and promote economic recovery in China.
“Ecco l’Italia” was promoted by two Chinese celebrities, one is Kang Hui, the most influential host of the China Media Group and the other is China’s top beauty influencer Austin Li (Lipstick King), who “can sell” 15 thousand lipsticks in five minutes.
In recent years, economic and commercial exchanges between China and Italy have continued to grow. According to data published by the General Customs of China, in 2019 the volume of trade between China and Italy was 54.899 billion dollars (+ 1.2% on an annual basis) of which 21.412 billion were Chinese imports from Italy. , which saw an increase of 1.7%.
The relationships between China and Italy will increase in the future and many brands will have the opportunity to expand their horizons.
THE GROWTH OF CHINA CROSS-BORDER E-COMMERCE
Cross-border E-commerce, or international online commerce, is booming in China and with the acquisition, in September 2019, of one of the main players, Kaola, the Alibaba group is aiming for even more significant development. The Covid-19 crisis had accelerated the growth of cross-border eCommerce in China, with Alibaba and Tencent now “fighting” to become the most appealing platform to foreign brands.
Cross-border eCommerce channels in China experienced a compound annual growth rate of 76% between 2015 and 2018, resulting in RMB 78.5 billion in gross volume of goods in 2019. Many important luxury brands, such as Armani and Prada, which were not present on the marketplaces, have recently launched their presence on Tmall.
In particular, the cosmetics sector stands out on the Chinese mall, one of the most promising commercial sectors in the country, which has a noticeably young population. According to what emerged in a conference on the topic organized by Alibaba in Milan, cosmetics has become the most important branch of Alibaba’s business, which operates through the consumer-trend division Tmall. An opportunity that many Italian brands have already seized. They have already opened their flagship store on Tmall Global Deborah Group, Diego dalla Palma, Kiko, Pupa, Ganassini, Bottega Verde and Giorgio Armani Beauty.
On the luxury front, however, the most recent debut is that of Moschino, who chose the Tmall Luxury Pavilion: the Italian retailer has opened its virtual flagship store on the platform, with an exclusive selection of garments and accessories. The brand now also offers Chinese customers the opportunity to discover its eccentric Made in Italy creations up close: a move that aims to win over young Asian luxury Millennial shoppers, thanks to Alibaba’s know-how in the field.
HOW TO INTRODUCE YOUR COMPANY TO CHINESE CONSUMERS?
One thing that every business wanting to enter the Chinese market should keep in mind is that Chinese consumers are very wary when it comes to purchasing products or services. You may be a B2B company selling machinery or a fashion brand, your tools will differ, but the goal will be the same: Build your Online reputation in China.
EVERY BUSINESS IN CHINA NEEDS A WEBSITE IN CHINESE
Website is your business card. It is a crucial topic regarding your information. It is especially important to have a Chinese Website although you won’t make many sales through it. You need a website for visibility and to run SEO and SEM campaign. Your website is a great platform to redirect to your online store or Wechat official account for instance.
Get your website linked on third party media to give it authority and a boost rank with PR. Not only PR is a great tool for your SEO effort, but it will definitely improve your reputation and credibility. There is nothing better than having expert of your industry recommending your name.
CHINESE SOCIAL MEDIA
WECHAT OFFICIAL ACCOUNT ARE NOT AN OPTION
Nowadays, WeChat is the most famous social platform in China. It will provide you with the tools to update your content regularly and send newsletter.
Keep in mind, WeChat is not a lead generation app. In fact, the app is closed social media, meaning that your content is only seen by those who follow you and their friend if they decide to share on their moment. Although the app has been opening a little more with Wechat Channel, it is still not an easy task to go viral. We strongly suggest you use WeChat as a nurturing platform; The app has great tools for this purpose:
- Wechat H5 brochure: easy to share with potential business partners/clients.
- WeChat Group Marketing: Engage with your target audience and share your content
- Wechat post: use it as an alternative for the newsletter. Make sure the content is interesting enough.
- Wechat Channel: Probably the best way to go “viral” on Wechat. Let peoples discover you through interesting videos
- CRM and Wechat Menu: The best way to manage and guide your followers in order for them to have the most pleasant and smooth experience when using your services.
WEIBO VERIFIED ACCOUNT ESPECIALLY GOOD FOR B2C COMPANIES
Weibo is a local microblogging platform. It will give you access to such a huge Chinese audience and especially will provide you a huge prospect of marketing.
Weibo being an open social media is a great platform to go viral, try new audiences and have fun with your community through contests and games. The paid ads system is also mature and cost-efficient especially compared to Wechat. If you are thinking about paid ads, Weibo a channel to consider.
TOUTIAO: PAID ADS FOR B2B COMPANY
Toutiao is Douyin’s sister app and uses the same super targeting algorithm that made Douyin so popular. Toutiao is a news aggregator app. You will find newspaper, blogs post, videos. The content is extremely varied and tailored to each user. The ads system has proven to work extremely well for B2B companies. Indeed, Toutiao users base is mostly composed of men with higher education and an interest in business & Finance. Worth giving it a shot.
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