Made in Italy in Chinese Market: Emerging Issues for Italian Food

Abstract

Considering the rapid changes in Chinese food habits, in both quantity and quality, the study aims to outline the market potentiality of the made-in-Italy food and focus on some emerging issues concerning Italian specialities that are characterised by higher competitiveness. Starting from the definition of made-in-Italy food, the paper addresses the topic of food safety, analysing policies and legislation. Following an approach from macro to micro aspects, market trends are highlighted, and a ranking analysis is carried out, emphasising the positioning of made in Italy. Concerns related to transaction costs, information asymmetry, and adverse selection are discussed and the Italian sounding phenomenon is addressed. Growing practices of unfair competition, such as food piracy, result in several forms of market failure, damaging the segmentation strategies of Italian companies. Findings propose an estimate of unfair business and offer special indexes of evaluation. Finally, policy and business implications are addressed, and attractive and multiple fields for future researches are suggested.

Full text

509
e-ISSN 2385-3042
ISSN 1125-3789
Annali di Ca’ Foscari. Serie orientale
Vol. 55 – Giugno 2019
509
Citation Antonio De Pin, Antonio(2019). “Made in Italy in Chinese Market.
Emerging Issues for Italian food”. Annali di Ca’Foscari. Serie orientale, 55, 509-538.
DOI 10.30687/AnnOr/2385-3042/2019/01/016
Peer review
Submitted 2019-02-15
Accepted 2019-06-20
Published 2019-06-27
Open access
©2019 | cb Creative Commons Attribution 4.0 International Public License
Edizioni
Ca’Foscari
Edizioni
Ca’Foscari
Made in Italy in Chinese Market
Emerging Issues for Italian Food
Antonio De Pin
Università Ca’ Foscari Venezia, Italia
Abstract Consider ing the rapid changes in Chin ese food habits , in both quantity and
quality, the study aims to outline the market potentialit y of the made-in-Italy food and
focus on some emerging issues concerning Italian specialities that are charac terised
by higher competitiveness. Starting from the definition of made-in-Italy food, the pa-
per addresses the topic of food safety, analysing policies and legislation. Following an
approach from macro to micro aspects, market trends are highlighted, and a ranking
analysis is c arried out, e mphasising the posit ioning of the made in Ital y. Concerns related
to transa ction costs, information asymmetr y, and adverse se lection are discus sed and
the Italian s ounding phenomeno n is addressed . Growing pract ices of unfair compet ition,
such as food p iracy, result in sev eral forms of marke t failure, damaging the se gmentation
strateg ies of Italian companie s. Findings prop ose an estimate of unf air business and oe r
special indexes of evaluation. Finally, policy and business implications are addressed,
and attractive and multiple fields for future researches are suggested.
Keywords Ma de-in-It aly food. Agricu ltural trade. Chin ese market. It alian sounding. Ha-
lo constr uct. Informat ion asymmetr y. Transaction cos ts. Adver se select ion. Food pirac y.
Summar y 1 Introduction. – 2 Background and Materials. – 2.1 Made-in-Italy
food. – 2.2 Food Safety Policy. – 2.3 Dynamics and A spects of Chinese market. – 3 Data
Analysis and Results. – 3.1 Markets Trends and Ranking of ‘Made-in-Italy food’. – 4 Dis-
cussion and Conclusion. – 4.1 Concern of Italian Soun ding. – 4.2 Implications for Italian
Companies . – 4.3 Conclusions and Research Suggestions .

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1 Introduction
Chinese food habits have experienced rapid changes in both quanti-
ty and quality of the diet due to the increased buying power of con-
sumers and their new lifestyle (Zhou et al. 2014). The Chinese food
sector has become the largest worldwide, with an average annual
growth rate near 30% (World Bank 2013). This trend has remark-
ably evolved. In this context, the import of agro food products ex-
plodes and inv ol ves an incr eas ingly di ver sied range of supply. This
development aects consumption growth rates, which become very
high for meat, dair y products, sh, oil, pasta, confectionery and con-
venience food.
The rise in household income and the scandals over food safety
are key drivers.
New distribution channels are deeply changing the purchasing
system with hypermarkets, supermarkets, convenience stores. Cor-
ner shops are spreading in urban areas, granting competitive pric-
es and improved sanitary conditions (Jiang, Prater 2002). Firms are
stimulated to introduce new products, to invest in innovation, but
this does not always grant higher safety. In fact, the frequently oc-
curring food safety scandals undermine consumer condence and
encourage new import ows (Yan 2012). The growth in food demand
gives a major boost to imports, an essential opportunity for Italian
businesses.
In this light, the present study aims to outline the potentialities
of the Chinese food markets, which enjoy higher appeal for made in
It aly, but ar e also suer ing fr om gro wing con cer ns abo ut food secu -
rity, intended as a guarantee of food in both quantity and safety. We
also focus on some issues concerning the positioning of foodstus
in Chinese markets, such as the Italian food specialities, which en-
joy higher competitiveness as they represent the excellence of Italy.
Their success is likely to result in phenomena of Italian sounding,
the unfair competition set out to achieve higher prots by evoking
an Italian image, in the absence of its requirements (De Pin 2009).
The counterfeiting and falsication growth is comparable to that of
the market. Considering that original products require higher pro-
duction costs, aecting its market positioning, company strategies
are heavily inuenced by imitation activity.
In this context, in terms of economic legitimacy and market trans
-
parency required for development, two very substantial issues aect
the Chinese market: on the one hand, the increasingly pressing pre-
requisite to achieve an adequate food safety standard, and, on the
other hand, the opportunity to put a break to the increasing phenom-
ena of product falsication and counterfeiting, which undermine the
credibility of the entire Chinese economic system from a global per-
sp ectiv e (Cuaro, Di Gi aci nto 2015). In the absenc e of a consol ida ted
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system of competitive and commercial rules guaranteeing fair com-
petition, the real transparency and settlement of the market fail. The
result is the inducement of moral hazard behaviours – due to high
transaction costs and manifest information asymmetries – translat-
ing into specic kinds of market failure.
2 Background and Materials
2.1 Made-in-Italy food
A highly dierentiated product portfolio, with a wide range of typi-
cal products characterises the made-in-Italy food heritage. The pres-
ence of a multitude of products and countless regional culinary prep-
arations is the most distinctive feature of Italian cuisine (Censis,
Federalimentare 2006). High competitiveness both in terms of qual-
ity and food safety is the hallmark of Italian production, its culture
and its culinary tradition.
Made-in-Italy food is dened as “the set of products recognized
for their strong typical character, given their close link with the ter-
ritory, on which Italy enjoys comparative advantages related to the
environment and production systems” (ISMEA 2012, 141).
Homegrown food specialities consist of branded and typical prod-
ucts, whose strict link to their area of origin is what makes the dif-
ference in international markets.
European certicates like Protected Designation of Origin (PDO),
Protected Geographical Origin (PGO) (Reg. 510/2006, ex 2081/92)
and Traditional Speciality Guaranteed (TSG) (Reg. 509/2006, ex
2082/92) protect typical products. Typical Geographical Indication
(IGT), Controlled Denomination of Origin (DOC), Controlled, and
Guaranteed Denomination of Origin (DOCG) (Reg. 3016/2004) la-
bel wines. Here the level of detail is much higher in terms of regu-
lation, compared to China.
Italy can boast 294 PDO, PGI, TSG certicates and 532 DOC,
DOCG, IGT labels (Ministr y of Agriculture and Forests, year 2018).
Italy is the main beneciary of these regulations as the 22% of total
PDO and PGI certicates issued in the European Union protects Ital-
ian foodstus, and in particular fruit and vegetables (40%), cheese
(18%), extra virgin olive oil (17.6%) and cured meat products (14%).
More than 84,000 rms provide certied products, the 90% of which
operate in the agricultural sector.
Among Italian specialities, we include the “Traditional prod-
ucts” (Ministerial Decree 350/1999), which possess a traditional
character, both in the composition and means of production. The
eighteenth edition of the “List of Traditional Food Products” counts
5,056 specialities, mainly pasta and bakery products (30%), vege-

