Below you'll find the transcript of an interview withH.E. Mr. Attilio Massimo Iannucci, the Ambassador of the Republic of Italy to China. The interview was conducted by Xie Ning, deputy Editor-in-Chief of China Economic Net.

Xie Ning: Hello! Welcome back to China Economic Net. Today we have the privilege to invite His Excellency Mr.Attilio Massimo Iannucci, the Ambassador of the Republic of Italy to China. And another guest to join us is Mr. Feng Xi. He's from the Horizon Research & Consultancy Group. Hello! Welcome, both of you.

Guests: Thank you! Thank you!

Xie Ning: We know that the bilateral trade and economic relations between Italy and China developed very rapidly, especially in recent years. So would you please give us a scenario of the development of the bilateral trade first?

Ambassador: Yes, it is true that it's a dramatic increase in our economic relations in the last three or four years. But last year in 2010 we reached an amount of more than US$45 billion of exchanges. When Prime Minister Berlusconi and Prime Minister Wen Jiabao met in Rome last October, they agreed to reach a level of 80 or 100 billion US dollars in trade. I am very confident we will reach this level before 2015 because now only in 2011 we registered an increase of 15% in our exchanges. So I am fully confident that this target can be reached in 2015.

Xie Ning: Yes, so it's an amazing achievement we've got in the past. And also the target is, we will double the current figures. So we are glad that you are very confident in this target. The bilateral trade and economic cooperation developed also very rapidly. And talking about the mutual investment, could you tell us something about the situation of mutual investment between the two countries?

Ambassador: Started from Italian investments to China, there are some investments made in the recent past, they started more or less at the end of the 80s and during these years. But they're in my view not enough. The proportion between investments and commerce is still not equilibrium. There's too much commerce and few investments from our side. On the contrary, from the Chinese point of view, you export a lot to Italy, we buy a lot of Chinese products, and you made very good investments in some specific sectors, telecommunications for example. But even in some very famous, very well-known Italian companies, they are still with the same name working very well in the sports wears, on the motorcycles, and on the heavy transport. We are ready to accept more Chinese investments to Italy. We are absolutely open to this flow of investments coming from China and this is a reason why we are facilitating the visas of Chinese businessmen to Italy, giving them an easier way to get to the visa and to come.

Xie Ning: So in the past three or four decades, I think many Italian brands are becoming very familiar to Chinese people. So in your opinion, if the Chinese companies want to invest in Italy, what sector maybe more welcome.

Ambassador: You mentioned that the Italian brands in China are very familiar, very popular, and very well-known. They are mainly in the sector of luxurious goods, but this is not the entire reality of the economic situation of our country. There are three sectors in which I consider interesting for Chinese companies to invest. They are attracting. First it's logistics. We need your capacity of organizing ports, airports or ways of communication, roads and this area surround the ports for example, you're very capable to manage this kind of activities and there are very good opportunities for you in this area. Then it is tourism. Tourism is something with very interesting, because it is dramatically increasing. And we are facing a flow of tourist coming to Italy. We are very happy for that. But from the Chinese point of view, from the businessmen, the cooperation with the tourist sector in Italy could be useful to adapt our sector to receive Chinese tourists. For example, building hotels with Chinese characteristics or restaurants or giving people speaking Chinese in the hotel. This is something that we can do but will take time; with the assistance of the Chinese companies it would be easier. Then there's another field that's very promising is the field of ICT, Information Communication Technologies. In this field, there are bigger opportunities important, you have a very famous I don't want to mention the name, but you have a very famous and very well-known company in this field already established in Italy, very successful. Telecommunication is the field in which Chinese companies can be satisfied if they continue to invest in Italy, and the technology, so the kind of technologies to cooperate with the Italian know-how. We don't fear competence of Chinese companies. We want them to come to Italy, to make alliances with our companies, and to produce in Italy to explore here. The position of Italy is interesting for you because it's a kind of hub between Europe and the Middle East and North Africa. We are very well established in these countries of North Africa historically and politically, etc... With the Europe, we are the main door; you can see we developed some ports in south Italy, or in north, Venice and Genoa. It's easier for you swiftly to reach these ports of Italy instead of making a detour of Europe to deliver your goods to Europe. So I think we must discover the interest for Italy but in my view this is not enough. Economic growth must be guaranteed, must be protected, and must be supported by an increased political dialogue. This is one of the targets; probably the main target my embassy is working for. We must increase this channel of political dialogue.

Xie Ning: The political dialogue can guarantee the further development of the economy.

Ambassador: Absolutely.

