Exporting La Dolce Vita

Transcription

1 made beautiful and well-made beauti eautiful and well-made beautiful and w nd well-made beautiful and well-made de beautiful and well-made beautiful Exporting La Dolce Vita ful and well-made beautiful and well-m Italian BBF Products in New Markets Tapping into 's Passion for made beautiful and well-made beauti eautiful and well-made beautiful and w nd well-made beautiful and well-made de beautiful and well-made beautiful ful and well-made beautiful and well-m made beautiful and well-made beauti Centro Studi 25

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3 Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for Centro Studi 25

4 This report has been written by: Alessandro Gambini, Manuela Marianera, Luca Paolazzi (Confindustria Research Department); Claudio Colacurcio, Patrizia Di Cicco, Carmela di Terlizzi, Andrea Dossena, Alessandra Lanza and Giampaolo Morittu (Prometeia). We would like to thank ANFAO, ANICA, Assocalzaturifici, Confindustria Alberghi, Federalimentare, FederlegnoArredo, Federorafi and SMI for their active contribution to the success of this study. We would also like to thank the Italian Trade Agency (ITA) and ANICA Desk for their collaboration in the survey The Italian BBF in : Perception and Opportunities carried out between October 24 and April 25 among experts and Chinese distributors and operators in the six manufacturing sectors of the BBF ( Bello e Ben Fatto which means beautiful and well-made ), in the tourism and in the audiovisual sectors; the results of which are presented in chapters two and three. Our thanks go to Giulio Finzi of Netcomm, the Italian e-commerce Association, for his contribution on the digital sector in and Laura Travaglini from Confindustria Internationalization Department for her contribution on trade barriers in. This report contains information available until the 27 th of April 25. Printed in May 25 Publishing and printing by D.effe comunicazione- Rome,

5 Index Introduction... pag. 5 The Forecasts until 22 for Italian BBF...» 9 2 Tourism and Audiovisual Production Driving Exports of BBF...» 29 3 Tapping into s Passion for through Local Marketing Strategies and the Web...» 37

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7 Introduction The mystery of life lies in the quest for beauty. Billy Wilder Italian cities, landscapes, works of art, Made in products, creativity: they all revolve around beauty, which the whole world recognizes as the country s hallmark. The impression that leaves may, at times, exceed reality, but the fact remains that beauty is manifested in the originality and attentive workmanship of Italian products, defined here as bello e ben fatto or BBF (which means beautiful and well-made). This concept is further described by the the expression industrial craftsmanship which could seem like a paradox, but is not. So, what exactly is Italian BBF? This expression brings together a set of medium-high end consumer goods that are outstanding in terms of design, quality of materials and expert workmanship. More specifically, Exporting La Dolce Vita concentrates on BBF products in the food and beverage, furniture, apparel and home textiles, footwear, eyewear and jewelry sectors. Exporting La Dolce Vita analyses the growth prospects for the sales of BBF products in the most promising thirty new markets. To measure the absorption capacity in these markets, the Confindustria Research Department and Prometeia have calculated the estimates of their imports of BBF products with the support of ANFAO, ANICA, Assocalzaturifici, Confindustria Alberghi, Federalimentare, FederlegnoArredo, Federorafi and SMI. The forecast interval range is 25 to 22. Imports represent a fairly reliable estimate of the domestic demand for these goods in such markets, since their capacity to produce them is still limited. Italian exports of BBF products to the new markets are growing. This is a result of the expansion of their affluent classes, that is, the increasingly numerous group of people who are in an economic position to acquire BBF products. Such a growth in exports is also due to the successful strategies used by BBF-producing companies in order to tap into the needs of affluent customers. As a result, Italian BBF exports grew from 7 billion in 2 to billion in 24. And the trend continues. In fact, by 22 there will be 224 million more new wealthy people all over the world, as compared to 24. These are individuals with an income greater than 35, dollars (at 2 purchasing power parities). Half of them will live in the main cities of, India and Indonesia, although this new affluent class is also expanding in countries closer to, such as. In these economies, Italian products represent status symbols for consumers, based on the strength of celebrated brands but also on the appeal of in general and the Made in brand in particular. Introduction 5