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tables (27%), meat (16%) and cheese (10%) (Gazzetta Uiciale nr.
57, 09.03.2018).
Made-in-Italy food includes branded, traditional and certied-
origin products, i.e. categories that are of greater importance be-
cause the international markets particularly appreciate their high-
ly typical character.
The commercial role of made in Italy is realised through the anal-
ysis of the country’s foreign trade, taking into consideration export-
oriented products – which show a positive value on their normalised
trade balance and constitute an important share of total exports.
The cluster is identied considering only exports higher than 300
million Euro and a normalised trade balance higher than 20. To this
range, we add cheese and olive oil, although in a trade decit.
As for commercial terminology, the concept of ‘countr y-of-origin’
is ambiguous, as it includes the ‘origin country’ to which the product
is associated; or ‘design-in country’, where it is planned or designed;
‘made in country’, where it is produced, or assembled.
Made in Italy is certied in case of DOP and IGP products, specif-
ically dened as directly related to the territorial and geographi-
cal origin. However, Italy excels in relevant specialities whose raw-
material origin can only be foreign (pasta, coee, chocolate). INEA
proposed an alternative denition that distinguishes three catego-
ries, depending on the level of transformation: “agricultural made
in Italy”, as rice, fruit, vegetable; “transformed”, as wine, fruit juice,
oi l; “i n du strial ”, as pa sta, coe e, chocola te (Cast ellotti 2010). In this
case, emphasis is placed on the recognition of the more elevated Ital-
ian agro-food quality in the world. The process of globalisation and
the shortage of national raw materials conform to the European Un-
ion notion of ‘made in’, which is based on the “last substantial trans-
formation of products” (Reg. (CEE) nr. 2454/93; art. 24).
Made-in-Italy products represent the 73% of exports (2017), al-
though in an overall trade decit condition, they are extremely rel-
evant considering the value and volume [table 1].
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Table 1 China’s Agro- food Import s (million USD)
The bigger share is the prerogative of those of rst-stage process-
ing (wine, olive oil, cheese) that concentrate the 42% of sales (16.1
billions of euro). The incidence of made in Italy of second-stage pro-
cessing (pasta, baked goods, coee, chocolate) exceeds one fth of
exports, while agricultural made in Italy is worth over 4.3 billion of
euros (11% of exports). Primacy goes to wine, with a weight of 13.8%
and an increase of 5.6% compared to 2015. The share of fresh fruits
is very close at 7% (2.65 billions of euros). Other important sectors
are those of pasta (6%), baked goods (4.7%), cheese (4.3%), processed
tomatoes (4.1%), cocoa products (4.0%), cold cuts (3.8%). Among the
rst sectors there is also coee, which abroad sales in 2017 exceed-
ed 1.3 billion of euros (+10% compared to 2015).
Made-in-Italy foods are high-end products, representation of su-
perior quality, both in composition (organoleptic characteristics, raw
materials, processing system) and image (emotional aspects, brand,
collective trademark, geographical origin). The capacity to meet all
the requirements of consumer demand for quality reduces the rele-
vance of price in driving purchase behaviour. The quality of made in
Italy high-end food products is worldwide recognised.
Table 1 - China’s agro-food imports (million USD)
Ranking 2017 2005 2010 2015 2017 100 Δ % 17/10
1Brazil 3.472 9.810 26.180 35.548 22 654 262
2Unites States 6.193 12.344 24.428 25.027 15 294 103
3Canada 937 2.724 4.492 8.956 6 379 229
4Argentina 2.965 5.126 5.810 6.318 4 96 23
5Thailandia 1.697 4.778 4.454 6.067 4 162 27
6Australia 2.368 3.851 6.406 5.152 3 170 34
7Indonesia 1.202 4.146 4.466 4.843 3 272 17
8New Zealand 599 1.972 3.684 3.895 2 515 97
25 Italy 68 209 439 446 0,3 546 114
Total Import 21.358 52.171 113.041 162.832 100 429 212
Total Export 13.858 44.116 63.186 73.649 356 67
Balance - 7.500 - 8.055 - 49.855 - 89.183 565 1.007
Normal. Bal. -21% -8% -28% -38% 33 351
Import
Agricult. prod. 9.757 20.869 70.381 111.570 69 621 435
Food products 11.601 31.302 42.660 51.262 31 268 64
Ey ap 2,2 2,4 6,8 8,3
Ey fp 2,7 3,3 1,4 0,91
*Ey ap/fp: income elasticity for imports of agricultural and food product
Source: World Trade Atlas, ICE, China’s Customs St atistics
Δ %
15/05

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Consumers are becoming increasingly attracted to the intangible
aspects linked to a product, the most important being its geographi-
cal origin with its background of culture and tradition that is accepted
as proof of its quality. Hence, the production certied by designation
and indication of origin achieves a great success in terms of export.
The denomination ‘country-of-origin’ steers consumer’s choice by
conveying an idea of quality linked to the place of origin, proveni-
ence of raw components and intellectual property. Furthermore, the
label ‘made in country’ enhances the transparency of transactions
promoting a healthy global competitiveness.
The rms can approach the international market relying on the
fame of Italy (Checchinato et al. 2013). Foods incorporate its values of
personalization, peculiarity, uniqueness, regional culture and identity.
On the contrary, generalization, depersonalisation of regional as-
pects, homologation of food styles tends to generalise, unify and de-
territorialize the action of food consumption. In such a contest, the
localisation cannot be underrated.
The strategy of integration of local supply and globalisation is rep-
resented by the ‘glocalisation’, where territory, peculiarity and local
traditions nd their right place and are kept into consideration by
a specialised demand and niches of market worldwide provided by
global companies (Foglio 2004). This concept re-establishes a cor-
rect connection between the value of local and socio-cultural ele-
ments and the signicance of the food consumption experience in
the global market.
The European Union meets this issue by conforming the transac-
tions to the principle of ‘country-of-origin’. The law of the country
in which goods are produced regulates the commercial exchanges.
The aim of this approach is to have the nal consumer informed on
the geographic origin of goods, thus marketing strategies must be
directed towards raising awareness.
The relevance of geographical origin on consumers’ behaviour
is widely accepted in marketing; as the choice process is induced,
the place of origin of a product deeply inuences the evaluation of
its characteristics (Erickson, Johansson, Chao 1984). The collective
evaluation of a Country substitutes any other information and sug-
gest intrinsic characteristics of foods, becoming a major decisional
factor in consumer choices.
The ‘country-of-origin’ eect manifests itself in two alternative
models: the “halo” and the “su mma r y ” construct. When the consu m-
er is not familiar with a products, the country image helps as a halo
from which they can infer the product’s attributes without directly
experiencing them (halo construct) (Han 1989). On the other hand,
“summar y construct” is fullled whenever the consumer is already
familiar with a Country’s production, and links the attributes expe-
rienced to the place of origin (Samiee 2010).
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This kind of perception inuenced by cognitive and emotional compo-
nents leads to the formation of internationally rooted stereotypes, facili-
tating and simplifying the process of consumer choice (Nagashima 1970).
An innovative study path that today links various elds of investi-
gation refers to the research of indicators able to eiciently synthe-
sise sets of information aimed at the determination of rankings and,
more in general, at the denition of competitive positioning. Not only
the ranking of made in Italy at the international level is signicant,
also the opportunity to enhance information obtained from rating’s
variables in perspective of guidance of competitive development of
rms. In other terms, benchmarking methods result functional to in-
crease the competitive advantage of rms of made in Italy on inter-
national markets, through the strategic implementation of the fac-
tors that determine it.
In this context, the index Quality Domestic Product (QDP) meas-
ures the level of quality achieved by Italian production by making a
ratio between ‘Gross Domestic Product’ (GDP) and quality production
in terms of competitiveness and market, positioning, technological
and social innovation, improvement of human and cultural resourc-
es, territory and environment (Symbola 2007).1 This new indicator
provides further methods to measure the intangible values, which
the traditional GDP does not reect (Frenda, Piana, Scippacercola
2014). In this light, made-in-Italy food takes high reputation (Camp-
iglio, Barnabò, Sturabotti 2012).
Italy boasts the global quality leadership on 120 foodstus among
the 704 in which the international trade is disaggregated (cheese,
strawberries, vinegar, cold cuts, mushrooms, ham, cherries, pasta, to-
matoes, oil) (Symbola 2017). The Quality Domestic Product index can be
applied to single sectors, to measure the share of product attributable
to improved quality parameters and criteria (Zucaro, Sturabotti 2014).
Other indicators can be used to understand the performance of
made-in-Italy food exports, namely “distance index” and “sophistica-
tion index” (Carbone, Henke, Subioli 2009).
If the distance among markets is a limiting factor, it highlights how
emerging dynamics of Chinese imports imply the sensible increase of
distance index for made-in-Italy food, conrming their higher com-
petitiveness (De Filippis 2012).
The complexity of agro-food trade can be studied through the
“measure of sophistication” with the use of “Prody and Expy index”
(Lall, Weiss, Zhang 2006).2
1 The computation of QDP identies and summari ses basic indicat ors that represent
the di erent qualit ative aspect s.
2
The concept of sophistication designates a set of characteristics incorpor ated in
goods: technology, design, quality attributions, degree of diversication. The type of

