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Internationalize one's own business in America: an overview

Posted by SI-LOG on 12/04/2019

Internationalize one's own business in America: an overview

SI-LOG 12/04/2019 pubblicato in english, internationalization

America represents “The dream” in the Italian collective imaginary, a land of riches and opportunity, nevertheless, to do business there, you must be prepared. Business acumen in the States is in some respects very different than that in Europe.

It is with Italy, nonetheless, that the United States has a privileged relationship: Americans are especially fond of the unmatched sense of design and style of Italian products, and it is no coincidence that the USA is one of the most favorable markets where to export “Made in Italy”.

The United States is the third export market for Italy, after Germany and France, with a 8.9% share of our exports (36.9 billion euros in 2016). On the other hand, among the EU countries, Italy is confirmed as the fourth supplier of the USA, after Germany, the United Kingdom and France. Business does not stop. While the United States is making headlines during these transformative times, global business leaders still rate the US as their most important market for overseas investment and growth.




This white paper examines the key American market sectors where Italy can tap into, what are the relations between Italy and the United States, and some interesting insights on the commercial opportunities between the two countries.

American market: general overview

In the past years, the economic crisis and the market globalization made the internationalization of European companies mandatory. Many Italian companies chose to expand in foreign countries, like America, with the aim of developing their business. In the US there are more than 1000 Italian Companies, most of which are commercial companies, but there are also production plants which total about 8.8%. According to ISTAT (Italian National Institute of Statistics) the positive trend in trade between Italy and the USA continued in 2016: bilateral trade reached a figure of 50.6 billion euros, an incremental figure compared to previous years.

When you talk about United States, you are talking about a geographical area encompassing about 9 million sq.km., and not what you would call a delimited area. So where are Italian companies located in this vast territory? Companies are mainly concentrated in the North East (34%), particularly on the East coast and in the South (33%), followed by the Mid-West (21%) and out West (12%). In general, the majority of Italian companies can be found in: New York (20% on total companies), Florida (13%), California (9%), Illinois (8%) and New Jersey (7%). Followed by Georgia, North Carolina and Michigan.

The data recently published by the Bureau of Economic Analysis - BEA confirm the soundness of American economic stability: current expansion phase surpasses normal economic cycle. US economic cycles tend to run for seven to eight years, yet the current expansionary cycle, which started in 2009, already is among the longest on record for the American economy, to follow in the third quarter 2017 by an estimated GDP growth of 2.6% yearly. CBRE’s report highlights two factors that likely will fuel the US industrial market even longer.

First, the industrial and logistics market–warehouses, distribution centers, manufacturing buildings and other industrial facilities–tends to lag the broader economy by a couple of years. Case in point is the industrial market’s recovery didn’t begin until 2011, well after the broader economy had started its rebound. Thus, the industrial market’s expansion isn’t as seasoned.

Second, the rapid growth of e-commerce in recent years has created a permanent, structural shift in the market as an increasing portion of US consumer goods is distributed to consumers through warehouses rather than stores. Given that e-commerce still has substantial room to grow within American retail sales, that ongoing shift likely will continue to support the industrial and logistics market’s expansion. “The market still is establishing its new baseline, though most evidence indicates that expectations have reset at higher levels for the foreseeable future.”

Amongst Italian goods shipped to the United States, there is a vast array of prestigious products that are unique and inimitable thanks to which Italy has earned a prominent position on the market.

The presence of Italian products mainly concerns the mechanical and transport sectors (32%), furniture, construction (14%), fashion and accessories (11%), and agri-food (9%). The United States, therefore, presents itself as a dynamic and growing market, very inclined to the “Made in Italy”: all propitious reasons to undertake internationalization.


Opportunities for Italian entrepreneurs

The economic sectors which are most appealing for Italian companies who wish to internationalize in the USA are:

Consumer goods

As far as high-end goods are concerned, Italy is in a favorable position. The US market is the first in the world for the number of households with an annual income available of at least $ 300,000, making the American luxury consumers, the richest and most empowered consumers in the world, not to mention the most numerous. Overall their mean income was $330,000 and they reported assets of over $3 million. The survey was conducted in the first quarter 2018. Across the globe, there is a rapidly growing base of consumers who can afford luxury and who actively participate in the luxury market. American luxury consumers’ participation in the luxury market grew, with 64% participating in luxury in 2017 and 68% in 2018.