8 This increase in potential buyers will enable imports of BBF products from to the new markets to rise from the billion of 24 to 6 billion in 22 (all values are at 23 prices and currency rates). This represents an increase of 45% in six years, 8 percentage points higher than the estimated trend for imports of BBF products from to developed markets. The Emirates are the largest contributors to the increase in demand for Italian BBF products in the new markets, followed by., which is losing its importance, comes third. This remarkable growth result will be achieved if defends its good competitive position in emerging markets, indicated by an average market share of over 7% in 23 in BBF products. In 22 the total BBF imports of new markets worldwide will reach 23 billion, up from the 52 billion of 24. This figure represents the potential absorption capacity of BBF goods in these countries. The new estimates are more conservative than those calculated a year ago, since they include a more moderate growth scenario for most of the emerging countries. Despite this, the link between BBF producers and new markets is increasingly consolidating: the slowdown in the GDP growth rate in the new markets is in fact offset by the corresponding evolution of consumers, whose enhanced purchasing power makes them shift their preferences towards Italian BBF products. In 22 the imports of Italian Food and Beverage BBF products of the thirty new markets will reach 2.5 billion euro, 554 million more than 24. Trade flows in this sector are still significantly influenced by geographical distance, to the extent that Polish imports will equal those of the whole Latin America (over 3 million)., and will be the greatest contributors to the growth of imports. In this sector, the hypothesis of a constant market share for (the average share in the new markets was 4.5% in 23) could prove to be overly cautious. Hence, it may be underestimating opportunities in countries that have recently entered the international circuit of the Italian BBF products, where Italian firms are gaining positions. The imports of Italian BBF products in the Furniture sector in the thirty new markets will rise from 2. billion euro in 24 to 3.3 billion in 22, with the main contribution made by the Emirates and. In 22 the new markets will account for a third of the foreign sales in the sector. These estimates are based on the hypothesis that Italian supply keeps pace with demand in the various markets. This could be an optimistic assumption for certain markets, such as and the Emirates, but overly cautious in other markets, first and foremost, where the Italian market share is rapidly increasing. The imports of Italian BBF Apparel of the thirty new markets will rise from 2.7 billion euro in 24 to 3.7 billion in 22, with 29% of this growing demand coming from and 2% from. Following them, in order of importance, are the Emirates, and. The hypothesis of preserving Italian market shares in the emerging countries could prove optimistic for. The opposite is true for, where the Italian share has grown to more than 7% over the last five years reaching 7% in 23. In the thirty new markets, the imports of Italian BBF Footwear will reach 2 billion in 22 with an increase of 684 million compared to 24, including almost 259 million in which, despite its difficulties, will continue to be the main outlet. For, the signals emerged in 24 make our assumption of constant Italian market share at the 23 levels, optimistic. This is a symmetrically conservative assumption for many other new markets; where there are signs of a stronger Italian competitive position. The new markets imports of Italian BBF Eyewear will rise by 22 to 858 million euro from 534 million in 24., Brazil and the Emirates will account for 4% of the increase with an addi- 6 Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

9 tional 29 million imports. These are followed by nearer destinations, such as and. Defense of the competitive position in the new markets is definitely within reach of Italian enterprises, since the Italian 25% share has remained substantially stable over recent years. Italian exports of BBF Jewelry items to the thirty new markets will increase to 3.7 billion euro in 22,.4 billion more than 24. The Emirates will, by far, contribute the most to this increase, since the trade flows in this sector are strongly influenced by the commercial hub of Dubai; the Emirates demand will increase by 974 million. takes second place in the ranking, with an increase of 22 million. In 23 the Italian share in the new markets amounted to 27%, substantially stable since 29. However, great opportunities do not spell easy access. The demand prospects of each market have to be accompanied by an assessment of the accessibility of the market, and therefore an accessibility index has been drawn up for Italian enterprises. The index is calculated for each of the six BBF sectors, since the degree of accessibility varies depending on the product. In the accessibility ranking of the thirty new markets, the Emirates are in the lead in all sectors, frequently followed by Malaysia and the European markets. and, which are two fundamental markets for Italian exports of BBF products, never are among the first ten for accessibility. Tourists who come to from emerging countries and Italian audiovisual products circulating abroad are both important vehicles for BBF promotion. In 24, there were.4 billion trips abroad. That is exactly the same figure, again for 24, as the number of people making up the affluent class worldwide, i.e. the pool of potential BBF consumers. This is more than just a statistical coincidence, because the two sets tourists and wealthy consumers partially overlap. Visitors arriving in from abroad represent a crucial opportunity for BBF enterprises because tourists have the occasion to know and consume italian goods during their stay. This is even more significant for the tourists coming from the new markets, where one of the factors frequently hindering the consumption of BBF products is the lack of knowledge of Italian products. Every year there are more than seven million visitors to from these countries, with, and Brazil in the lead. The survey of Chinese tours operators carried out with the Italian Trade Agency (ITA) in April 25, reveals a high demand for. However, it also reveals that there is a need for a better adaptation of the Italian supply to the characteristics of Chinese travelers and that greater efforts need to be made by the Italian touristic promotion system, especially when compared to what is being done by other European countries. While tourism is a real-life experience introducing consumers to the BBF world, the audiovisual offering in the new markets is a virtual encounter. The BBF enterprises can channel their products towards consumers in cooperation with the audiovisual sector. There are numerous examples of films, TV series and music videos showcasing BBF products that have been successfully distributed in new markets through collaboration with the audiovisual sector. The survey of Chinese audiovisual operators, carried out together with ITA and the ANICA desk in April 25, indicates a growing interest in Italian audiovisuals and reveals significant growth opportunities in this sector. Among the thirty new markets, is the country that offers the best prospects of development for BBF enterprises. Its GDP will have the highest growth in the world in absolute value. Consequently it deserves an accurate focus. All the more so because there are numerous commercial and operational obstacles, in addition to the risk of an infringement of intellectual property rights, a phenomenon which the Italian system has to counter by carefully considering the best strategies. Introduction 7

