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Opportunities and challenges for Made in Italy agri-food in the

2.2. Made in Italy agri-food exports to the world

2.2.1. Opportunities and challenges for Made in Italy agri-food in the

Trade flows are also supported by bilateral agreements, which intend to favor liberalization and to facilitate market entry in a specific country. These understandings have become an increasingly important and frequently used policy instrument to establish and intensify close trade relationships, as countries grant each other trade privileges in terms of concessions on trade barriers, including reductions of tariffs and quotas, as well as easing

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of market access and of competition provisions (Maluck et al., 2018). In recent years, relations between Italy and China have been given particular impetus, thanks to the numerous agreements stipulated between the two countries, which have also favored collaboration in the agri- food sector. Italy's prompt response to participation in the AIIB and the Belt & Road Initiative has enabled greater communication and the development of mutual business opportunities. In this context, it is clear that the activities linked to exports of Made in Italy agri- food have also benefited from a significant boost. According to Confindustria90, China is the first country for Italy with an exploitable potential of 3.3 billion Euros of additional exports, mainly due to the size of t he market. Therefore, it is important for companies to understand what the dynamics of the Chinese market are, in particular from an economic but also a cultural and regulatory point of view.

Italian agri- food products, especially some food categories, have to follow many procedures and have to obtain the authorizations prior to being admitted to the Chinese market. In particular, the 2013 Amendment of Food Safety Law has caused significant changes within the food safety system and has highlighted the need for new institutional agreements. Chinese authorities have emphasized the importance of scientific data for the definition of product standards, with the aim of preventing any kind of risk or harm to the detriment of consumers. While maintaining a high sys tem of control, more recently, the Central Government has nevertheless tried to simplify the internal bureaucracy, which has encouraged Italian companies to both explore the market and to increase exports. However, it is not possible to affirm that the Chinese context is of simple management and this is also evident by registration, certificate and labeling requirements and by the non- immediacy of the first economic results.

According to some scholars, many Italian companies believe they can face the marke t by investing little, without analyzing the potential risks or needs of consumers. Their knowledge of the Chinese system is limited and, generally, it is the main cause of market exit. Trade flows were also favored by economic factors and, as we have seen in sub- paragraph 2.1.3, the average income growth of families in recent years, due to the development of the country, is one of the main causes of socio-demographic changes in China. The improvement of the conditions and living standards of the population may be directly linked to food consumption: the higher the income earned by a family unit, the

90Confindustria is the main association representing manufacturing and service companies in Italy, with over 150,000 small, medium and large enterprises.

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higher the percentage spent on food purchase. It is no coincidence, in fact, that China is currently the largest importer and consumer of food and agricultural products.91

As for the cultural context, it is possible to state that changes in food consumption, both in terms of quality and quantity, due to the growing purchasing power of consumers and globalization, have also favored the trade of Italian products. The growth of imports of foreign agri- food products in China is constant and due to some factors: first, the different scandals related to food safety and the growing attention to products’ quality, as we could notice when analyzing the regulations governing food safety and traceability. Second, there is a greater tendency to consume this type of products in "Western" restaurants, particularly in coastal areas, demonstrating that food is no longer synonymous with nutrition, but also of conviviality and experience. Finally, the status symbol generated by the consumption of food from abroad must be taken into consideration as Italian agri- food products in the Chinese market are aimed at a medium- high segment of the population, characterized by consumers strongly influenced by Western habits. This, together with the diversification of the offer, affects the growth rates of consumption, which over the last few years have become high especially for meat, dairy products, fish, olive oil, pasta, confectionery and ready-to-eat foods (De Pin, 2013).

Italian cuisine in China has received a lot of praise and, thanks to the evolution of domestic demand, especially among the younger generations, it is able to satisfy even the most complex needs. For this reason, Made in Ita ly has good development potential within the Chinese market, a promising reality also due to the vast pool of potential consumers. The growth opportunities for the Italian agri- food sector on the one hand have to do with the opening of the market, characterized by the reduction of customs duties, the liberalization of consumer trade, foreign direct investments and the modernization of retail distribution.

On the other, they concern the trust placed in food safety, in the ingredients used for the production of healthy and quality food and consumers’ new lifestyles that require more variety, modern packaging, freshness, convenience and superior nutrit ional values (De Pin, 2013).

In addition to the opportunities, Italian companies must also take into account the challenges of the Chinese market, which especially concern logistical problems that are still the reason for many limitations. In fact, local distribution channels are not sufficient

91In 2019, imports of these products reached US $ 90.8 billion, with an annual growth of 23.4%.

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for an adequate distribution of products throughout the market and, alt hough the Chinese authorities have invested heavily in infrastructure development, foreign companies still struggle to find the right channels to enter the country. Furthermore, the presence of Italian products is mostly reserved for the Ho.Re.Ca channel a nd not for the Chinese large-scale retail trade (GDO), where it would be necessary to increase the presence of Made in Italy by promoting the Italian gastronomic culture, which lays its foundations in tradition, dear to Chinese consumers. In recent years, the Ministry of Foreign Affairs and International Cooperation, together with other specialized bodies in the field of international exports, have engaged in the foreign promotion and internationalization of Italian companies, especially for small and medium-sized enterprises (SMEs), which constitute the backbone of the economy of the Bel Paese.