The fact that
29 out of the 100 top luxury brands in the world are Italian (according to the 2016 Deloitte Report on Global Powers of Luxury) should give you an idea of how relevant such brands have proved in the context of the national economy. Fashion and clothing, luxury accessories, wines, oil, pasta and fine food products in general: Italian production meets the requirements of the US market very well.

The idea of goods being produced on a global scale with the same care and attention to detail that one would expect from an artisan is part of the international appeal of Italian fashion, accessories and products. All these products share attributes that are normally connected with the sides of the Italian character that make it internationally appealing. The challenge is to understand how to expand this domain also to the "intermediate" market of the United States: seize the opportunity to internationalize one’s business.

Information and Communication Technologies (ICT)

ICT refers to technologies that provide access to information through telecommunications. It is similar to Information Technology (IT) but focuses primarily on communication technologies. This includes the Internet, wireless networks, cell phones, and other communication mediums. A large number of new technologies, such Internet to things (IoT), Cloud platforms, mobile applications, data mining, Data analysis (Big Data) and so on are increasingly in demand the United States. In fact, ICT sector in the USA is in strong expansion and represents sales opportunities for foreign companies not to be underestimated. The Telecommunication Industries Association (TIA) has estimated that the United States holds 28.1% of the world ICT market and that in 2017 the sector's import spending amounted to around 234 billion dollars, but not only: it will be increasingly growing for years to come.

International trade in medicinal and pharmaceutical products

The United States is the largest consumer of active pharmaceutical ingredients (Active Pharmaceutical Ingredients - APIs) in the world, with a demand that exceeds 50% of the world market. Italy on average exports 85% of its total production, supplies 40% of its products to the United States. Although, it must halt the advance of countries such as China and India, Italy remains the largest producer of generic APIs in Western Europe, accounting for 58.3% of the region’s total. Italy is also the largest supplier of generic APIs to the US market. Italian API producers accounted for 31.2% of the supply to the US generic API market in 2012, and their growth in supplying the US increased at an annual average growth of 5.2% between 2008 and 2012. The American market is in favor of openness and Italy is in a good position to increase its presence.

fically, since the Italian pharmaceutical industries are internationally recognized thanks to technology and innovation, the high quality, and the production know-how: a competitive advantage that can mean the success of the internationalization process.

Life sciences

Italian pharmaceutical production has reached a value up to 30 billion euros, 44 when considering related industries, with 2.7 billion euros invested in production, research and development, for activities with a high level of innovation. From 2010 to 2017, industrial production grew by 13%, exports by 52%, the productivity index by 19%.

The excellence of the Life Science sector highlighted by these data is closely related to the high quality and technological know-how of the Italian manufacturing industries of the entire system: therefore, bringing
Italian Pharmaceutical production and life sciences is the right occasion to give visibility to the entire sector and to its production excellence, representing the best of process technologies, laboratory instruments, packaging, components and the best digital and automation solutions applied to the sector, from IoT - Internet of Things to data governance. Nowadays, in every segment of Life Science, science and technology are in strict conjunction: the partnership between pharmaceutical, biotech, nutritional and cosmeceutical companies on the one side, and companies specialized in artificial intelligence on the other, is leading to a real revolution that leads to the concept of 'Life Science 4.0', a natural evolution of the phenomenon that experts have called "Pharma 4.0". Due to the increase in life expectancy, a series of autoimmune diseases, intolerances and cancers are emerging, that require more and more personalized drugs. The dialogue between genomics and Big Data, between pharma and ICT makes it possible to produce these drugs in a sustainable way. The "Pharma 4.0" revolution consists precisely in realizing what was not possible before.

