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Internationalization Strategies: A Comparison of the United States and China

Internationalization Strategies: A Comparison of the United States and China

In internationalization strategies, choosing the right markets and comparing them is essential. Many Italian companies find themselves having to decide whether export to the United States or in China, both large and powerful markets that drive the global economy.

Currently, the USA presents itself as a more advantageous option: the trade war with China had minimal impacts on Italian imports, providing a stable environment. In addition, purchasing power in the United States is high and demand for high-quality products, such as Italian ones, is strong.

Furthermore, exports to the USA are large and diversified, covering strategic sectors such as machinery, pharmaceuticals, food and fashion, which ensures solid and stable opportunities. On the contrary, Italian exports to China are concentrated in a few sectors, such as textiles and machinery, which limits the possibilities for expansion.

Trade relations between Italy and the United States are robust and free of significant barriers, unlike China, where regulatory complexities can be an obstacle.

To delve further, it is useful to make a direct comparison between the two countries.

Internationalization strategies

 

Internationalization strategies: why Italian exports should look to the West

The United States represents the second target market for Italian exports, with a share of 10.5%, significantly higher than China, which is in 11th place with only 2.5%. These data highlight how the US market offers greater opportunities for internationalization strategies and the growth of Italian businesses. 

In addition to this main data, there are other factors that favor the American market for exports, and we will analyze the main ones below.

Diversification of sectors

In the United States, Italian exports are well diversified, which offers companies growth opportunities in various sectors. The main export sectors include:

  • Machinery: 19,9%
  • Means of transport: 14,6%
  • Pharmaceuticals: 14,5%
  • Grocery: 11,3%

On the contrary, in China, exports are highly concentrated in a few sectors, such as:

  • Textiles and clothing: 26,6%
  • Machinery: 22,6%

This greater diversification of the American market reduces the risk associated with dependence on specific segments.

Trade surplus

Italy benefits from a significant trade surplus with the United States: in the period January-June 2024, theItalian export to the USA reached €33.095 million, far exceeding imports. This result highlights the US market's propensity to welcome Italian products, creating a more favorable economic context for internationalization strategies. In contrast, Italy has a significant trade deficit with China, where Chinese imports amount to €32,704 million, significantly exceeding Italian exports. This imbalance further underscores the attractiveness of the American market.

Foreign Direct Investment

Italian foreign direct investments (FDI) in the United States are extremely significant, with a value reaching €65,379 million. This comparison is particularly evident if we consider only the €15,043 million invested in China. This difference not only reflects a higher confidence in the American market, but also highlights the favorable characteristics it offers. The United States is perceived as a more stable economic environment, accompanied by a regulatory framework that facilitates and incentivizes investments, making them more attractive for Italian companies.

More stable economic environment

The United States offers a more predictable economic environment and less subject to restrictions and uncertainties than China. In fact, Chinese economic policy is vulnerable to external factors, such as the management of COVID-19, which has had negative effects on Chinese imports until 2023. On the other hand, exporting to the US is more advantageous, since, despite moderate growth, the US economy is more stable and trade relations with Italy are strong and consolidated, creating a favorable environment for Italian companies to expand their activities.

Trade and regulatory barriers

While both countries have trade barriers, regulation in China is notoriously complex, especially for foreign companies, due to frequently changing regulations. In contrast, the United States has a more transparent and predictable approach, which makes it easier for Italian companies to navigate the market, open a company in the USA and comply with local regulations, including FDA certification. This favorable regulatory environment facilitates the entry of Italian companies into the US market, making it more advantageous to export to the nation.

Internationalization strategies USA China

 

Expansion Opportunities to Consider in Internationalization Strategies

The US market, with a population of 347 million people, offers a large consumer base, but above all with a higher average purchasing power than China. This scenario represents a significant opportunity for Italian companies, especially in the luxury, food and technology sectors. Export to USA It allows Italian companies to access a receptive market, where the demand for high-quality products is high, thus promoting the growth and expansion of their businesses.

The reasons described highlight how the United States is considered a privileged destination for exports, thanks to the stability and solid collaboration with Italy, demonstrated by the significant trade exchange. made in Italy, historically appreciated as a symbol of quality, is a crucial factor in internationalization strategies of Italian companies to identify the most promising market.

Exporting to the USA is therefore proving to be a profitable opportunity, supported by a profitable interaction between supply and demand and by the strengthening of bilateral relations. The growing demand for food products and clothing Italians confirms that Italian brands continue to represent excellence in the US market, opening the door to opportunities in diversified and dynamic sectors.

Octagona, specialized in internationalization consulting, is ready to assist your company in expanding beyond national borders, with particular attention to the US market. 

Contact us for further details and information.

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