10 offers a wide variety of business opportunities. Therefore, it is crucial to consider territorial differences when approaching a market the size of an entire continent. The eight most attractive areas are, from north to south: Tianjin, Beijing, Hebei, Zhejiang, Shanghai, Jiangsu, Fujian and Guangdong. Each of them, in terms of size and population, can be compared to a single country and often has a per capita GDP similar to that of some advanced countries or emerging ones at an advanced stage of development. In 23 became the top international supplier of BBF products to. According to a survey carried out in, in collaboration with ITA, with experts and distributors working in the BBF sectors, the strengths of Italian products are quality, product range, design, style, innovation and craftsmanship, and Made in is a reference target in Chinese fashion trends. Interviews also revealed that the demand for Italian products is potentially much greater than the actual imports and that consumers frequently have inadequate information about the quality of Italian products. The two aspects that Italian BBF firms should improve are: promotional strategy, by exploiting integrated online and offline marketing tactics and sales-associated services (commercial flexibility, delivery time estimates, pre and post-sale customer services). It is also important to exploit institutional support for promoting product-education initiatives, especially for the less well-known categories of goods. Additionally, it is fundamental to comply with local customs and traditions in relations when relating with Chinese counterparts, and to be aware of the values of the oriental culture. Establishing a relationship based on mutual understanding and respect for reciprocal commitments is crucial for nurturing good commercial bonds. With regard to alliances between Chinese firms and Italian institutions, a high price is paid for the poor coordination of the latter. One of the most important trends in is the development of e-commerce. Since 23 has headed world markets in terms of the value of online sales. The combination of widespread mobile phone use, social networks and e-commerce is one of the distinctive features of the Chinese digital scenario. Entering the new markets is a major challenge for Italian small and medium enterprises (SMEs). Nevertheless, what we observed over the last six years, through analyses carried out for Exporting La Dolce Vita, is that many of SMEs have accomplished this challenge, succeeding in the face of conflicting forces that initially seemed insurmountable. In a long-term perspective, some of the new markets (, for instance, being just one of those) also represent a competitive arena for the best international competitors, and are places where it is possible to tap into trends that, even if only in terms of population dynamics, are destined to become global. 8 Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

11 Chapter The Forecasts until 22 for Italian BBF Italian exports of products classified as BBF (the acronym for Bello e Ben Fatto which means beautiful and well-made) to the thirty main new markets will increase by 45% over the next six years. By 22 this group of emerging markets will account for 26% of Italian BBF exports, a 3% increase with respect to 24. The relationship between BBF producers and new markets has been further strengthened over recent years. This trend should continue, although the growth gap between emerging and developed markets will be less marked than in the recent past. The slowdown in the growth of new markets is offset by the growing wealth of consumers, whose enhanced purchasing power is favorable to the BBF produced by Italian enterprises. This is because BBF products meet these consumers demands in terms of quality, safety, fashion, design and inventiveness. Lower commodity prices and a riskier geopolitical context mean that BBF businesses need to select new markets more carefully. The largest contributors to the growth of Italian BBF exports in the new markets are the United Arab Emirates, followed by. is only in third place. Although still the main emerging market for Italian enterprises, s growth is penalized by its difficult macroeconomic and political context. Managing this transition is one of the crucial challenges for BBF enterprises. With regard to BBF in the Food & Beverage sector, the process of geographical diversification relative to new markets has to take into account the cultural characteristics of the most dynamic importing countries. and will be the main contributors to the growth of exports. Tourism and distribution will be the keys to success., the Emirates and Saudi Arabia will be the main contributors to the growth of BBF exports in new markets in the Furniture sector. Indeed the positioning of Italian businesses in is rapidly improving. will be the main contributor to the growth of BBF exports in new markets in the Apparel and Footwear sectors, followed by and the Emirates. These countries will be joined by closer and more accessible destinations, such as and. For BBF in Eyewear, growth in exports will be driven by, Brazil and the Emirates, followed by closer destinations such as and. The Emirates will be, by far, the main contributors to the growth of BBF exports in Jewelry, since the trade flows in this sector are significantly conditioned by the commercial hub in Dubai. is second in ranking. Chapter The Forecasts until 22 for Italian BBF 9

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13 New markets and BBF BBF: the 3 new markets Algeria Ghana Mexico South Africa Angola Hungary Nigeria Thailand Argentina India Pakistan Tunisia Brazil Indonesia Peru Chile Kazakhstan Philippines Vietnam Kenya United Arab Emirates Colombia Malaysia Egypt Morocco Saudi Arabia For more information on the selection criteria of the markets please write to csc@confindustria.it. BBF: the 87 codes HS4 selected Sector Codes HS4 Food and Beverage 2, 34, 37, 45, 46, 7, 72, 9, 6, 59, 6, 62, 64, 74, 86, 92, 94, 95, 2, 23, 24, 25, 27, 28, 29, 23, 24, 25, 26, 22, 222, 223, 224, 228, 229 Furniture 94, 943, 944, 945 Apparel and Home Textiles 423, 6, 62, 63, 64, 65, 66, 67, 68, 69, 6, 6, 62, 64, 65, 66, 67, 62, 622, 623, 624, 625, 626, 627, 628, 629, 62, 62, 622, 624, 625, 626, 627, 63, 632, 633, 634, 654, 655, 656 Footwear 642, 643, 644, 645 Eyewear 93, 94 Jewelry 73,74 For more information on the selection criteria of the markets please write to csc@confindustria.it. Chapter The Forecasts until 22 for Italian BBF