This sector can be defined as multi-sectoral: for "life sciences", in fact, we mean:

  • red biotechnology (health: medicines and pharmaceutical products);

  • white biotechnology (industry: biochemical products, industrial processes and energy resources;

  • green biotechnology (agriculture and agricultural raw materials, ecological technologies and environmental sustainability).
    But that's not all: the scope also extends to bio-medical equipment and devices, research and experimentation, and organ and blood banks.
    The life sciences industry is among the most innovative in the United States and continues to seek resources to cope with the ever-increasing demand for pharmaceutical products: California and Massachusetts are the two states where the US focuses about half of the total investment. Another reason promising to initiate internationalization.


In the world of finance, the automotive sector represents the financial performance and economic variables related to automobile manufacturers, dealerships, original equipment manufacturers and auto maintenance companies. It is interesting to notice that today 75% of a vehicle is constituted by parts and components: a percentage that underlines the fundamental role played by the manufacturing chain of enterprises making up the sector of automotive components.

A field that, in Italy, stands out for dynamism and growth performance, besides a significant penetration into new Countries. The manufacturing chain of Italian automotive components must seize these new possibilities studying suitable penetration strategies for the peculiarities of this markets».
Italy is the ninth US supplier for the automotive sector, with a value of 626 million dollars in 2016. Within the European Community it is second only to Germany. The automotive sector offers good prospects to Italian companies, both to increase exports in this market, and to create settlements in order to create a presence of direct production in the US, as have chosen to proceed with Fiat Chrysler and Alfa Romeo.
Another aspect to consider, for those who want to fit into this sector, is the overall share of
green - hybrid, electric and hydrogen - which for the first time in 2018 will exceed 4% of total production.

Instrumental Mechanics

According to a recent report by the "Manufacturers' Alliance for Productivity and Innovation" association (MAPI), Machinery and Computers Lead the Way to Stronger U.S. Manufacturing. The percentage of growth in manufacturing productivity exceeded that of GDP by + 3.0% in 2017 and by + 2.8% in 2018 The sectors that showed the greatest increase are: press machines (+ 49.1% compared to 2015); machines for marble and stone processing (+ 31.4%); woodworking machines (+ 18.2%) and agri-food machinery (+ 15.9%). The US industry is going through a phase of change, and a large level of machinery turnover is expected. The upswing in global growth that began in earnest in the winter of 2016 continues. All told, the MAPI Foundation’s forecast remains relatively unchanged from the February 2017 report. Between 2017-2020, we expect annual U.S. GDP growth to average 2.2% and U.S. manufacturing growth to average 1.6% over the three-year period. The forecasts, however, also predict the maintenance of a high-quality level, combined with the desire to contain production costs: Italian technology continues to offer good opportunities, especially when it is possible to offer quality technological solutions


SWOT Analysis

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. By using these four areas to identify an organization’s characteristics and climate, a SWOT Analysis offers a high-level evaluation of a company’s pros and cons. Generally, strengths (such as the ability to change quickly) and weaknesses (such as a slow customer service response time) are internal to the organization, while opportunities and threats tend to be external (competition, regulations, market share, and so on).

A SWOT Analysis may help an organization to identify a success strategy such as taking advantage of a new market opportunity based on internal strengths, eliminating an internal weakness to make one’s organization less vulnerable to market threats, or some other combination of evaluating strengths, weaknesses, opportunities and threats.

  • Identifying business potential–SWOT Analysis is also great for long-term, broad scope strategy., “SWOT analysis should distinguish between where your organization is today, and where it could be in the future.”

  • Narrowing your options -When an organization has multiple solutions from which to choose, SWOT Analysis can form a framework for a solution. SWOT helps “determine where change is possible. If you are at a juncture or turning point, an inventory of your strengths and weaknesses can reveal priorities as well as possibilities” and help you “adjust and refine plans mid-course “The SWOT analysis helps quickly analyze various aspects of the current state of the organization and its environment prior to identifying potential solution options.”

  • Kick-starting a new assignment–SWOT Analysis is easy to do quickly and with little to no planning or preparation—perfect for a project that you’ll begin meeting about almost as soon as it’s assigned.

    The matrix clearly represents the elements to watch out for when considering taking one’s business overseas. It may seem like a complicated landscape, but if you rely on those who have the right experience in the field of internationalization in the United States, you can take advantage of all the opportunities and strengths of the American market without running into danger.

Click on the image below if you want to know more about our last point and discover how to internationalize one's own business in America. 



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