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Made-in-Italy foods are placed on an interesting position on Chi-
nese market, especially if compared with closer competitors (France,
Spain, Greece) (Carbone, Henke 2012).
2.2 Food Safety Policy
Food safety represents the degree of development achieved by a
Country. The Chinese Government is carrying out important eorts
to conform to international standards. For this reason, at the end of
2007, has approved the document “The Quality and Safety of Food in
China”. This is a major benchmark of the economic development and
people’s living conditions (Lam et al 2013). By adhering to the peo-
ple-oriented approach, the Chinese government has given great im-
portance to food quality and safety: building a supervisory system,
strengthening the setting of standards, exercising strict quality con-
trol and actively promoting international cooperation (Naronte 2008).
On April 24, 2015, the Standing Committee of China’s National
People’s Congress, under the last ve-year Plan, revised the Food
Safety Law, come into eect in October. The revisions are wide-rang-
ing, imposing stricter controls and supervision on food production
and management.
Once divided among dierent agencies, the system is now central-
ised, with China Food and Drug Administration (CFDA), under the
State Council, responsible for the super vision of food production, dis-
tribution and restaurant catering.
Food producers must maintain a record system for the supply and
examination of food ingredients, additives, and related products.3
Food traders, importing agents, producers must be recorded with
the General Administration of Quality Super vision, Inspection and
Quarantine (AQSIQ).
Ordering meal online is now a global trend, so safety of food
bought on the internet has raised issues. Food trading platforms
must get a trader’s permit.
Ingredients outside the approved list must be registered with CF-
DA, always required for imported health foods.
A key revision is stricter regulation for baby formula food. More-
over, the rules on genetically modied foods provide specic pack-
ages and labels.
compe tit ion and prot a bi li t y level s de pe nd s on the m. T he hyp ot he si s i s th at such char -
acteristics are cor related to the i ncome level of expor ting countries.
3 Such record must be kept for si x months after the expi ration date of food, or two
years if the ex pirat ion date is not speci ed.
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Compared to previous, the updated law imposes harsher sanc-
tions on violations. The ne is up to twenty times the products’ val-
ue. While it is ten times the consumer indemnity.
The last law is claimed to be the strictest food safety law in Chi-
nese history.
This shows the will of the Chinese government in cracking down
on recent food scandals.
4
CFDA and local FDAs are granting more en-
forcement power in addressing food safety issues, controlling every
step of food (production, distribution, sale and recall). Special provi-
sions are set out for products, which have been a focal point in food-
safety incidents in recent years and for innovative trading activities,
including internet portals and e-commerce channels.
However, its recent evolution highlights the diiculty of reconcil-
ing conicting needs, like food safety and food security. Therefore,
China has postponed for two years the regulation for import food,
after a push-back from the United States and European Union. The
last law cuts China o from the global food market and its measures
are out of step with global practices.5 The eort of implementing the
new legislation can limit the chance to access to international trade.
On the other hand, also the foreign companies, aware of most re-
cent updates on laws in this domain, complain about unfair treat-
ment. The market-entr y costs are amplied in fees and resources are
required. Product registration, labelling and product expiry dates
are particularly hard concerns. Adjusting and accommodating to
new regulation are expensive and time-consuming, further increas-
ing transaction costs.
Even though the entry into the World Trade Organization, in 2001,
has seen the reduction of charges on a wide range of imported prod-
ucts, barriers tari and non, health regulations, prohibitions, bur-
densome customs procedures, a disjointed and stratied system of
licensing represent additional obstacles (Francescone 2012).6
4
As it is k nown, there are uncountable scandals relat ed to food safet y in China, about
50,000 each year (Li et al 2015). The punish ments are proverbial too, including the death
sentence (Lafran iere, Sh aron. “Two Executed in Ch ina for Selling Tainted Milk”. The
New York Times, 24 November 2009).
5 China has notied the World Trade Organization – September 25th, 2017 – a tran-
sit ion per iod for the ru le (C hi na’s WT O noti c at ion TB T 120 9, Ad dendu m to the “Me as -
ures for t he Adm inistration of Cert icat es Att ached to Foods Exported t o China”).
6 All companies impor ting into Chin a are bound to regist er to AQSIQ-Chines e Gov-
er n me nt al In sti t ut e fo r q ua lit y sup er visi on and in s pe c ti on (Fo r ei gn Fo od Pr od uc er Re g-
ulations, Pro visions on Adm inistration of the Registration of O verseas Production En-
terpr ises for Import ed Food, 2012, Foreign Food Pr oducer Regulat ions).

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2.3 Dynamics and Aspects of Chinese Market
Understanding the evolutionar y dynamics of the Chinese market re-
quires a mix of several kind of information (market, laws, and even
culture) and is quite hard.
A key growth driver in the Chinese economy is the rapid rise in
average household income, experiencing a Gross Domestic Product
growth, until recent years, of approximately 10%.
Urban population is expected to grow to one billion people soon
(2025), while 200 towns exceed one million people (World Bank 2013).
These evolutionary rates of socio-demographic variables reect the
rising proportion of income spent on food. This plays such an impor-
tant role characterising the food-centred Chinese culture. Nutrition-
al consumption patterns change signicantly with improved living
standards (Del Giudice et al. 2012).
With a population of almost 1.5 billion, increasing by 20 million
each year, China is the largest consumer market for imported food
(Huang et al. 2017).
Imports of agro-food products have reached 163 billion USD in
2017 (+43% on 2015), remarking an exponential dynamic [table 2].
Table 2 Italian Agro-food Balance
The greater demand for agricultural commodities (+58.5% on 2015),
compared to foodstus (+21.4%), results in an increasingly nega-
tive trade balance (-89 billion USD in 2017), rising the normalised
one to -38.7
Signicant changes in eating behaviour are connected to income
level. Demand for original calories spikes; animal calories replace
7 The norma lised trade ba lance is compounde d as (Exp-Imp) ⁄(Exp+Imp)*100.
Table 2 - Italian agro-food balance
Macroeconomic aggregates 2000 2012 2013 2014 2015 2017 ∆ 17/15
Import - I 25.358 38.690 39.756 41.043 41.991 44.335 66% 6%
Export - E 16.867 32.132 33.645 34.629 37.209 40.854 121% 10%
Made in Italy - MiI 9.268 19.279 21.870 24.240 27.452 29.905 196% 9%
Made in Italy/Export - MiI/E 55% 60% 65% 70% 74% 73% 34% -1%
Trade balance - E-I -8.491 -6.558 -6.111 -6.414 -4.782 -3.481 -44% -27%
Normalized trade balance - (E-I)/(E+I) -20,1% -9,3% -8,3% -8,5% -6,0% -4,1% -70% -32%
Trade volume - (I+E) 42.225 70.822 73.401 75.672 79.200 85.189 88% 8%
67.899 79.285 81.683 81.420 81.420 85.977 20% 6%
Appartent consumption - (P+I-E) 76.390 85.843 87.794 87.834 86.202 89.458 13% 4%
Self-suiciency ratio - (P/C) 89% 92% 93% 93% 94% 96%
Tendency to import index - (I/C) 33% 45% 45% 47% 49% 50%
Tendency to export index - (E/P) 25% 41% 41% 43% 46% 48%
Commercial coverage ratio - (E/I) 67% 83% 85% 84% 89% 92%
1 Agricoltural production, forestry, fishin g, food industry
Source: elaboration on Istat and CREA data
∆
15/00
Total agro-food production1 - P
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Made in Italy in Chinese Market. Emerging Issues for Italian food

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Made in Italy in Chinese Market. Emerging Issues for Italian food
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the vegetable ones; and processed food substitutes agricultural prod-
ucts (Malassis, Ghersi 1995).
The evolution towards an advanced society requires, as well, an
always-higher import of commodities for animal farming, their nat-
ural outlet.
The convergence process of eating patterns mimics those of the
satiety society, orienting the agricultural production. Consequently,
relevant impacts on import aect the international market.
This process can be synthesised by the divergent evolution of elas-
ticity for commodities import compared to foodstus.8
The import elasticity of agricultural commodities shows values
bigger than one and increasing (6.8 in 2015; 8.3 in 2017), stigmatiz-
ing the current substitution process.
On the contrary, the elasticity of processed food is receding to val
-
ue low er th a n one (fro m 1.1 of 2015, to 0.90 of 2017), acco rding to eco -
nomic theory that lists foodstus among necessary goods.
In terms of market development, lower custom duties, consumer
commerce liberalization, foreign direct investments, modernization
of retail distribution are the driving forces (Jiang, Prater 2002). On
the contrary, food safety scandals, remaining prevalent, damage con-
dence and trust in Chinese food. For this reason, consumers who
can aord higher prices are driven to buy foreign stus, because of
increasing concerns about food safety and health.
Condence in food safety, ingredient integrity, high-quality prod-
ucts are the key to purchase imported supply (Babcock 2018). New
lifestyles require more variety, modern packaging, freshness, con-
venience and superior nutritional values.
While, in terms of delivery organisation, the import of food for con-
sumer retail is a mostly recent phenomenon, not yet sustained by a
well-established chain of importers and distributors (Hingley, Lind-
green, Chen 2009), nevertheless, the dimension of the market speed-
ily attracts new competitors.
From a territorial point of view, strong disparities can be obser ved
between urban agglomerations and rural areas, as well as among dis-
similar regions (Zhang, Figliozzi 2010).
Specic marketing studies have led to the division of China in-
8
Th e ela sti cit y of ag ric ult ura l pro du c t im por t s to th e inc om e is comp ou nde d as (Δq /q )/
(ΔY/Y). The import expenditure is used in place of quantity, as a proxy. The notably high
value of elasticity for pr imary agr icultura l products, wich locates t hem among the luxu-
ry good s, should not sur pris e, eect of the deep transformation process occurring. On
the other hand, the rebalance of Chinese economy stimulates the domest ic consump-
tion, shif ting towar ds a matur e economy, with lower Gross Domestic P roduct grow th
rates. In 2017, the income i ncrease rat e was 6% a fter year s of two -digit rise. Scienti -
cally, Chinese cu rrent dyna mic represents a great opp ortunit y to study the evolut ion of
the socio-ec onomic varia bles of a fast grow ing economy, compara ble, for characterist ics
and population, t o that one of the whole world at the beginni ng of the twentiet h century.

