Italian SMEs key drivers of eco-innovation

Italy has a broad and balanced industrial base, one of the broadest in Europe, encompassing both traditional and innovative sectors. Italy is the world’s fifth manufacturing country in terms of added value, after the US, China, Japan and Germany. In Europe, we are the second industrial manufacturing base after Germany. In the last decade, Italian business significantly increased its foreign trade surplus in machinery and transport equipment, but also in lifestyle products such as fashion, footwear and furniture, marked by high intangible values, such as creativity and innovation. Italian magnificence in arts, history and culture is at the base of its attractiveness for tourism but also represents the background of Italian well-known design, innovative attitude and its brand in the world. The major driving forces of the Italian manufacturing, where a significant foreign trade surplus is recorded, are four — industrial machinery and high tech specialized suppliers; fashion, including apparel, leather goods, footwear, jewelry, eyewear, cosmetics; furniture, ceramics and building materials; food and wines. Each year these sectors contribute for over 65 percent to Italy’s overall manufacturing value added, underscoring a trade surplus still belonging to the world’s highest. Yearly forecasts point to a continuing recovery at a relatively moderate pace. Export recovery in the manufacturing sector has been important and brisk in some sectors (chemicals, motor vehicles) and relevant also in food products, beverages and tobacco, and in products of straw and woven materials. A recovery has taken place also in agriculture, fishing and forestry and in mining products. A country like Italy is not a declining one. The trade surplus of Italy’s 4Fs (its traditional strengths of food, furniture, fashion and ferrari) is high. These remarkable results are possible because in those traditional sectors Italy covers the niche of the higher-value-added segments, thus distinguishing from the lower value articles from developing countries. Meanwhile, Italian business is a niche leader in technology and quality, with products ranging from luxury yachts to cruising ships, from Ferrari cars to helicopters, from industrial machinery to domestic appliances. The internal market benefits from an important flow of tourists who are good buyers and in foreign markets, Italy’s shift toward higher-value added productions and personal luxury goods (clothing, leather, jewels, watches and cosmetics) sacrificed volumes but increased the value of our exports. The case of our footwear industry is paramount; in less than a decade, we have halved the quantity of shoes produced, while increasing the overall turnover. Italian luxury firms are demonstrating their ability to penetrate growing rich foreign markets (traditional, new and very new ones from emerging countries, such as Indonesia, Turkey and Brazil). Today, Italy has a 30 percent share (together with France) of the world luxury production, followed by the US (20 percent) and Switzerland (8 percent). Italy is also likely to have perspectives of good performances thanks to the recovery of growth in trendy sectors such as luxury hotels, high class furniture, beverages, delicatessen, and super yachts. Even if it is difficult for major firms to maintain the Italian ownership, Italy’s specific capitalism made of medium and medium-large enterprises still leads our export. Also, small exporting firms showed strong resilience during the crisis. There is an ability of those Italian enterprises to successfully take up the challenge of international competition, which is increasingly identified with their desire to be involved in transnational production networks. A global reorganization of their economic activity is taking place and is shown by a growing emphasis on production and trade of intermediate goods and services. Just beneath the surface of a challenging economic picture is a vibrant Italian economy where SMEs account for 80 percent of GDP. Italy’s strengths are in those SMEs and their evolution (dimension and capitalization), as opposed to the idea of a the need of a “scale revolution” that is not only impossible in Italy but would destroy the capabilities, the flexibility and the talents that have made the “Made in Italy” brand so prominent around the world. Italian SMEs give a sound economic contribution and guarantee our prominence in World Export. Those are 5 million enterprises that employ 90 percent of the Italian workforce (15.8 million employees) and constitute the backbone of the Italian export-led economy. These companies are known for their niche specialization and the quality and reliability of their products. Their value added equal to 70 percent of the total, their exports are equal to 70 percent of the total internationalization, and their export propensity higher than Germany. In R&D, SMEs have more than 50 percent of total Italian patent applications at the EPO (European Patent Office). Italy has competitively adjusted its sectors to cope with the introduction of the Euro and the asymmetries perpetuated by Asian (and particularly Chinese) competition. It has established a globally competitive operating model that builds upon the specialization in niches across sectors, the flexibility of these small and medium sized companies, and cooperation within the clusters or industrial districts, known in Italy as “distretti.” The SMEs’ distretti or clusters are the open secret of Italy. Intesa Sanpaolo, a leading Italian bank, identifies 110 traditional clusters and 18 techno clusters. It is the phenomenon of the Italian distretti that underlies our position of global production leadership. Italy also has an interesting, upcoming start-ups charter. The 2010 survey of 237 start-ups by the Mind the Bridge Foundation describes the profile of the new generation of start-up. There is a new wave of Italian businesspeople who are learning to overcome these challenges by looking at how other countries have surmounted these obstacles. Often this new wave of entrepreneurs is thinking globally, as they start and grow their businesses both in Italy and abroad. These entrepreneurs are able to go beyond the traditional boundaries, providing the vanguard to make Italy globally competitive and innovative (45 percent are Web-based firms, 16 percent are incubated in a technology park, 19 percent are an academic spin-off, 62 percent has a scientific/technological background, while 38 percent has a business/humanistic education, 42 percent holds a Ph.D. or MBA and 13 percent of them got it abroad, 35 percent has prior entrepreneurial experience). In the case of green technologies, innovative SMEs are key drivers of eco-innovation, by both providing new solutions and spreading new eco-friendly technologies in sectors such as renewable energy, wind and solar installations, building refurbishment, energy saving management and battery technologies. Our firms engaged in construction and public works are operating in challenging environments such as North Africa, Middle East, Central Asia and Sub-Saharan Africa. Especially in energy infrastructure, our expertise in build-operate-transfer (BOT) projects is highly appreciated. Many of the best turnkey contractors operating in the oil and gas industry are Italian, even in remote, deepwater and offshore areas. Source: ArabNews