The China Council for the Promotion of International Trade (CCPIT) Representative Office in Italy actively assists Chinese enterprises in investing in the Italian market.

Italy is renowned for its leading position in manufacturing, fashion design, cultural creativity, and food processing. To help Chinese companies better understand Italy's economic and trade policies and regulations, the China Council for the Promotion of International Trade (CCPIT) Representative Office in Italy, in collaboration with EY Italy's China Business Department, hosted a training event on October 23rd. The event aimed to interpret economic, trade, and legal issues related to investing in Italy and mergers and acquisitions (M&A).

Wang Zhuoqun, the manager of EY Italy's China Overseas Investment Business Department, pointed out that M&A is one of the ways for Chinese companies to establish businesses in Italy, with main investment areas including finance, communications, high-end manufacturing, and research and development design. For instance, Bright Food Group acquired Italy's SALOV olive oil company and quickly entered the European and American markets using its brand Fillippo Berio; Zoomlion acquired Italy's CIFA company, achieving localized production and comprehensive services in the European market, thereby strengthening its global layout.

However, Chinese companies in Italy also face multiple challenges, including restrictions from the Golden Power law, tax and financial risks, compliance costs, and labor law protections. The Italian government introduced the Golden Power law in 2012 to protect key sectors from speculative investments, and the scope of this law has been continuously expanded. The regulation also includes retrospective risks after the completion of acquisitions. Companies such as Huawei and ZTE have expressed that this law restricts their participation in the construction of Italy's 5G communication field.

Italy's tax policy is strict, and companies unfamiliar with tax laws and policies may face heavy tax burdens. The financial and tax laws and regulations change rapidly, and if a company's financial accounting standards are not updated in time or if there are accounting errors, it may face fines from the tax authorities. Additionally, Italy has strict fire regulations, and companies may need to pay for the transformation of warehouse hardware facilities and declaration fees. In terms of employee rights, Italian law requires employers to have a justifiable reason for terminating an employment relationship, and a special procedure involving trade unions must be followed when a large-scale layoff of more than five employees is planned within a certain period.

For the field of intellectual property and technology, if companies do not conduct sufficient investigations before M&A or if the contract terms are unclear, it may lead to M&A failure. Therefore, companies should value the role of professional institutions when engaging in M&A, using law firms and accounting firms to conduct due diligence, find the right entry point for investment, scientifically evaluate the investment industry chain, and thus reasonably control and manage costs to avoid hidden cost traps.