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to several macro areas, dened, by dierent levels of consumer
awareness development: the growing markets (South and East Chi-
na), emerging markets (North, Central and South West), unexplored
markets (North West and East China) (Busato 2011).
The peculiarity of each local market requires specic strategies,
proper entr y investments, strong operative undertakings, settlement
of company’s sta in site and a long time before generating income
(Vescovi 2011a).
In this developing system, in which the elements of uncertainty are
still high, personal relationships with impor ters, distributors, agents,
oicials and clients are crucial to create brand loyalty (Puppin 2014).
Enforceability of contracts is generally weak. Business relies heav-
ily on personal contacts and inuence.
In such a context, success is closely connected to the network of
relationships established. Managing relationships in the Chinese eco-
nomic culture acquires great strategic relevance, necessary before
starting any sort of business.9
Failure to identify fundamental success elements and managing
business too ohandedly may lead to great disappointment.10
Important factors – such as high xed entry-costs, logistics, devel-
opment of the local sta – are decisive keys for business success. To
all this, we must add the challenge to understand the average Chi-
nese consumer, who is sensitive to price and hesitant to approach
products that are too far from its tastes (Yu et al. 2007). Business
success requires a mix of several kind of knowledge and information
(market, laws, and even culture) and is quite demanding.
All these factors raise transactional costs, suggesting that only
careful competition strategies, based on an accurate segmentation
of the market, both geographically and by consumer groups, are able
to oset the high commercial risks, arising from the eort of under-
standing of a quite dierent culture.
9 This is t he so-called guanxi, the circle of relat ionships and contacts that ident ies
the never -ending network of inter personal bonds, which is necessary to r each one’s
own aims of business development.
10 The communicat ive approach has of f undamental importance. T he case of the fas h-
ion house of Dolce & Gabbana is an em blematic example of how ne gative commercial
eects ca n lead to mistakes in the market ing eld. One of his campa igns pict ures a
young Chinese eat ing typical dish of It alian cuisine, usi ng trad itiona l chopsticks. The
disappointment of Chinese consumers turned int o tota l rejection of the brand’s prod-
ucts. Such mis takes of communication seem to be t he combination of dierent ele
-
ments: ignorance on Ch inese culture, self-r eferent iality and et hnocent rism. The con-
sequences might be economically heavy. Rebuild ing bra nd loyalty might become dii-
cult, since we ar e tal king a bout a culture t hat is ver y sensitive to the perception that
other countries have of Chi na.
De Pin
Made in Italy in Chinese Market. Emerging Issues for Italian food

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Made in Italy in Chinese Market. Emerging Issues for Italian food
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3 Data Analysis and Results
3.1 Markets Trends and Ranking of ‘Made-in-Italy food’
Italy occupies the 25th place among countries exporting in China,
with a 446 million USD supply in 2017, but features a substantial an-
nual growth rate (about 25%).
The agro-food commercial balance highlights a negative value,
albeit in contraction, for Italy, that is net importer for 130.5 million
USD [table 3].
Table 3 Agro- food Import-E xport Italia- China (million USD)
Table 3 -Agro-food Import-Export Italia-China (millionUSD)
Year Exports to China Import from China Tota l Norm.
Agr. Pr. Food Agr. Pr. Food Export Import Balance Balance
2015 39,14 9% 285,21 65% 114,70 26% 297,07 46% 337,71 53% 4,5 1% 439,05 639,28 -200,23 -18,6
2016 45,56 12% 225,66 57% 121,64 31% 276,47 43% 356,11 56% 4,81 1% 392,86 637,39 -244,53 -23,7
2017 41,00 9% 250,66 56% 154,79 35% 253,81 44% 318,2 55% 4,94 1% 446,45 576,95 -130,50 -12,8
Var. % 4,8 -12,1 35,0 -14,6 -5,8 9,8 1,7 -9,8 -34,8 -31,3
Source: World Trade Atlas, ICE, China’s Customs Statistics
Beverage Beverag
e
Beside foodstus (55% of imports), there are still dierent agricultur-
al commodities of Chinese origin (44%), however such commodities
are in downward trending (-14.6% between 2015 and 2017).
In contrast, mainly foodstus (56%) and beverages (35%) charac-
terise exports. As such, the normalised balance is improving, still
negative nowadays (-12.8). In China, the decreasing propensity to
export, due to the inducement of development of the internal mar-
ket, goes along with higher demand of made-in-Italy foodstus and
beverages.
In this context, despite the relatively limited current dimensions,
made-in-Italy food presents one of the most dynamic trends. Many
elements highlight the great potential for imports.
China’s great interest in made-in-Italy products is largely proved
by the ana l ysis of the ra nking ma rket of speci c seg ments, who se in-
creasing trend gures positive performances.
Currently, the main exported product from Italy is wine, followed
by chocolate, pasta and bakery products; olive oil sees Italy as the
second largest exporter after Spain. Many other specialities such as
meat, sausages, hams and dairy products are still low on quantity,
but chances of seeing a growing market are excellent.
For wine, the most famous Italian product, Chinese imports reach
143 million euro in 2017, with a 20% increase over the previous year.
However, Italy’s current position – fth place, with just a 6% of mar-
ket share after France, Australia, Chile and Spain – is not yet ade-
quate to the role played in the global market, especially if compared
with the closest competitors [table 4].

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Table 4 Wine Impor t in China
Table 4 - Wine import in Cina
Ranking 2017 Hl/1000 Million Euro Price per litre
2016 2017 Δ% 2016 2017 Δ% 2016 2017 Δ%
1France 1.965 2.366 20,4 31,5 904 973 7,6 39,5 4,60 4,11 - 10,6 125
2Australia 1.050 1.444 37,5 19,2 518 640 23,6 26,0 4,93 4,43 -10,2 135
3Chile 1.462 1.308 -10,5 17,4 243 290 19,3 11,8 1,66 2,22 33,4 68
4Spain 938 1.344 43,3 17,9 144 171 18,8 6,9 1,54 1,27 -17,1 39
5Italy 324 375 15,7 5,0 120 143 19,2 5,8 3,70 3,81 3,0 116
6Unites States 133 127 -4,5 1,7 54 72 33,3 2,9 4,06 5,67 39,6 173
Total 6.389 7.511 17,6 100 2.143 2.466 15,1 100 3,35 3,28 -2,1 100
Source: Elaboration Comtrade, ISMEA data
Thanks to an uninterrupted growth, China is part of the four major
consumers, the rst, if we consider the widely most appreciated red
wines. Bottled red wines represent the highest import share (91%),
whereas sparkling wines are marginal (2.7%) highlighting the high
penetration potential of our local ones, like prosecco.11
Conversely, the consumption of Italian olive oil in China witness-
es a remarkable increase, reaching a 50% annual rate. The change
in food habits leads to the appreciation of its nutritional properties.
Price still exerts a major hindering inuence on purchase, as Chinese
consumers are not yet able to evaluate other qualitative characteris-
tics. Extra virgin olive oil retains the best appeal, as its geographical
origin conveys to the consumer an image of quality. China’s imports
of extra virgin oil have rapidly grown, reaching 307.7 million USD
in 2017: Italian exports touched 42 million, a 14% share, in second
place after the most competitive Spain (246.2 million; 80% share).
Olive oil is identied by its origin countr y and its renowned brands,
among which major Spanish producers stand out [table 5].
Table 5 China’s Impor ts of Extra V irgin Olive Oil - Baker y Products (million USD)
Table 5 – China’s imports of extra virgin olive oil - Bakery Products (million USD)
Ranking 2017 2005 2010 2015 2017 Δ % 15/05 Ranking 2017 2005 2010 2015 2017
Olive oil Pasta
1 Spain 8,2 34,1 140,7 246,2 80 1.616 621 1Korea S. 10,7 7,3 41,1 116,0 50 284 1496
2Italy 6,6 15,2 19,3 41,9 14 192 176 2Italy 1,7 5,0 20,5 25,9 11 1.128 420
3Greece 1,9 4,5 5,3 9,2 3 184 105 3 Hong K. 1,5 3,9 20,4 22,7 10 1.269 482
4Australia 0,6 1,8 3,0 3,1 1 376 75 4Taiwan 1,7 5,6 24,8 21,2 9 1.356 279
5Turkey 0,1 1,5 0,9 1,5 0,5 528 35Japan 2,5 4,6 10,8 5 - 325
6Thailand 0,9 2,1 6,7 6,2 3 619 201
Total 17,7 74,5 175,9 307,7 100 891 136 Total 19,0 53,5 149,0 245,0 100 684 358
Source: World Trade Atlas, ICE, China’s Customs Statistics Source: World Trade Atlas, ICE, China’s Customs Statistics
Table 6 – China’s Imports of Pasta - Coee (million USD)
Ranking 2017 2005 2010 2015 2017 Δ % 15/05 Ranking 2017 2005 2010 2015 2017
Bakery Coee
1 Indonesia 1,6 26,7 135,7 214,0 70 8.225 701 1 Indonesia 3,4 4,4 27,6 43,5 19 702 895
2 Hong K. 15,5 42,2 107,0 137,0 45 593 225 2 Malaysia 28,6 34,5 15 - -
3Taiwan 0,4 13,5 64,2 48,5 16 14.830 259 3Vietnam 7,5 37,3 59,5 23,8 10 690 -36
4Denmark 9,3 20,8 80,6 46,4 15 769 123 4Italy 1,9 5,3 18,1 22,4 10 878 324
5Korea S. 2,1 7,2 39,9 37,0 12 1.764 414 5Unites States 3,5 9,6 11,1 17,9 8 222 86
6Italy 1,2 4,9 26,5 26,7 9 2.072 445
Total 50,5 167,8 713,8 794,0 100 1.313 373 Total 31,2 78,5 209,0 231,0 100 570 194
Source: World Trade Atlas, ICE, China’s Customs Statistics
Table 7 – China’s Imports of Cheese - Chocolate (million USD)
Ranking 2017 2005 2010 2015 2017 Δ % 15/05 Ranking 2017 2005 2010 2015 2017
Cheese Chocolate
1New Zeal. 14,5 52,2 131,9 246,2 48 810 372 1Italy 5,1 47,9 107,0 69,2 21 2002,2 44
2Australia 11,4 21,6 87,4 85,5 17 666 296 2 Russia 62,5 19
3Unites St. 3,8 13,6 51,6 61,7 12 1.258 354 3Belgium 3,4 15,5 36,9 49,8 15 978,9 221
4Italy 1,0 3,1 20,9 32,3 6 1.949 942 4Unites St. 8,5 11,1 26,5 26,4 8 210,3 138
5Denmark 0,8 2,9 14,3 25,7 5 1.679 786 5Germany 2,0 13,0 47,4 24,0 7 2306,1 85
6 France 1,8 4,8 18,2 22,0 4 922 358 6Switzerland 1,6 3,6 22,6 11,3 3 1348,7 218
Total 38,1 105,8 337,3 515,4 100 785 387 Total 62,1 142,0 429,0 337,0 100 590,8 137
Source: World Trade Atlas, ICE, China’s Customs Statistics
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Regarding pasta, it enjoys a long tradition in Chinese cuisine (noo-
dles), thus paving the way for the success of Italian pasta. In 2017
11 The Consorzio P rosecco Doc, conscious of the enormous market potential, inau-
gurat ed the House of the Pr osecco in the old Ch inese capital X i’an. The a im is to g rant
operators and consumers t he information in Chi nese language.
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Made in Italy in Chinese Market. Emerging Issues for Italian food