14 In 22 one out of four new wealthy people will live in (Millions of new wealthy people and % share of total ) Increase % share of world increase 4, 2,2 7, 3,3 USA 239,8 257,8 8, 8, India 56, 85,6 29,6 3,2 UK 34,6 44,3 9,7 4,3 Indonesia 9,2 26,3 7, 3,2 Mexico 2, 25, 5, 2,2 Saudi Arabia 5,8 2,5 4,7 2, Canada 26,7 28,9 2,3, Brazil 26,6 3,7 4,,8 2,3 5,5 3,2,4 Nigeria 7,3 9,9 2,7,2 South Africa 9,,2 2,2, Netherlands 3, 3,5,5,2 Philippines 6,2 8,4 2,2, Iran,4 2,5 2,,9 Czech Rep. 4, 6, 2,, Egypt 6,7 8,7 2,,9 Belgium 6,5 8,7 2,,9 Pakistan 5, 6,9,8,8 Malaysia 5,3 7,,8,8 Others 53,3 554,2 5,9 22,7 World.68,6.393, 224,3, The term "New wealthy people" defines the set of individuals with an income per capita of USD 35, calculated at 2 purchasing power parities (PPP). statistical institutes BBF: new markets imports from (First new markets ; millions of euro at 23 prices) 4, 3,5 3, 3,462 3,346 Import growth until 22 Imports 24 2,5 2,236 2,,5, 5, The first account for 84% of total new markets imports in 22. Saudi Arabia Mexico Algeria Brazil South Africa 2 Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

15 Italian market shares of BBF imports (First 2 new markets for BBF world imports in 23) Hungary Saudi Arabia 5.3 Brazil 4.8 South Africa Kazakhstan India 3.8 Mexico 3.3 Egypt Advanced markets average: 8.8 New markets average: Angola Thailand Chile Philippines Indonesia Malaysia Vietnam BBF: new markets imports from the world (First new markets ; millions of euro at 23 prices) 3, 25, 27,532 26,83 Import growth until 22 Imports 24 2, 8,85 5, 5,83 3,658 3,347 2,876 2,469, 7,5 7,492 5, Malaysia Saudi Arabia Mexico Vietnam South Africa India The first account for 68% of total new markets imports in 22. Chapter The Forecasts until 22 for Italian BBF 3

16 Food and Beverage BBF Food and Beverage BBF: new markets imports from (First new markets ; millions of euro at 23 prices) Import growth until 22 Imports The first account for 8% of total new markets imports in 22. Saudi Arabia Brazil Hungary South Africa Mexico Food and Beverage BBF: Italian market shares (First 5 new markets for Italian BBF Food and Beverage imports; 23 shares at current prices and changes in percentage points 29-23) 5. low market share, but growing high and growing market share Change in market share Malaysia Mexico Thailand Angola India Algeria New markets Saudi Arabia Brazil South Africa Hungary Advanced markets low and decreasing market share high market share, but decreasing Market share 23 4 Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

17 Food and Beverage BBF market shares, and main competitors (First 7 new markets for Italian BBF Food and Beverage imports; current prices, 23 ) Czech Rep. UK USA New Zeland Czech Rep. Chile South Korea Slovack Rep. Denmark Netherlands Netherlands Lithuania Hong Kong France France Portugal Latvia USA Germany Netherlands USA Argentina Germany Germany France USA UK Saudi Arabia Brazil Hungary The arrow indicates an increase or decrease of the market share in the period Food and Beverage BBF the access to new markets (Index of accessibility to new markets, max accessibility=) 8 6 Distribution Doing Business Logistics Duties Non-tariff barriers 4 2 Malaysia Chile South Africa Mexico Hungary Thailand Saudi Arabia Peru Colombia Philippines Tunisia Brazil Morocco Kazakhstan Ghana Argentina Kenya Vietnam Indonesia Egypt India Algeria Angola Nigeria Pakistan The overall index varies from to for increasing values and is the result of a weighted average of the score of each market in each of the aspects considered. For the food sector weights chosen for the components of the index are: Distribution: 2 = max modernization; = low modernization; Doing business: 2 = better operational environment = worse operational environment; Logistics: 2 = max modernization; = low modernization; Duties: 2 = no duties; = high duties; Non-tariff barriers: 2 = no barriers; = high barriers Source: Confindustria and Prometeia calculations based on data from CBRE, Euromonitor, GTA, World Bank and WTO. Chapter The Forecasts until 22 for Italian BBF 5

18 Food and Beverage BBF: new markets imports from the world (First new markets ; millions of euro at 23 prices) 9, 8, 7, 7,693 Import growth until 22 Imports 24 6, 5, 5,746 5,7 4,55 4, 3, 3,264 2,892 2,758 2,624 2,498 2,468 2,, Mexico Saudi Arabia Vietnam Brazil Thailand Malaysia The first account for 7% of total new markets imports in 22. Furniture BBF Furniture BBF: new markets imports from (First new markets ; millions of euro at 23 prices) Import growth until 22 Imports Saudi Arabia India Mexico Morocco Kazakhstan The first account for 83% of total new markets imports in Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

19 Furniture BBF: Italian market shares (First 5 new markets for Italian BBF Furniture imports; 23 shares at current prices and changes in percentage points 29-23) Change in market share low market share, but growing Mexico South Africa Algeria Advanced markets Brazil Hungary Morocco India New markets Saudi Arabia Kazakhstan Nigeria (24.;-3.4) low and decreasing market share high market share, but decreasing Market share 23 high and growing market share Furniture BBF: market shares, and main competitors (First 7 new markets for Italian BBF Furniture imports; current prices, 23 ) South Korea UK Malaysia USA Germany Germany Austria Spain USA France Germany Lithuania Germany Austria USA Czech Rep. Germany Japan Germany Germany South Korea Saudi Arabia India The arrow indicates an increase or decrease of the market share in the period Chapter The Forecasts until 22 for Italian BBF 7

