The United States continues to represent one of the main growth opportunities for small and medium-sized Italian companies, but to assert itself on the American market the quality of the product is no longer sufficient. They need a stable presence, an in-depth knowledge of trade rules and the ability to build relationships. It is the starting point of the Confapi USA project, presented by Andrea Paparo, national director of Confapi with delegation to territorial relations and internationalization, intervened at the microphones of our podcast Portraits. “We are no longer at a time when it was enough to make a good product and wait for someone to come and buy it. Our companies have a very strong product culture, which certainly represents a strength, but today is no longer enough. We must internationalize ourselves, be present in the markets and try to increase the margins within the entire value chain”.
Confapi, the Italian Confederation of small and medium private industry, is preparing to celebrate eighty years of activity and today represents 118 thousand enterprises, for a total of one million and two hundred thousand workers. A production system that includes metalmechanics, construction, agri-food, chemistry, wood, plastic and manufacturing related services. “98% of Italian companies are a reality of this size, very often family property. They are enterprises that are facing the generational passage and the great transformations related to the ecological and digital transition,” Paparo explained. “The approximately 650 billion euros of exports that our country realizes, without being able to count on the export of oil, gas or large amounts of raw materials, are largely linked to the capacity of our SMEs, for direct or indirect export for large groups. They are companies that, thanks to their expertise and know-how, manage to sell on foreign markets and to internationalize”.
Originally from Piacenza, Andrea Paparo joined Confapi in 2014 as director of the territorial headquarters and since 2023 he held a national post. A path that allowed him to know directly the needs of companies, also through previous experiences in the business world and in the local administration. “I still maintain a territorial role today, because it is an aspect I particularly care about. I think it is essential to maintain a daily relationship with companies and our associates, to know directly their needs and to understand the difficulties they face. It is a very important element to be able to represent these companies both in relations with the government and with the institutions, and in the realization of the concrete projects that we are organizing”.
The US market occupies a central position in the expansion strategies of Italian companies. “The United States represents the second market for Italian SMEs after Germany. It is therefore an extremely receptive market, not only for the great brands of Made in Italy and for the famous three F, Food, Furniture and Fashion, but also for mechanics, precision mechanics, machinery and many other industrial sectors”. The competitive advantage of Italian companies, according to the Director of Confapi, lies above all in the ability to adapt to the needs of the customer: “The flexibility of Italian companies, the ability of small-scale enterprises to carry out tailor-made processes and to meet the demands of large American groups represent a very important value”.
Access to the American market, however, requires a specific preparation. “The American is a market in which it is difficult to enter, for a very simple reason: it is extremely competitive. The whole world wants to sell in the United States. One of the mistakes made by Italian entrepreneurs is to underestimate how different the way of doing business in the United States is compared to Italy and many other parts of the world. An entrepreneur maybe thinks: “I already sell in Germany, I sell in France, I operate in different European countries, so I can go also in the United States”. Sometimes there is a sort of cultural familiarity, because Italians and Americans are two peoples who know each other and appreciate each other. But the way of doing business in the United States is profoundly different. And this diversity must be known before facing the market”.
It is to respond to these difficulties that Confapi USA was born, a project designed to accompany Italian companies in the different stages of entry and consolidation on the US market. “We are creating a network of Italian companies that already operate in the United States or who would like to start doing so, putting them in contact with each other and creating the conditions to imagine, in the future, even real chains. There is a dimensional problem. An average Italian company, compared to a great American reality, is microscopic. Aggregation more enterprises means increasing the negotiating power, improving the capacity of representation and being able to face certain investments together”.
The aim is to provide SMEs with services that, individually, could be too expensive or complex to organize: “Of course, to do all this, human and financial resources are needed. The large industrial groups already operate in this way, while not all small and mediumsized enterprises have the possibility to support the same investments individually. What we want to do is help them to make this journey together, allowing them to save time and money and get better results than those who could reach by themselves”.
Confapi USA uses collaboration with embassies, consulates, Italian Chambers of Commerce abroad, of course ICE, SIMEST, SACE and CDP, and private professionals. The network includes partners in New York, Chicago, Miami Houston and Los Angeles, as well as experts able to provide assistance on commercial and operational aspects: “We want to be able to give each undertaking an answer on the basis of its specific needs, quickly and safely. The fundamental aspect is to offer a complete vision,” explained Paparo. “The first step is to understand whether the product of that company can be sold in the United States and what opportunities really exist. For example, we can carry out research free of charge using customs codes to verify the values of American imports, identify from which countries come from certain products and understand how competition is structured”.
The support continues after the analysis phase: “We can provide the entrepreneur with a picture of the competitors already present on the market, their products and customers to whom they are addressed. This is a first step of guidance and information, which allows the company to have useful data before making any decision. Subsequently, on the basis of the choices that the entrepreneur or entrepreneur decides to perform, we offer a support on a whole series of operational aspects”.