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Made in Italy in Chinese Market. Emerging Issues for Italian food
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China imported 245 million USD of pasta, of which 25.9 from Italy,
in second place after South Korea (116 million), outdoing the previ-
ous year statistics by 26%.
On the contrary, bakery products have been almost absent from
the traditional Chinese diet, where baking is a scarcely diused cook-
ing method, but lately have gained large diusion causing an increase
in imports and the establishment of a thriving local industry. More
than 4,000 large companies are active, with production exceeding
two million tons per year, although the average per-capita consump-
tion barely reaches 1.5 kg. Despite the great market potentiality,
many local companies are forced to cease their activity because of
the erce competition, and Honk Kong, Macao and Taiwan are ood-
ing the market with important investments. The penetration of mul-
tinational companies fosters the development of this sector, causing
deep changes in the traditional productive system. The highest prof-
its are gained by numerous foreign capital joint ventures [table 6].
Table 6 China’s Impor ts of Pasta - Coee (millio n USD)
Table 5 – China’s imports of extra virgin olive oil - Bakery Products (million USD)
Ranking 2017 2005 2010 2015 2017 Δ % 15/05 Ranking 2017 2005 2010 2015 2017
Olive oil Pasta
1 Spain 8,2 34,1 140,7 246,2 80 1.616 621 1Korea S. 10,7 7,3 41,1 116,0 50 284 1496
2Italy 6,6 15,2 19,3 41,9 14 192 176 2Italy 1,7 5,0 20,5 25,9 11 1.128 420
3Greece 1,9 4,5 5,3 9,2 3 184 105 3 Hong K. 1,5 3,9 20,4 22,7 10 1.269 482
4Australia 0,6 1,8 3,0 3,1 1 376 75 4Taiwan 1,7 5,6 24,8 21,2 9 1.356 279
5Turkey 0,1 1,5 0,9 1,5 0,5 528 35Japan 2,5 4,6 10,8 5 - 325
6Thailand 0,9 2,1 6,7 6,2 3
619 201
Total 17,7 74,5 175,9 307,7 100 891 136 Total 19,0 53,5 149,0 245,0 100 684 358
Source: World Trade Atlas, ICE, China’s Customs Statistics Source: World Trade Atlas, ICE, China’s Customs Statistics
Table 6 – China’s Imports of Pasta - Coee (million USD)
Ranking 2017 2005 2010 2015 2017 Δ % 15/05 Ranking 2017 2005 2010 2015 2017
Bakery Coee
1 Indonesia 1,6 26,7 135,7 214,0 70 8.225 701 1 Indonesia 3,4 4,4 27,6 43,5 19 702 895
2 Hong K. 15,5 42,2 107,0 137,0 45 593 225 2Malaysia 28,6 34,5 15 - -
3Taiwan 0,4 13,5 64,2 48,5 16 14.830 259 3Vietnam 7,5 37,3 59,5 23,8 10 690 -36
4Denmark 9,3 20,8 80,6 46,4 15 769 123 4Italy 1,9 5,3 18,1 22,4 10 878 324
5Korea S. 2,1 7,2 39,9 37,0 12 1.764 414 5Unites States 3,5 9,6 11,1 17,9 8 222 86
6Italy 1,2 4,9 26,5 26,7 9 2.072 445
Total 50,5 167,8 713,8 794,0 100 1.313 373 Total 31,2 78,5 209,0 231,0 100 570 194
Source: World Trade Atlas, ICE, China’s Customs Statistics
Table 7 – China’s Imports of Cheese - Chocolate (million USD)
Ranking 2017 2005 2010 2015 2017 Δ % 15/05 Ranking 2017 2005 2010 2015 2017
Cheese Chocolate
1New Zeal. 14,5 52,2 131,9 246,2 48 810 372 1Italy 5,1 47,9 107,0 69,2 21 2002,2 44
2Australia 11,4 21,6 87,4 85,5 17 666 296 2 Russia 62,5 19
3Unites St. 3,8 13,6 51,6 61,7 12 1.258 354 3Belgium 3,4 15,5 36,9 49,8 15 978,9 221
4Italy 1,0 3,1 20,9 32,3 6 1.949 942 4Unites St. 8,5 11,1 26,5 26,4 8 210,3 138
5Denmark 0,8 2,9 14,3 25,7 5 1.679 786 5Germany 2,0 13,0 47,4 24,0 7 2306,1 85
6 France 1,8 4,8 18,2 22,0 4 922 358 6Swi tzerland 1,6 3,6 22,6 11,3 3 1348,7 218
Total 38,1 105,8 337,3 515,4 100 785 387 Total 62,1 142,0 429,0 337,0 100 590,8 137
Source: World Trade Atlas, ICE, China’s Customs Statistics
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While China has a strong tradition of tea consumption, coee – in-
troduced only in the nineties – has so far become a consolidated hab-
it among the upper classes. Now, due to the development of the me-
tropolis, coee reaches greater par ts of the population. Cafeterias
have become a symbol of urban lifestyle, places to relax, and coee
has become a ritual. The quality of blends does not hold the right im-
portance, as the consumer lacks the proper parameters of judgment.
Starbucks, with its hundreds of stores spread around the Coun-
try, is the most widespread Western coeehouse chain and provides
a major contribution to the development of the sector; meanwhile
the spread of instant coee increases its penetration among people.
The boost received by national production has reached unexpect-
ed goals, even if it is only localised in the districts of Yunnan, whose
Arabic blend alone provides 95% of the supply, and Hainan. Imports
of coee amounted to 231 million USD in 2017, 10% higher than the
previous year.
Italian exports have reached a value of 22.4 million USD, with a
40% annual growth rate. Italy holds the fourth place after Indonesia
(43.5 million; 19% share), Malaysia (15%), Vietnam (10%).
With the consumption of coee becoming a consolidated habit,

