The “Marco Polo” Effect: Chinese FDI in Italy

Abstract

This study investigates the motivations driving Chinese outward direct investment to Italy. The analysis is based on secondary sources and in-depth interviews with key informants and senior managers of Chinese affiliates in Italy. The empirical analysis shows that the evolution of the Chinese pattern of entry to Italy is in line with the model followed by Chinese firms for direct investment in other European countries: starting with small scale operations in trade-related activities, and then evolving towards the acquisition of tangible and intangible resources deemed necessary to increase Chinese presence in international markets and, more generally, to upgrade its technological and production capacities. Chinese investments in Italy are increasingly targeting the acquisition of design and brands in key Italian sectors of specialization, and technological capabilities in sectors such as metalworking. Chinese multinational enterprises also are investing in Italy to get access to local competitive advantages in sectors such as automotives and home appliances. This location choice is clearly linked to the intention to tap local competences available at the cluster level.