20 Furniture BBF: the access to the new markets (Index of accessibility to new markets, max accessibility=) 8 6 Distribution Doing Business Logistics Duties Non-tariff barriers 4 2 Malaysia Chile Hungary Mexico Saudi Arabia South Africa Peru Thailand Philippines Colombia Brazil Morocco Indonesia Kazakhstan Egypt Tunisia India Ghana Vietnam Angola Kenya Pakistan Argentina Nigeria Algeria The overall index varies from to for increasing values and is the result of a weighted average of the score of each market in each of the aspects considered. For the furniture sector weights chosen for the components of the index are: Distribution: 25 = max modernization; = low modernization; Doing business: = better operational environment = worse operational environment; Logistics: 2 = max modernization; = low modernization; Duties: 25 = no duties; = high duties; Non-tariff barriers: 2 = no barriers; = high barriers Source: Confindustria and Prometeia calculations based on data from CBRE, Euromonitor, GTA, World Bank and WTO. Furniture BBF: new markets imports from the world (First new markets ; millions of euro at 23 prices) 7, 6, 5, 4, 3, 2, 5,798 5,87 4, 3,68 3,62 3,369 Import growth until 22 Imports 24 2,946 2,6 2,34,883, Malaysia Saudi Arabia Mexico India Indonesia South Africa The first account for 7% of total new markets imports in Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

21 Apparel BBF Apparel BBF: new markets imports from (First new markets ; millions of euro at 23 prices),6,4,2,,352 Import growth until 22 Imports Saudi Arabia Kazakhstan Mexico Tunisia Hungary The first account for 9% of total new markets imports in 22. Apparel BBF: Italian market shares (First 5 new markets for Italian BBF Apparel imports; 23 shares at current prices and changes in percentage points 29-23) Change in market share low market share, but growing Kazakhstan Chile South Africa Brazil Mexico Saudi Arabia Egypt Advanced markets Hungary New markets Morocco Tunisia (26.3;.8) -8. low and decreasing market share -. high market share, but decreasing Market share 23 high and growing market share Chapter The Forecasts until 22 for Italian BBF 9

22 Apparel BBF: market shares, and main competitors (First 7 new markets for Italian BBF Apparel imports; current prices, 23 ) France Germany UK Lithuania Indonesia France Spain Germany Spain France UK Spain Belgium Spain South Korea Slovack Rep. Spain Germany Hong Kong Polonia Saudi Arabia Kazakistan The arrow indicates an increase or decrease of the market share in the period Apparel BBF: the access to the new markets (Index of accessibility to new markets, max accessibility=) 8 6 Distribution Doing Business Logistics Duties Non-tariff barriers 4 2 Malaysia Chile Hungary Saudi Arabia Colombia Mexico Peru Philippines Thailand Kazakhstan Morocco South Africa Tunisia India Indonesia Ghana Vietnam Egypt Kenya Brazil Angola Pakistan Nigeria Algeria Argentina The overall index varies from to for increasing values and is the result of a weighted average of the score of each market in each of the aspects considered. For the apparel sector weights chosen for the components of the index are: Distribution: 25 = max modernization; = low modernization; Doing business: 2 = better operational environment = worse operational environment; Logistics: = max modernization; = low modernization; Duties: 3 = no duties; = high duties; Non-tariff barriers: 5 = no barriers; = high barriers Source: Confindustria and Prometeia calculations based on data from CBRE, Euromonitor, GTA, World Bank and WTO. 2 Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

23 Apparel BBF: new markets imports from the world (First new markets ; millions of euro at 23 prices) 2,,229 Import growth until 22, 8, 8,534 8,9 Imports 24 6, 5,4 4, 4,555 4,485 4,65 3,83 3,762 3,59 2, Vietnam Malaysia Saudi Arabia Kazakhstan Chile Mexico The first account for 7% of total new markets imports in 22. Footwear BBF Footwear BBF: new markets imports from (First new markets ; millions of euro at 23 prices), Import growth until 22 Imports Kazakhstan Saudi Arabia South Africa Mexico The first account for 9% of total new markets imports in Nigeria Chapter The Forecasts until 22 for Italian BBF 2

24 Footwear BBF: Italian market shares (First 5 new markets for Italian BBF Footwear imports; 23 shares at current prices and changes in percentage points 29-23) Change in market share Chile. Malaysia low market share, but growing Thailand South Africa India Kazakhstan Saudi Arabia Hungary Mexico New markets Advanced markets (25.;3.9) -8. Nigeria (4.6; -22.) -. low and decreasing market share high market share, but decreasing Market share 23 high and growing market share Footwear BBF: market shares, and main competitors (First 7 new markets for Italian Footwear BBF imports; current prices, 23 ) Lithuania Germany Spain USA Brazil Indonesia France Germany Switzerland Spain Slovack Rep. Netherlands Indonesia Slovack Rep. Belgium Belgium Hong Kong Germany Kazakhstan Saudi Arabia The arrow indicates an increase or decrease of the market share in the period Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