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soon China will be the world’s largest market.
As for the cheese and milk industry, the Chinese potential has
gathered momentum and no other country currently shows such
great prospects of growth. Present annual pro capite consumption
has so far remained low, namely 2.3 kg milk pro capite, a statistic that
barely reaches 1.3% of Dutch consumption, 2.7% of the US and 6.4%
of the Japanese. The potential market demand for dairy is positively
esteemed by China’s National Bureau of Statistics in 42 kg in 2020.
Changes in food habits immediately cause a surge in demand, wit-
nessing an exponential growth in the milk industry, placing China
among the world’s largest producers, and also causing detrimental
episodes, like the tainted milk scandal.
Consumption of milk and yoghurt has strongly increased. The
same trend characterises the demand for cheese, especially used
as an ingredient for hamburgers, pizza and sandwiches, in large
part supplied by Australia and New Zealand. Imported cheese from
France, the Netherlands and Italy is required in the catering chan-
nel, but it is most likely to remain out of supermarkets.
The strong potential encourages companies to set up production
lines in the Countr y. Thus, Danone and Kraft have formed joint ven-
tures with local partners, especially active in baby food and yoghurt
market.
China’s imports of cheese have amounted to 515.4 million USD in
2017. Italy holds 6% share, after New Zealand (48%), Australia (17%),
United States (12%) [table 7].
Table 7 China’s Impor ts of Cheese - Chocol ate (million USD)
But it is with regard to the chocolate sector that Italy is the main
competitor. China is the world’s second largest market, only after
the United States. Many foreign brands control large parts of the na-
tional consumption, as they can provide a quality not yet achieved by
Chinese producers. Local production exceeds 100,000 tons, but pro
capite consumption reaches only 1% of global average.
Such a huge gap promises good chances for the future of the Chi-
nese chocolate market. Chinese producers are unable to meet the
uncontainable demand as they lack long established brands and an
Table 5 – China’s imports of extra virgin olive oil - Bakery Products (million USD)
Ranking 2017 2005 2010 2015 2017 Δ % 15/ 05 Ranking 2017 2005 2010 2015 2017
Olive oil Pasta
1 Spain 8,2 34,1 140,7 246,2 80 1.616 621 1Korea S. 10,7 7,3 41,1 116,0 50 284 1496
2Italy 6,6 15,2 19,3 41,9 14 192 176 2Italy 1,7 5,0 20,5 25,9 11 1.128 420
3Greece 1,9 4,5 5,3 9,2 3 184 105 3 Hong K. 1,5 3,9 20,4 22,7 10 1.269 482
4Australia 0,6 1,8 3,0 3,1 1 376 75 4Taiwan 1,7 5,6 24,8 21,2 9 1.356 279
5Turkey 0,1 1,5 0,9 1,5 0,5 528 35 Japan 2,5 4,6 10,8 5 - 325
6Thailand 0,9 2,1 6,7 6,2 3
619 201
Total 17,7 74,5 175,9 307,7 100 891 136 Total 19,0 53,5 149,0 245,0 100 684 358
Source: World Trade Atlas, ICE, China’s Customs Statistics Source: World Trade Atlas, ICE, China’s Customs Statistics
Table 6 – China’s Imports of Pasta - Coee (million USD)
Ranking 2017 2005 2010 2015 2017 Δ % 15/05 Ranking 2017 2005 2010 2015 2017
Bakery Coee
1 Indonesia 1,6 26,7 135,7 214,0 70 8.225 701 1 Indonesia 3,4 4,4 27,6 43,5 19 702 895
2 Hong K. 15,5 42,2 107,0 137,0 45 593 225 2 Malaysia 28,6 34,5 15 - -
3Taiwan 0,4 13,5 64,2 48,5 16 14.830 259 3Vietnam 7,5 37,3 59,5 23,8 10 690 -36
4Denmark 9,3 20,8 80,6 46,4 15 769 123 4Italy 1,9 5,3 18,1 22,4 10 878 324
5Korea S. 2,1 7,2 39,9 37,0 12 1.764 414 5Unites State s 3,5 9,6 11,1 17,9 8 222 86
6Italy 1,2 4,9 26,5 26,7 9 2.072 445
Total 50,5 167,8 713,8 794,0 100 1.313 373 Total 31,2 78,5 209,0 231,0 100 570 194
Source: World Trade Atlas, ICE, China’s Customs Statistics
Table 7 – China’s Imports of Cheese - Chocolate (million USD)
Ranking 2017 2005 2010 2015 2017 Δ % 15/05 Ranking 2017 2005 2010 2015 2017
Cheese Chocolate
1New Zeal. 14,5 52,2 131,9 246,2 48 810 372 1Italy 5,1 47,9 107,0 69,2 21 2002,2 44
2Australia 11,4 21,6 87,4 85,5 17 666 296 2 Russia 62,5 19
3Unites St. 3,8 13,6 51,6 61,7 12 1.258 354 3Belgium 3,4 15,5 36,9 49,8 15 978,9 221
4Italy 1,0 3,1 20,9 32,3 6 1.949 942 4Unites St. 8,5 11,1 26,5 26,4 8 210,3 138
5Denmark 0,8 2,9 14,3 25,7 5 1.679 786 5Germany 2,0 13,0 47,4 24,0 7 2306,1 85
6 France 1,8 4,8 18,2 22,0 4 922 358 6Switzerla nd 1,6 3,6 22,6 11,3 3 1348,7 218
Total 38,1 105,8 337,3 515,4 100 785 387 Total 62,1 142,0 429,0 337,0 100 590,8 137
Source: World Trade Atlas, ICE, China’s Customs Statistics
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Made in Italy in Chinese Market. Emerging Issues for Italian food

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Made in Italy in Chinese Market. Emerging Issues for Italian food
525
appropriate dierentiation of the supply. Hence multinationals and
foreign companies have an easy entry into the market and are able
to conquer the most protable segments.
In 2017, China imported more than 337 million USD in chocolate,
Italy stands out with 21% share, reaching 69.2 million USD sales.
These remarkable prospects have induced the presence of Ferrero
for several years; the great success in China has resulted in the re-
cent opening of a factory in Hangzhou.
The ice cream sector is expanding rapidly as well: Chinese pro-
duction exceeds 3 million tons a year, amounting to 34 billion RMB.
The ice cream market is a promising one, also due to the ongoing pro-
cess of seasonal adjustment of consumption. Average pro capite con-
sumption has so far remained low if compared to 23 kg in the USA,
17 kg in Australia and 11 kg in Japan.
Demand has mostly increased in takeaway ice cream, due to the
loyalty of retailers to their brands in terms of widespread promo-
tion. This segment no longer tends to count among luxury goods, thus
attracting the most renowned and active multinational companies
in the market, which is currently controlled for 90% by Yili Group,
Mengniu Group, Bright Group, Nestle, Wall’s. Imports have reached
50 million USD, and the growth trend is close to 30%.
The ongoing increase in income in larger parts of metropolitan ar-
eas encourages the assimilation of western food habits and the pro-
gressive interest for the health properties of the Mediterranean di-
et, identied as a leading incentive in purchase behaviour (Guthrie
2009). This trend of success experienced by Italian food products is
also sustained by the growth of tourism, which allows direct contact
with authentic Italian cuisine (Coletta, De Cicco 2011).
The Chinese market increases with the rise of the living standard.
Quality food has become popular, portending great business oppor-
tunities for made in Italy. Their penetration in the market is some-
how hindered by the strong tie the Chinese population has with its
deeply rooted local traditions (Cui, Liu 2000). Italian cuisine comes
to be regarded as a social status, conned to a market niche. As in
other similar markets, the growth of Italian restaurants seems to be
a crucial factor in the success of made in Italy.
However, just nowadays, the e-commerce becomes the most prom-
ising distribution channel for Italian food in China. The phenomenon
called “Haitao” (foreign shopping through Internet) is widespread.
Domestic prices too high and the mistrust toward inside quality boost
the increase in demand. The Absolute Italy Lifestyle is a leading e-
commerce platform. Found on WeChat, it has more than 900 million
followers. Since mid-September 2018, it sells a wide range of Italian
specialities under the Inalca Food and Beverage brand. Similar pro-
jects can develop to a better positioning of our food and wine.

