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Presiding over the US market: fears and doubts of Italian entrepreneurs

Posted by SI-LOG on 30/01/2019
SI-LOG

Presiding over the US market: fears and doubts of Italian entrepreneurs

SI-LOG 30/01/2019 pubblicato in english, internationalization


Among the countries that look for Italian manufacturing, it seems the United States is one which most appreciates the art of "beautiful and well done".  Italy is known for its craftsmanship, attention to detail and color mastery. Italians are great at design and they always add that touch that differentiates them from good design from other places to excellent.

Although a large number of small Italian entrepreneurs have managed to exploit their potential to undertake the US market, the American continent is still a territory to be discovered for many of the small businesses that dream of expanding their business abroad. So, what are the main reasons why entrepreneurs with winning business ideas are not yet ready to export their value overseas? Continue reading to find out.

 

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American Market and "Made in Italy": an overview

Say the word design and thoughts often turn to Italy, to its traditions of quality manufacturing, of craftsmanship incorporated into industrial processes and to the explosion of creativity that has been seen among the big designers, who have transformed the way we experience and perceive furnishings in both the public and private sectors.

 

It was in the fields of furnishings and design that the term Made in Italy was coined in the first place, and its value is still very much felt throughout the world. If you think about quality clothes, think Italy. If you think about furniture, the same, and the list goes on for many other consumer products that are in high demand in the international marketplace: such as glasses and sunglasses, food products.

According to Coldiretti (Confederazione nazionale coltivatori diretti), in 2017 the demand for Made in Italy products grew by 7.4% worldwide and in the United States reached the historical record for a total amount for the first time evermore than 40 billion euros.

The main reason behind this boom is the rediscovered strength of the US economy: it has returned to grow (at a rate of 4%) and has cut unemployment by more than six percentage points. The direct consequence was a greater investment in the purchase of consumer products, including Made in Italy. Luxury, food products (the export wine market is booming) as well as design and machinery.  These sectors are growing the most and are conquering space and success. The impact of smart manufacturing is being felt far and wide—benefitting industries as diverse as consumer products and heavy machinery. Nothing short of revolutionary, the vast improvements in manufacturing involve mastering automation, big data and robotics. Front and center in this new industrial revolution is manufacturing technology provided by Italian companies.

Export: the internal inconveniences of a company

Concerns relative to investing in the American market mainly derive from inside Italian companies. The typical profile of a not yet internationalized SME is in fact that of being a small - medium company without sufficient knowledge to manage such a vast and heterogeneous market as that of the US. The entrepreneur who wants to internationalize in the US is often frightened by the disparity between the domestic context and the American context, which bases its economy on large multinationals.

  • financial strains;
  • constraints of a cultural and cognitive nature;
  • difficulty in identifying management in loco.

External Constraints

In addition to the endogenous factors that are found within the company itself, we can also identify exogenous factors. In an economic model, an exogenous change is one that comes from outside. For those who hoped to have a better and easier life abroad, this is often disheartening. The fear of being alone in a foreign country, without the right network of contacts that can facilitate the entry of an SME in the United States leads entrepreneurs to abandon the idea of expanding abroad. More specifically, the greatest threats come from:

  • lack of financing and insurance in the country of arrival;
  • administrative and bureaucratic barriers;
  • regulatory barriers.

USA's reality: complex but full of possibilities

The US market is quite different compared to the European or Asian market. For example, it demonstrates a much higher level of competitiveness than the European one. Because the U.S. market is so large and so competitive, winning here is a way of proving your mettle. Furthermore, the legal system is profoundly different, as are the contracts and geographical distances.

Overall, the situation is complex, but the American market is still an excellent opportunity for those who want to internationalize their Made in Italy. Companies that consider U.S. expansion are usually having success in their smaller home market. Their ambitions outstrip that market though and the U.S. stands as a formidable challenge. Before evaluating internationalization, it is good norm to consider all these aspects: non-internationalized companies that want to stand out, looking for business overseas, will have to start with the search for the right activities to support internationalization such as information, consultant services, training and promotional initiatives. Businesses that want to make a successful transition need to be confident enough to think they can do well in America but be humble enough to ask for help from services providers.

Entering the American market is not impossible. Of course, one must be well prepared, but the fundamental requirement for internationalization is one: to be organized. This ability, combined with the ability to develop relationships and adapt to people of very different cultures from ours, will allow you to face the US market in the best possible way.

To learn more about the process of internationalization in the United States and on Italy-US relations, click on the image below and download our white paper!

 

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