25 Footwear BBF: the access to the new markets (Index of accessibility to new markets, max accessibility=) 8 6 Distribution Doing Business Logistics Duties Non-tariff barriers 4 2 Malaysia Chile Hungary Saudi Arabia Colombia Mexico Peru South Africa Philippines Thailand Morocco Kazakhstan India Tunisia Ghana Egypt Angola Kenya Pakistan Argentina Brazil Nigeria Vietnam Algeria Indonesia The overall index varies from to for increasing values and is the result of a weighted average of the score of each market in each of the aspects considered. For the footwear sector weights chosen for the components of the index are: Distribution: 25 = max modernization; = low modernization; Doing business: 2 = better operational environment = worse operational environment; Logistics: 5 = max modernization; = low modernization; Duties: 25 = no duties; = high duties; Non-tariff barriers: 25 = no barriers; = high barriers Source: Confindustria and Prometeia calculations based on data from CBRE, Euromonitor, GTA, World Bank and WTO. Footwear BBF: new markets imports from the world (First new markets ; millions of euro at 23 prices) 5, 4,5 4, 3,5 3, 4,7 Import growth until 22 Imports 24 2,5 2, 2,46,764,5, 5,374,338,322,274,59,77,56 Malaysia Kazakhstan South Africa Chile Saudi Arabia The first account for 7% of total new markets imports in 22. Chapter The Forecasts until 22 for Italian BBF 23

26 Eyewear BBF Eyewear BBF: new markets imports from (First new markets ; millions of euro at 23 prices) Import growth until 22 Imports Brazil The first account for 83% of total new markets imports in 22. Mexico India Saudi Arabia South Africa Eyewear BBF: Italian market shares (First 5 new markets for Italian BBF Eyewear imports; 23 shares at current prices and changes in percentage points 29-23). 8. low market share, but growing Colombia high and growing market share Change in market share India South Africa Advanced markets Peru Chile New markets Brazil Egypt -6. Saudi Arabia -8. Mexico Thailand -. low and decreasing market share high market share, but decreasing Market share Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

27 Eyewear BBF: market shares, and main competitors (First 7 new markets for Italian BBF Eyewear imports; current prices, 23 ) Germany Netherland Taiwan France Germany Taiwan UK France Malaysia France USA Japan USA France France Germany South Korea USA Germany Switzerland Hong Kong USA Brazil Mexico India The arrow indicates an increase or decrease of the market share in the period Eyewear BBF: the access to the new markets (Index of accessibility to new markets, max accessibility=) 8 6 Distribution Doing Business Logistics Duties Non-tariff barriers 4 2 Malaysia South Africa Mexico Chile Thailand Hungary Saudi Arabia Peru Morocco Philippines Colombia Brazil Tunisia The overall index varies from to for increasing values and is the result of a weighted average of the score of each market in each of the aspects considered. For the footwear sector weights chosen for the components of the index are: Distribution: 2 = max modernization; = low modernization; Doing business: 2 = better operational environment = worse operational environment; Logistics: 2 = max modernization; = low modernization; Duties: 2 = no duties; = high duties; Non-tariff barriers: 2 = no barriers; = high barriers Source: Confindustria and Prometeia calculations based on data from CBRE, Euromonitor, GTA, World Bank and WTO. Egypt India Ghana Pakistan Kazakhstan Vietnam Kenya Argentina Angola Indonesia Nigeria Algeria Chapter The Forecasts until 22 for Italian BBF 25

28 Eyewear BBF: new markets imports from the world (First new markets ; millions of euro at 23 prices),2, 8,8 Import growth until 22 Imports The first account for 8% of total new markets imports in 22. Jewelry BBF: new markets imports from (First new markets ; millions of euro at 23 prices) 2,5 2,332 Import growth until 22 2, Imports 24,5, Mexico South Africa India Malaysia Algeria Brazil Mexico India Thailand Malaysia Jewelry BBF The first account for 94% of total new markets imports in Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

29 Jewelry BBF: Italian market shares (First 5 new markets for Italian BBF Eyewear imports; 23 shares at current prices and changes in percentage points 29-23) Change in market share low market share, but growing Malaysia Algeria. South Africa India Saudi Arabia New markets. Mexico Philippines Advanced markets -. Brazil Thailand -2. Nigeria low and decreasing market share high market share, but decreasing Market share 23 high and growing market share Jewelry BBF: market shares, and main competitors (First 7 new markets for Italian BBF Jewelry imports; current prices, 23 ) France Switzerland USA USA Switzerland Belgium Spain Germany Switzerland USA Switzerland Indonesia Spain Switzerland Norway Hong Kong Germany Malaysia USA Mexico South Africa The arrow indicates an increase or decrease of the market share in the period Chapter The Forecasts until 22 for Italian BBF 27

30 Jewelry BBF: the access to the new markets (Index of accessibility to new markets, max accessibility=) 8 6 Distribution Doing Business Logistics Duties Non-tariff barriers 4 2 Malaysia Mexico Chile Hungary Saudi Arabia Thailand South Africa Morocco Philippines Colombia Peru Brazil Pakistan Indonesia Tunisia Egypt Kazakhstan Argentina Ghana Algeria Kenya Vietnam India Nigeria Angola The overall index varies from to for increasing values and is the result of a weighted average of the score of each market in each of the aspects considered. For the jewellery sector weights chosen for the components of the index are: Distribution: 25 = max modernization; = low modernization; Doing business: 2 = better operational environment = worse operational environment; Logistics: 5 = max modernization; = low modernization; Duties: 25 = no duties; = high duties; Non-tariff barriers: 5 = no barriers; = high barriers Source: Confindustria and Prometeia calculations based on data from CBRE, Euromonitor, GTA, World Bank and WTO. Jewelry BBF: new markets imports from the world (First new markets ; millions of euro at 23 prices), 9, 9,77 Import growth until 22 8, Imports 24 7, 6, 5, 4, 3, 2,,,57, India Saudi Arabia Mexico Thailand Kazakhstan Malaysia The first account for 95% of total new markets imports in Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