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4 Discussion and Conclusion
4.1 Concern of Italian Sounding
In China, the progressive development of fake goods, imitation of
products and piracy phenomena show the same trend as internation-
al imports. These identify a set of phenomena: the use of ingredients
of lower quality and value than the original, a productive process
aimed at cost containment, the circumvention of legal requirements,
as well as the counterfeiting of company identity, geographical ori-
gin, productive process. The imitation of specic aspects of a prod-
uct suggests a misleading geographical origin, like the improper use
of words, colours, names, places, images: this is the Italian sounding
phenomena (De Pin 2009).
Fraudulent acts violate the rights of intellectual and industrial
property, resulting in embezzlement and reproduction of peculiar
characteristics of the original good with a clear intention of fraud.
The imitative practices result in the marketing of products by gen-
der and appearance that are similar – but not identical – to the orig-
inal, intended to arouse fake expectations, without having the same
properties of the original good.
From a theoretical perspective, these phenomena might lead to
market failure, an even more emphasised chance in presence of a
globalised market, easily explained for the existence of information
asymmetries, trade barriers, high transaction costs (Stiglitz 1987).
For China, geographical, cultural, and legislative dissimilarities raise
transaction costs, worsening information asymmetries between produc-
ers and consumers. The natural attitude towards imitation proved by
local rms is encouraged, resulting in moral hazard phenomena, fake
goods beneting from an undeser ved reputation (Akerlof 1970).
Price becomes an inadequate factor for the recognition of quality.
Conversely, it produces an adverse selection on demand, whose pur-
chase intentions are driven by the expected quality rather than the
eective one (Olshavsky 1985).
The development of unfair practices follows the market trend. The
dierent law among countries does not provide an eective protec-
tion, limiting the prosecution of unlawful conduct (Milgrom, Roberts
1982). The imitation is protable because of the positive evaluation
attributed to the original specialities. The positioning of counterfeit-
ed products in the Chinese market provides a consistent premium
price. This is because when it is compared to the real made in Ita-
ly, which represents the upper price, and the conventional referenc-
es, placed at the lower level, the positioning of imitative products is
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intermediate.12 The premium price, gained by the seeming Italian-
ness, represents the market prot resulting from illegitimate repu-
tation. The price dierential compared to conventional references
translates the prot to imitation products.
Thus, the persistent trade barriers hinder the penetration into
the Chinese market by made-in-Italy products, and the increasing
demand that is not satised by original products is provided by imi-
tations (Qualivita 2007).13
However, given the high number of wealthy citizens, even if rela-
tively small, the potential for high-end Italian food products is huge
and increasing. The replacement of consumption with lower quali-
ty products results in information asymmetry, accompanied by very
high transaction costs. The mere image evoked by Italian food, be-
cause of the halo eect, makes the payment of a premium price cred-
ible for the average Chinese consumer, even for a product that con-
forms to the average quality of the market. The deceptive supply,
aware of the average purchasing power of the Chinese consumer,
takes advantage of information asymmetries, in the awareness of
high transaction costs and huge commercial barriers, conveying a
substantial share of demand towards non-original foods, conrming
the nding that bad goods drive away good ones.14
Not on ly do the ne gat i ve eect s of the se phenom ena aect the si n -
gle product, but the supply system as a whole. Italian rms are una-
ble to reach a position of competitiveness, because their positioning
12 Actua lly, not alway s the prices of Italian sounding food are lower tha n the made -
in-Italy one. Of ten it is the oppos ite s ituation, w ith the prices augment ed of 20-30%.
The di iculties in nding authentic food and the scar ce k nowledge of t he cha racter-
istics of the origina l ones result in a dominant position for imitations (source h t t p ://
ww w.assocamerestero.it).
13 In 2018, the Chi nese government r emoved it s ban on It alian beef a nd reduced by
half the import tar is on some of the cardin al product s of the Made in Italy: Parmi-
giano Reggiano, Grana, aged cheeses, Gor gonzola (from 15 to 8%), grated and melted
cheese, wine spirits (fr om 15 to 5%), vermouth (from 65 to 14%), pasta and sausages,
salami (from 15 to 8%). The agreement for the removal of non-tar i bar riers for Ita lian
citr us fruit is at the end of 2018. Oranges, mandari ns, lemons are added to the 2016 list
of the open s of Chinese border s relat ive to It alian pig meat and to the 2018 one for lu-
cerne. Made-in-Italy pears a nd apples are still blocked and ar e object of a specic ne-
gotiation (source Coldirett i).
14 The cont ingent ‘trade war ’ between the USA and Ch ina is emblematic of the en-
tity of t he imitation market and of the role of commercial bar rier s. Among t he numer-
ous foo dstus and beverages i n the A merican Black lis t ther e is the fake made-i n-Chi-
na Marsala wine, protected by Italy with the Contr olled Denomi nation of Origin (DOC);
whereas China hit s with dut ies fa ke Italia n cheeses f rom t he USA (par mesan, provo-
lone, mozzarella, ricotta, Asiago, fontina, pecorino romano, etc.), main supplier of fa ke
Italian foodstus. If this seems to open interesting opportunities to the real Made in
Italy, the current bilateral agr eements of the Europ ean Union a re worrying. From t he
CETA wit h Canada, to Japan, Singapore, Mexico and the Mercosur countries, they ca n
actua lly leg itim ise the fake Made i n Italy.

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is undermined by the imitations’ activity: as long as their investments
do not generate income, they cannot expand their market share.
Furthermore, the predominance of imitations causes the inevi-
table deterioration of the image of quality so far gained, thus ham-
pering the strategies of demand segmentation. The average Chinese
product, which behaves according to the average quality available,
disadvantages the original product, sold at higher price. The impos-
sibility of enhancing its own specialities causes the failure of mar-
ket expansion (Canali 2012).
Among the most counterfeited products, we can nd Chinese par-
mesan, pecorino cheese, whose packaging portrays a cow instead of
a sheep, pomodorini di Collina, caciotta cheese, bearing an Italian
ag on its brand (Source Coldiretti).
Despite its relevance, the phenomenon is underestimated and nei-
ther consumers nor producers seem to perceive its importance. The
majority of Chinese consumers are accustomed to buying products
with an Italian name, without even questioning their real origin. To
them it does not matter if these are real Italian. The goods replaced
by imitations, considering the spread price gained, represent the so-
cial costs of information asymmetry for Chinese consumers (Kreps,
Wilson 1982).
From Italian supply companies, the perception of the phenomenon
does not receive the adequate attention. Additionally, this underes-
timation, not recognising the potential of competitiveness of Italian
rms in the Chinese market, results in a failure of the market.
Nevertheless, the issue can be investigated under an alternative
light. The competition of high-end food products cannot take place on
price as much as on exclusivity, uniqueness, excellence, requiring spe-
cic strategies to segment demand and create brand loyalty (Venturini
1995). Making use of the peculiar certications of origin – of product
and process – and of the traceability of supply chain, they must turn
to a market that is able to pay o the intrinsic value (Shapiro 1983).
On the other hand, the strong growth of demand segments willing to
recognise the right quality to the original Italian specialities makes
China the most promising market for implementing the best modern
marketing strategies for the countless sectors of Italian high-end food.
Theoretically, of special interest is the economic evaluation of the
eects of information asymmetry on the market. The evaluation of
imitative phenomena focuses on the results obtained with the appli-
cation of some indicators suggested by literature and can be inter-
preted with an eye on future studies and working hypotheses (CEN-
SIS, 2018) [table 8].
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Table 8 Italian Agr o-food Sounding i n China - Estimation 2017
Tab. 8 - Italian agro-food sounding in China - Estimation 2017
Indicators
million Euro
Italian sounding Value
649
Intensity of Imitation Index
2,59
Italian sounding Value/Export Made in Italy food
Damage Index
74
Value of Made in Italy food counterfeiting
Information Asymmetry Index
104
Dierencial Price Made in Italy food* Italian Sounding Value
Source: Elaboration on Coldiretti, CENSIS data
Considering the average proportion of Italian sounding on the Asian
market related to the value of the original products, the market val-
ue of the imitative phenomena is estimated.
The amount of Italian sounding in China is expected to be high-
er than 600 million euros, showing an ‘intensity of imitation index’
equal to 2.59. This indicator is obtained by comparing the value of
the Italian sounding with the total exports made-in-Italy food. While,
the just value of counterfeit goods, the ‘damage index’, that is, prod-
ucts illegally sold as authentic, exceeds 70 million euros.
The evaluation of the unfair advantage derived from information
asymmetry is computed through the ‘information asymmetry index’,
identied as the dierential price of made in Italy, that is, the aver-
age deviation between the market price of authentic products com-
pared to imitations, multiplied by the value of the Italian sounding.
This index is estimated to be more than 100 million euro.
These ndings and their implications may constitute promising in-
centive towards future research guidelines, concerning the measure
-
ment of the economic eects of the information asymmetries and of
trade distorting processes, typical of the international trade.
4.2 Implications for Italian Companies
The development of business strategies aimed at recovering market
shares unduly occupied by counterfeit products is a must, given the
weak legal protection of made-in-Italy food, pending the conclusion
of the World Trade Organization agreement on the international pro-
tection of geographical indications.
In addition to law defence through the few protection tools, stands
out the requirement of active participation by companies in the pro-
posal of enhancement and promotion activities.
The business strategies can only focus on the strength of made
in Italy, and the promising conditions opened by the current mar-
ket dynamics.

