Italy should ramp up efforts to localize manufacturing in Russia to catch up to rival Germany, national business lobby says

Russia could easily become a production hub for Italian companies that are actively exporting to Eurasian markets and outside, according to Ernesto Ferlenghi, vice president of the General Confederation of Italian Industry.The official called for a major shift in the manner of cooperation from trading alone towards industrial partnership.

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“We are still deeply dependent on the export model of cooperation, but it is necessary to move to a strategic industrial partnership and actively develop it, otherwise competitors from other countries will take our place,” Ferlenghi said in an interview with TASS.

Localizing Italian production facilities in Russia is the top priority for effective cooperation between the two nations, according to the vice president. He stressed that the Russian authorities have been creating excellent conditions for this by introducing tax benefits and providing special economic zones for foreign businesses.

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“Moreover, apart from its own market, Russia is able to access to the entire Eurasian Economic Union that is home for more than 200,000 people. This is a great advantage and motivation to invest,” Ferlenghi said.

According to him, Italian businesses have to face growing competition from Germany.

“Germany, which placed a bet on production localization long ago, is currently running 4,000 enterprises in Russia, half of which are either localized or participate in joint ventures,” he said, adding that Italy may boast just about 450 localized firms and 80 joint ventures.

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Ferlenghi highlighted that the sanctions currently in effect do not create a significant hurdle for now, though the financial sector is hit, preventing companies from direct investments.

“As a whole, the range of industries targeted by the penalties is narrow and sector-specific, most… Italian companies haven’t left Russia, and we have learned how to work under these conditions over the past eight years,” he said.

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