31 Chapter 2 Tourism and Audiovisual Production Driving Exports of BBF In 24,. billion trips were made abroad. That is exactly the same figure as the number of affluent consumers worldwide, which is also the potential target for BBF products. This is more than just a statistical coincidence, because the two categories, tourists and wealthy consumers, partially overlap. Travel experiences fuel the attractiveness of BBF in a virtuous circle where the quest for beauty embraces tourism and shopping. When a foreign visitor arrives in, foreign demand meets Italian supply, especially for the goods and services enjoyed and consumed during his stay. Tourism is even more significant with regard to the new markets, where one of the factors frequently hindering the consumption of BBF is the lack of one s direct knowledge of the products. New markets are also the most dynamic component of the international tourism. Every year more than seven million visitors come from these countries, with, and Brazil in the lead. New markets tourist spending equals and sometimes exceeds spending by tourists from the advanced economies, but their travel trends are characterized by several distintive features. The first is the shopping/art combination of their trips which is restricted to just a few destinations: Rome, Florence, Venice and Milan. The second aspect is accommodation, usually in luxury hotels (4-star and higher). The length of stay is a critical factor: 3 days on average (less than 2 for Chinese tourists). The trip to is frequently the last part of an European tour, mainly as a result of the absence of airport hubs and major national tour operators. The Expo offers an important opportunity to overcome this limitation, since, for six months, it will place at the center of European-bound tourism. The survey of Chinese tour operators, carried out in collaboration with the Italian Trade Agency (ITA), reveals a high demand for. However, Italian supply needs to adapt to the characteristics of Chinese travelers, and greater efforts need to be made with respect to s promotion of tourism, which lags far behind that of other European countries. While tourism is a real-life experience introducing consumers to the BBF world, the audiovisual offering in the new markets is a virtual encountering, where BBF enterprises can show case their products. Several films, TV series and music videos featuring BBF products have been successfully distributed in new markets. The survey of Chinese audiovisual operators, carried out with ITA and ANICA desk, indicates a growing interest in Italian audiovisual productors and reveals significant growth opportunities in this sector. Chapter 2 Tourism and Audiovisual Production Driving Exports of BBF 29

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33 Tourists from new markets to : 7.2 million, half from and (International tourist arrivals by country of origin; 23, thousands) 2,,927,85 New markets: 7.2 million;4.4% of arrivals from abroad Advanced markets: 3.5 million; 6.7% of arrivals from abroad,5 Other markets: 2.5 million; 24.9% of arrivals from abroad, Brazil Argentina Hungary India Mexico South Africa Egypt Source: Confindustria and Prometeia calculations based on ISTAT data. The dynamics of international tourist arrivals (International tourist arrivals by area of origin; index 28=) Advanced markets World New markets Source: Confindustria and Prometeia calculations based on ISTAT data Chapter 2 Tourism and Audiovisual Production Driving Exports of BBF 3

34 International tourist arrivals in (International tourist arrivals by country of origin; 23, thousands) 2,,,329 8, 6, 4, 4,543 3,879 2,955 2, 2,35 2,4,927,925,85,65,432, Germany USA France UK Switzerland Austria Netherlands Spain Japan Belgium Australia Brazil Source: Confindustria and Prometeia calculations based on ISTAT data. International tourists expenses in (Expenses by country of origin; 23, thousands of euro),4,2, Brazil USA (right axis) ,5 4, 3,5 3, 8 2, ,,5, Source: Confindustria and Prometeia calculations based on Bank of data. 32 Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

35 Personal purposes drive the expenses of tourists from the new markets in (Total expenses of international tourists in, by country of origin and by purpose of the journey; % share in 23) Personal reasons, holidays Work reasons Personal reasons, other Brazil USA Source: Confindustria and Prometeia calculations based on Bank of data. Chinese and Brasilian tourists prefer top-level accomodations (Nights of stay, by country and type of accomodation; % share in 23 on the left side and cumulative % change in on the right side) Brazil USA Hotels, 4, 5 stars and luxury Hotels, 3 stars and other tourist residences Brazil USA Hotels, 2 and stars Other Source: Confindustria and Prometeia calculations based on ISTAT data. Chapter 2 Tourism and Audiovisual Production Driving Exports of BBF 33

36 Arrivals from new markets are concentrated in five Italian regions (International tourist arrivals by country of origin and by region of destination; % shares in 23) Brazil USA Lombardy Veneto Emilia-Romagna Tuscany Lazio Other regions Source: Confindustria and Prometeia calculations based on ISTAT data. Duration of stays: shorter for tourists from new markets (Average number of nights in by country and area of origin, 23) Brazil USA New markets Advanced markets Source: Confindustria and Prometeia calculations based on ISTAT data. 34 Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

37 The rise of international tourism (Number of international tourist arrivals and tourism revenues across the world; millions of people and millions of euro),2,, International tourists Revenues Source: Confindustria and Prometeia calculations based on WTTC data. The rise of international tourism (First countries of destination for international tourism; % of world total by country of origin; 23) France USA Spain Germany UK Thailand Source: Confindustria and Prometeia calculations based on WTTC data. Chapter 2 Tourism and Audiovisual Production Driving Exports of BBF 35

38 Italian accommodations: too many and too small (Number of touristic structures and rooms per structure; 23) Rooms per structure Hotels and other tourist residences (thousands) Spain France Source: Confindustria and Prometeia calculations based on ISTAT data. Italian accommodation supply is growing in quality (Touristic structures by category, % share on total) Other tourist residences Hotels star Hotels 2 star Hotels 3 star Hotels 4 star Hotels 5 star and luxury Source: Confindustria and Prometeia calculations based on ISTAT data. 36 Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for