The initiative also provides for sectoral projects and business meetings. Among the activities already organized, the director mentioned the presence of American buyers in Matera, involved in initiatives dedicated to wood and furniture and companies in Miami a little ago.
Another objective is to overcome the fragmentation of the Italian association system, especially in relations with foreign countries: “Sometimes the Italian system and associations are a little fragmented. Everyone has their own home, as if they belonged to a different football team. But when we go abroad we must all be blue and make system. Having a network of suppliers and subcontractors capable of internationalization is also suitable for large companies, because it allows to build more solid and competitive supply chains. This is why our project was born with a collaborative approach and is open to anyone who wants to board with us”. Access to the project is not reserved for companies associated with Confapi, but open to all Italian SMEs interested in the US market.
Despite trade tensions and the debate on duties, Director Paparo considers the United States a priority destination for Italian investments: “I believe that the United States remains the country that indicates the road to the future, the one from which many innovations come. All data tell us that until 2050 the number one market will remain. It is still a business friendly country, which wants to grow and do business, regardless of political leadership. People who know the United States know that Americans get up in the morning thinking about working, producing, earning. Sometimes I can say that perhaps in Europe we are talking about American politics more than the Americans themselves are talking about.”.
The evaluation also takes into account the instability of other international markets: “We think of the many Italian companies operating in Russia before the war, or the situations that concern the Middle East and the Gulf area. In this context, the United States continues to represent a stable market of reference”, said Paparo. “What I recommend to an Italian entrepreneur, when he decides to invest time and money in an international project, is to consider that the United States, in my opinion, will remain the richest country on the planet even in the next twenty or thirty years. It is a market in which it is still worth investing and in which you can learn a lot. If you learn to do business in the United States, you acquire skills that then allow you to operate in the rest of the world”.
On the impact of American commercial policies, Confapi’s director invited us to distinguish between the different economic factors: “In recent months we have seen that Italian companies have increased their exports to the United States. It is possible that, at least in part, American customers were able to absorb relapses from duties. Perhaps, in some respects, it could be even more worrying the trend of the exchange between euro and dollar, which in recent months has undergone significant changes. Of course, it is necessary to evaluate individual sectors and individual situations, but I continue to think that the United States is the market in which an Italian company should try to be present, if it has a suitable product or processing”.
Among the aspects that Andrea Paparo still considers little valued there is the ability of Italian companies to tell their results: “We happen to meet family-run companies, with a very simple structure, but they sell in the United States to huge customers. When they tell us who their customers are, we discover that they are big international groups that bill billions. Yet these Italian companies, perhaps from a shed in the province, manage to supply products and processes to those realities”. A practical example is an Italian canoe producer: “We asked if he already had some clients in the United States. They answered us: “yes, we provide the American national of canoeing.” They are situations that sometimes seem incredible, because we talk about reality that maybe they are not particularly known, but that they have reached levels of specialization and very high competence”.
According to Paparo, communication represents one of the main cultural challenges for Italian SMEs: “I believe this is one of the limits of our small and medium-sized enterprises: they often do not know how to tell each other. Storytelling is fundamental, especially in the United States. That is why I say to Italian entrepreneurs: do not stay at home, do not be content to send something from Italy. Have the courage to go to the United States, to make you know and affirm your presence. The market tells you that you have the chance to create value, but you have to be the ones who know what you can do.”.
The story of the company history can help distinguish an Italian production even with respect to international competitors: “Behind a product there are often generations of entrepreneurs, experiences, sacrifices and skills that represent an added value and that can be appreciated by the American customer. Sometimes we realize that there is still a certain image of Italy, in some respects a little backward compared to what our production system is really capable of doing. But when Americans discover the skills of our companies, the level of work and the ability to respond to complex demands, they realize that we have extraordinary qualities, even compared to historically very strong competitors, like the German ones”.
However, the ability to tell must accompany services adapted to the expectations of the American market: “For too long the Italian company has been excellent especially in production. This is a great strength, but today the quality of the product must add other elements: communication, after-sales service and a whole series of activities that become fundamental when operating on international markets. In the United States, in particular, the service component is very strong. American companies attach great importance to these aspects and are used to consider them an integral part of the trade relationship. This is why we need a cultural evolution from our companies. It does not mean renouncing its identity or the quality that distinguishes it, but learning to support the production of skills and tools that allow to value it”.
The first results of the Confapi USA project seem to confirm the interest of Italian companies towards this type of support. The initiative has been officially presented for a few weeks, after a preparatory phase of interviews and focus groups conducted with companies from different territories. “We have received requests for information from over 500 companies,” Paparo announced. “It is a number that encourages us a lot, because it shows that there is a concrete interest and that so many companies feel the need to be accompanied on this path. Of course we are only at the beginning. The work to do is still so much, but we hope that the next time we meet we will be able to tell you results and numbers raised remarkably”.
The article Andrea Paparo: “Italian SMEs must go to the United States, but it is not enough to have only a good product” comes from IlNewyorkese.
