Economic relations between Germany and Italy are close and rich in tradition. Both countries are characterised by a strong SME sector, often with family-run companies. They have numerous ‘hidden champions’. So much for the similarities – what makes Italy different?
Both German and Italian SMEs are strongly export-orientated.
Many German companies have their own subsidiaries abroad and focus on strategic internationalisation. Italian SMEs more often rely on trading partners and distributors. Small and medium-sized enterprises (Piccole e Medie Imprese) are organised in industrial clusters (147 Distretti Industriali).The German manufacturing Mittelstand has its centers in Baden Württemberg, Bavaria, and North Rhine-Westphalia.
High degree of specialisation
Italy has many highly specialised and flexible producers with state-of-the-art production technology (Industry 4.0) and a high level of know-how.
These companies not only take care of production, but cover also design, engineering and prototyping. They offer customised, high-quality solutions to end customers and OEMs and are strategic partners in sectors such as automotive, mechanical engineering, electronics and medical technology.
Reshoring – the relocation of production capacities back to the home country or to neighbouring regions – is also becoming increasingly important in Italy due to geopolitical tensions.
Investing in the future
There are currently several major initiatives for economic and technological modernisation of the country:
The PNRR (Piano Nazionale di Ripresa e Resilienza) promotes investment in digitalisation, sustainability and infrastructure. Industria 4.0 and 5.0 incentives are driving automation, digitalisation and AI-supported production, combined with digital transformation and environmental sustainability – particularly through investments in renewable energies and low-emission technologies.
M&A activity, private equity, venture capital and start-ups are also gaining in importance in Italy, but are still less widespread than in other countries. There were 104 M&A deals in the segment of companies in the EGM of the Milan Stock Exchange (Euronext Growth Milan) in 2024. Mechanical engineering, including tools and precision mechanics, recorded the most takeovers in 2024 with a total of 11 transactions. On the Buy-Side the propensity of Italian companies to invest abroad is growing.
Further information on the Made in Italy – Made in Germany axis can be found here.