39 Chapter 3 Tapping into s Passion for through Local Marketing Strategies and the Web is the fastest growing country in the world in terms of absolute increase in real GDP, and it also offers significant development prospects to Italian BBF enterprises. Nevertheless, great opportunities do not mean easy access: in commercial and operational obstacles are numerous, and the risk of infringement of intellectual property rights is high. Italian institutions and enterprises have to counter this risk by carefully considering the best strategies. offers a wide range of business opportunities. Therefore, it s crucial to evaluate the local differences in order to correctly approach a market that has the size of an entire continent. At present, great business opportunities exist almost all over the country, but the eight most attractive areas are, from north to south: Tianjin, Beijing, Hebei, Zhejiang, Shanghai, Jiangsu, Fujian and Guangdong. In 23 ranked as the top international supplier of BBF products to. According to the surveys of experts and Chinese distributors working in the BBF sectors, carried out in collaboration with the Italian Trade Agency, the strengths of Italian enterprises are quality, product range, design, style, innovation and craftsmanship. Interviews also revealed that the demand for Italian products is potentially much greater than the actual imports, but that consumers frequently have inadequate information about product quality. BBF enterprises wishing to maintain or boost their market shares need to improve two key aspects: promotional strategy of brands, exploiting integrated online and offline marketing tactics and sales-associated services. It is also important to exploit institutional support for promoting product-education initiatives, especially for the lesserknown categories of goods. Additionally, it is fundamental to comply with local customs and traditions in relations when relating with Chinese counterparts, and to be aware of the values of the oriental culture. With regard to alliances between Chinese firms and Italian institutions, a high price is paid for the poor coordination of the latter. These elements hold for the entire BBF scenario, beyond which there are certain sector-specific features. For example, in the Food & Beverage sector the Italian market share fails to achieve its potential as a result of cultural obstacles and a lack of knowledge regarding Italian food. As far as Furniture is concerned, the positioning of Italian firms in is on the rise; consumer education about concepts of craftsmanship will be a fundamental driver for development. is the market leader in the Apparel, Footwear, Eyewear and Jewelry sectors and Made in is a benchmark in Chinese fashion trends. One of the most important trends in is the development of e-commerce. Since 23 has headed the world market in terms of online sales. The combination of widespread mobile phone use, social networks and e-commerce is one of the distinctive features of the Chinese digital scenario. To sell online in, extensive experience acquired in and Europe is essential in order to address a very complex and highly competitive sector. Chapter 3 Tapping into s Passion for through Local Marketing Strategies and the Web 37

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41 real GDP growth (GDP at 2 prices, billions of euro and percentage changes ) 9,5 8,5 7,5 6,5 5,5 4,5 3,5 2, Real GDP, increase over the previous year Real GDP, previous year Real GDP % growth (right axis) , IHS estimations since 25. Source: Confindustria and Prometeia calculations based on IHS and NBS data.. The most attractive areas in The eight most attractive areas grouped in four clusters Other attractive areas MONGOLI Heilongjiang Jilin Liaoning Xinjiang Tibet Gansu Qinghai Sichuan Mongolia interna Ningxia CHINA Shaanxi Chongqing Guizhou Shanxi Beijing Tianjin Hebei Jing-Jin-Ji Henan Hubei Shandong Anhui Jiangsu Hunan Jiangxi Fujian Zhejiang Shanghai Yangze River Delta Yunnan Guangxi Guangdong TAIWAN Hong Kong Macao Pearl River Delta Hainan Source: Confindustria and Prometeia calculations based on NBS data. Chapter 3 Tapping into s Passion for through Local Marketing Strategies and the Web 39

42 The most attractive areas in : summary statistics (Areas are ordered geographically from north to south; a red name next to a number stands for the most similar emerging country to the corresponding Chinese indicator, a green name stands for the most similar advanced country; 24) Areas Population Surface GDP GDP per capita (millions of inhabitants) (sq km) (billions of euro) (euro) Beijing 2 Romania 6.8 Swaziland 26 Thailand Estonia Tianjin 5 Netherlands.35 Montenegro 93 Israel 3.8 Slovack Rep. Hebei Portugal x 2 36 Belgium 4.95 Thailand Jiangsu 79 Germany 2.6 South Korea 797 South Korea.42 Chile Shanghai 24 Greece x Luxemburg x 2,5 289 Austria.949 Slovack Rep. Zhejiang South Korea 492 Switzerland Kazakhstan Fujian Switzerland x Austria 7.8 Guangdong 6 + Spain 8. Portugal x 2 83 South Korea 7.88 Total 42 USA France 3.57 x Source: Confindustria and Prometeia calculations based on CIA and IMF data. Consumption is higher than the Chinese average in most attractive areas (Per capita urban consumption and saving, 23 euro ) 6, Saving Consumption 5, 4,,5,4,427 89,38, , 2,, 3,872 3,529 3,29 3,64 3,5 2,884 2, , ,98 Shanghai Beijing Zhejiang Tianjin Guandong Jiangsu Fujian Hebei Per capita disposable income is the sum of per capita consumption and saving. Source: Confindustria and Prometeia calculations based on CIA and IMF data. 4 Exporting La Dolce Vita Italian BBF Products in New Markets Tapping into 's Passion for