Like many developed economies, Italy is facing a rising trade deficit. The country's statistics bureau announced in March that the trade deficit had doubled in a year. This matches what is happening with Hong Kong-Italian trade. Trade between the two countries increased this year by 2.1 per cent, but the increase is one way, with the SAR's exports up 17.4 per cent and Italy's down 16 per cent. In China the inequality seems even more serious. Although Asia accounts for less than 4 per cent of Italy's economy, with most of that having to do with Japan, Italy is China's fourth-largest trade partner in Europe. Many goods made in the mainland are going to Italy, but the amount of Italian exports going to China is far from comparable. 'The reality is that Italy is a service economy. In terms of production, I don't believe that Italy can regain too much competitiveness,' said Fabio De Rosa, president of the Italian Chamber of Commerce in Hong Kong. Compared to its counterparts in many countries, Italian businesses have been slow in jumping onto the China bandwagon. 'We have several small and medium enterprises coming to China and starting production and distribution, but [Italy] lacks big investments [in China],' Mr De Rosa said. 'The more the World Trade Organisation gets into place, the more you will see Italians in this part of the world,' he said. Most of Italy's business came from its European neighbours, Mr De Rosa said. However, the consul-general in Hong Kong Gabriella Meneghello said the Italian business community understood that it could benefit from China's growth. 'Italy is aware that China is a big emerging power,' she said. 'There was a time when there was fear toward [competition from China], but now there is the feeling that its growth is only natural,' she said. 'It has been recognised that this growth in China and Italy's own potential are two different things.' Some of Italy's strengths are unmatched, and one good example is fashion. 'Italy has no competition in the fashion business ... there is one company in the world that can compete with Italy and that is the Louis Vuitton group. The rest of the big names are virtually all Italian,' Mr De Rosa said. He said that in the long run Italy's economy would rely on the tertiary sector of the industry. 'Of course the Italians need to produce in China, but soon you will see a reverse trend. You will see the Chinese companies - the big names - who will need to find distribution points and headquarters in Europe. Italy must become an option. Once China leaves the local economy and has to move abroad, they also will have to pay the price.' The foundation is already being laid for this unavoidable trend, and its name is InvestinItaly, an organisation created by the National Agency for Enterprise and Inward Investment Development and the Italian Trade Commission to promote investment. InvestinItaly's mission is to offer a reliable reference point to current and new investors wanting to set up or expand in Italy. In the same way that Hong Kong is seen as the gateway to China, Italy is advertising itself as the facilitator for Chinese companies to penetrate Northern Europe, the Middle East and Africa. The figures so far are modest, with only 30 Chinese companies making their presence felt, but it is a step in the right direction. According to various polls, either the United States or China will lead the world's economy in 20 years' time. One poll carried out by the BBC is betting on the latter. Regardless of the result, China is on the rise and the business community cannot afford to miss the boat.