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The peculiarities of our food provide opportunities to convey the
set of values that identify the ‘Italian way of eating’, the cornerstone
of Italian style, basis of the competitive advantage.15
Management of the relationship with the consumer and the abili-
ty to meet emerging expectations are preconditions for penetration
strategies. It is in the skill of rms specialised in quality food and
aimed at a high target to take advantage of changes in Chinese con-
sumption patterns.
The rise of clusters with similar consumption patterns implies the
requirement to manage global strategies. Product dierentiation must
be associated with the know-how to manage penetration strategies in
local markets, crucial to compensate the high investment costs.
The increased competition on low price and quality food sees a
higher concentration of competitors, making unavoidable the stra-
tegic positioning based on segmentation and dierentiation. This
is encouraged by the increase of informed groups, for which the
changed sensitivity to food selection softens the role of price as the
main variable.
Penetration strategies must allow Italian companies to exceed their
natural limits, intrinsic in their small size. The implementation of col-
lective strategies can make up for the lack of nancial and manage-
rial resources.
The underestimation of the specicities of the Chinese market re-
sults in unprotable strategies for rms that mistakenly consider that
market as the domestic one.
In this context, the strategic plan must include several actions of
marketing mix: the focus on the product and its competitive positioning
must be coordinated with the specic communication and promotion
activities, and with the precise policy towards distribution channels.
The certication of the product cannot dissociate itself from its en-
hancement. Its recognition becomes a fundamental key, the goal is
to mitigate the information asymmetry with the consumer, making it
more diicult to pursue counterfeiting and imitation strategies.
Strategic elements highlighting product dierentiation are useful:
the renement of packaging, the information provided on the label,
until they assume the connotation of unique references.
The improvement of the peculiar positioning of made-in-Italy spe-
cialities is compatible with high price segments, in which competition
is more diicult.
However, it is with regard to the structure of the supply that the
greater eorts of adaptation are required.
15
The ‘Ita lian way of stay ing at the table’ identies a healthy, balanced and pre -
cious food style, t he use of typical foods, h igh quality, unparalleled taste, and conv iv-
ial atmosphere of meals.
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Adequate tting of the economic size and nancial soundness of
companies identifying the Chinese as a preferred market is required,
to ensure adequate bargaining power in trade relations and real op-
portunities to defend against agro-piracy. In the impracticality of the
single initiative to reach an adequate dimensional structure, the sys-
tem of business aggregation and network can be usefully used for
coordinated strategies, with joint actions for the enhancement, pro-
motion and protection.
The activity of communication and collective promotion is strate-
gic to increase the recognition of Italian food. This is central in the
function of choice, with the implicit simplication of the selection pro-
cess. The easy distinction between original and false involves a per-
severing information activity on how to determine the authenticity of
food, such the search for the words ‘Made in Italy’, ‘Imported from It-
aly’, the certications DOP and IGP.
Nevertheless, it is diicult for Chinese consumers to learn the
structure and meaning of our system of quality certication, where
the overlapping of brands makes an aware purchase extremely hard.
16
Eective communication and promotion activities can only be
planned and implemented in networks, in order to reach the critical
threshold required for the dissemination and penetration of the mes-
sage. Being able to own adequate nancial resources ensures con-
tinuity of the activity, as well as the use of mass media. The focus
on the typical target of made-in-Italy food identies consumers with
higher propensity and informative receptivity.
The penetration strategy must involve the distributors, who play a
key role in commercial success. In supermarkets, the original prod-
ucts shall be placed separately from counterfeits, to emphasise the dif-
ferentiation: it is the distributor’s condence in the benet of invest-
ing in the authentic food that increases its visibility. The increased
presence of original products comes from the real increase in prot-
ability of the ‘shelf space’ and its ‘rotation index’.
However, real incentives to reward the authentic food are the ev-
idence of the risk of decreasing sales that could result from the deal
of counterfeits and the return of the consumer’s negative judgment
if the perceived quality is not in accordance with expected one.
The agreement with the distribution chains gives the chance to
market the original products on a large scale, leveraging the huge
share of demand not yet met.
16
Thus, the name mozzarella ca n ide nt i f y th e bu a lo moz zar ell a C am pan a DOP ’, ‘b u f-
falo milk mozzarella’, ‘cow’s milk mozzarella’, ‘STG mozzarella’. As a result, the false
mozzarella produced a broad is a worldwide m arket of t wo mil lion tonnes, marketed
main ly in the United St ates, Australia, and China.

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The implementation of such strategic actions, however, implies
the acquisition of a strong bargaining power that contrasts with cur-
rent distribution strategies. In fact, the major manufacturers of im-
itation products, marketed as ‘private label’, are indeed the opera-
tors of large-scale distribution.
Adapting the strategy to the specicities of the Chinese market is
essential, as well as to the individual product. The cases of Piazza Ita-
lia and of the initiative Tastes of the Italian Regions in Shanghai are
emblematic in this regard. Piazza Italia was inaugurated in Beijing in
2008, in the luxury area of Chaoyang, as the largest Italian food cen-
tre abroad, with a surface of almost 4,000 m
2
spread over three stores,
oered more than 3,000 references of made-in-Italy food. Underesti-
mating important factors, such as high entry costs, weak logistics,
lack of development of local sta, were decisive factors for its failure.
A brighter situation is highlighted by Tastes of the Italian Regions,
opened up by Auchan Italia in 2012. The use of modern distribution al-
lows a more lasting approach for an adequate education of the Chinese
consumer, which is a condition for the penetration on a larger scale.
4.3 Conclusions and Research Suggestions
Nowadays, the Chinese food market – represented by nearly one and
a half billion people – features the most appealing business chanc-
es in the world, still limited by problems such as legal issues, trade
barriers, backwardness of commercial distribution, and rural-urban
gap in income and lifestyle.
When referring to food and China, some dierentiations should be
made based on specic categories (when policies, law and trends are
involved), especially when talking about made in Italy.
A precise order to address policy implication, business implications,
suggestions for Chinese and Italian companies must be followed.
The rapid changes in behaviours and the increasingly urgent nu-
tritional needs of the growing multitude of young people, forecast
unprecedented economic impacts in the global market. The quantita-
tive instances are associated with the desires to taste typical Italian
food of an emergent group of customers who are aware of the impor-
tance of product quality and nutritional elements, extremely recep-
tive of modern marketing strategies.
The accelerated growth of consumptions is driving the success of
imported goods, while the distribution system, which is currently una-
ble to satisfy emerging needs, is involved in dynamic transformations.
From the point of view of made-in-Italy food, quality is the strate-
gic advantage of penetration. For high-end foods, non-price competi-
tion strategies are suitable and prot-oriented. In light of the attrac-
tive market prospects, it is the company’s duty to manage consistent
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global marketing mix strategies and look further than a short-term
perspective.
China rapidly becomes the major actor on the global scene, still
grounded on its local traditions and culture, presently discovering
the private industry, open to a capitalistic economy. A permanently
increasing income brings along a new welfare, which in turn chang-
es the population’s lifestyle.
Considering the emerging consumption patterns, the recently
strong development of the middle class, which will very soon repre-
sent nearly 75% of the population, as expected in 2022, the big migra-
tion from rural areas to cities, the exponential growth of the ver y rich
people, Italian companies could easily consider dierent segments
of customs as potential targets. In fact, some of these ranges are in-
terested in high-end made-in-Italy foods, for which the Chinese mar-
ket becomes the rst for magnitude and importance.
This new condition foresees new opportunities for the made in Ita-
ly to be cultivated through partnership agreements aimed at protect-
ing it from imitation and also to grant consumers’ safety. Therefore,
in 2006 already, China signed the Agreement on Mutual Collabora-
tion in Contrasting Import-export of Counterfeited or Adulterated
Food with the European Union, whereas in 2010 a formal commit-
ment was signed between Italy and China to guarantee security and
contrast food counterfeiting.
Meanwhile, what is to become an historical bilateral agreement
between the European Union and China for the recognition of the
Geographical Indications is proceeding. A list of one hundred foods
for each country has been prepared. The products will be mutually
protected and twenty-six of these are Italian.
As for imports, Chinese authorities conform to the principle that
prevention and control are to be exerted on the productive cycle. Ex-
amples of unfair competition that arise from such a rapid increase in
consumption involve the duty to protect Italian products overseas.
Chinese imitative propensity could result in food frauds, up to mar-
ket failure. The condition of information asymmetry and high trans-
action costs in the trade with China requires the implementation of
public policies shared by governments.
The Chinese Government, aware that food safet y represents the
degree of development achieved by the Country, is carrying out im-
portant eorts to conform with international standards. As men-
tioned, in the last ‘Five-year Plan’ the Chinese Congress revised the
Food Safety Law. Food quality and safety is now the major benchmark
of the economic development, adhering to the people-oriented ap-
proach. International relations and cooperation are actively promot-
ed in this eld, greatly enhancing public awareness on food safety.
From the point of view of Italian companies, the Chinese agro-food
market is an essential opportunity for made in Italy to gain full suc-

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cess in the global dimension. Still, it is necessary to push companies
to invest in the long run, adjusting marketing strategies, in view of
eroding the share of imitative competitors.
A strategic positioning of high-end foods is based on segmentation
and diversication. Such a huge market requires the carving out of
specic niches for the made in Italy, in which price no longer plays a
major role. The supply of certi ed foods is a require d st rateg y. Com-
petition based on the reputation of goods makes the proposal of low-
quality and low-price items unsuitable.
For the characteristics of Italian rms, characterised by small to
medium size, the ability to implement network strategies, required
to reach the new business opportunities, is a main factor.
In terms of scientic research, the study of the Chinese market
and its topics open attractive and multiple strands.
With regard to economic theory, the analysis of the eects of the
information asymmetries requires the proposition of innovative in-
terpretation models, which can refer to the game theory, to multi-
criteria analysis, or to the behavioural theory of economic actors.
While, the studies in the business eld can be directed to export
management, to the strategies that can be implemented by rms, to
marketing and communication, to the management of the segmen-
tation plans, and to several other issues still missing (size of Italian
rms, opportunities from networks, distribution channels).
But, also from the point of view of law studies, a big eort still has
to be done, on the one hand for the correct legal identication of the
made-in-Italy food, still unclear currently, as the worsening of oppor-
tunistic behaviours proves it. On the other hand, because the protec-
tion of made-in-Italy food in the global market involves the whole le-
gal framework of international trade, which represents an essential
premise for economic success.
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