Xie Ning: You said that because Italy has a good location in the European continent, it's good for the logistics industries. So it's one potential area for Chinese enterprises. And another is tourism sector. It's a fast growing in Italy, and in the world; its tourism industry is very developed in the world. I read that the Italy's tourism sector has contributed about 12% of GDP of the country. It's amazing. So I think there's a large potential between the two countries to cooperate in this area. And the last you mentioned about technology cooperation. I think it's also very important. I think it's great. So we all know that small and medium enterprises are a very important part in Italy. It's composed about 98% of the business establishment there. And also some people called Italy as a Kingdom of SMEs. But meanwhile, currently, many Chinese small and medium-sized enterprises, they are looking for the opportunities outside China. They want to develop overseas. So what kind suggestions could you give to both governments or in what way we can help the SMEs from both countries to establish their business contacts and can cooperate each other more easily more quickly?

Ambassador: First of all, I would like to mention the institutions working to increase the number of contacts between the two parties, the institutes: the commerce (chambers), the embassy, etc. Your embassy in Rome, we can create here and in Italy the opportunities, events to create the opportunity for business to business meetings. I mentioned the important role played by Italian and Chinese foundation which is a very important instrument in this field that you know very well. And they work especially to create this kind of contacts. For small and medium size enterprises, sometimes are very difficult because it is a lack of knowledge of the other country, that there's a lack of traditions. For big companies it's easier to send a representative in Italy to China to understand the situation. But for the small company, especially for the companies, any kind of companies, or Chinese based on the family group with a small amount of money, they don't risk without knowing what they can do abroad. Well, there are two suggestions, first, Italian companies have some important Chinese partners in Italy already established, big companies working there, without coming to China, and they can create and cooperate with alliances, and cooperate with these Chinese companies. The same is for Chinese companies. They are some, not too many, but some Italian groups already established with investments to China. Small Chinese companies could be in touch with them to find ways of cooperation here without going to Italy. But the suggestion I must give, would like to give to the responsible of smaller enterprises in China, to spend some days in Italy, some days to have a look, to make friends. We are ready to deliver them long term visas with multiple entrances, so they can decide where and when to go and how long to stay. They can go there for an opportunity for an event for a fair. But I suggest them don't go just for the fair, stay in Italy after the end of the fair, make a trip, find friends, try to understand the Italian mentality, the Italian way of thinking, and you will find good opportunities, best opportunities for your small companies in Italy.

Xie Ning: Thank you for your valuable advice. And also Mr. Feng, you are an expert of small and medium enterprises. I know that you have done a lot of research work on this side. Could you tell us something about these SMEs?

Mr. Feng Xi: Thank you. First of all, I would like to, you know, add my comments on what the ambassador just mentioned about the Italian-Chinese foundation because we were invited to the annual conference of Italian-Chinese foundation. And we found that this organization will be a key organization to promote better understanding between Chinese and Italian small and medium enterprises. And besides, there are a lot of things that could be done through the help of this organization because this organization has most well-known established members, corporate members on, you know this foundation. We were very impressed with the members on the people we have met when we were in Italy. I think also quite agree with ambassador that, you know, it's very important to have a better understanding of, you know, both countries from different small and medium enterprises. For example, I don't think many people know this organization, which shows that we need to have a better understanding. And also the ambassador mentioned logistics, mentioned high technology. These are also areas that Chinese, or the Chinese companies don't know that much. They know the fashion, the soccer team, the brand. For example, everything I am wearing today is Italian brand. The tie I bought in Milano, the shirt and this. But for small and medium enterprises, what I would propose is find a better way to understand each other. We did a study not long ago about Italy in the eyes of Chinese. What we found out was Chinese are very interested in going there for sight seeing. They also have very good impression of Italy for its quality, for its brand. But there are many areas they don't know. For example, environmental protection, also some industrial design. They know design for clothes, for fashion. Actually, in China, industrial design is one area a lot of Chinese companies need to learn. They can learn from Italian small and medium enterprises. Another thing I would like to say is actually small and medium enterprises in Italy are playing a very key role in economic growth in Italy. They have a lot of management experience, also quality control, management of the factory, and also I would say innovation. So these also are the things both companies can learn from each other. Of course some of the Chinese companies have some money; they would like to invest abroad, and also creates the interests of Italian companies to do business with China. So I would say we are doing another study that would be of value to small and medium enterprises both in Italy and China. What we are doing right now is we are working on a road map for brand, technology and investments. What would be the opportunities for Italian companies in China and what would be the opportunities for Chinese companies in Italy. So we will release that study pretty soon.

Xie Ning: So the other important issues are the Italian, we should let people know that Italy is a very innovative, is a very creative country. The innovation is very...

Ambassador: I made an interview some weeks ago to Chinese newspapers and they put this headline on the interview, "Ambassador Iannucci says that we do expect that we can do more."This is true; because we have not enough in China. And the creativity of Italian's is not very well-known around the world. For example, few people in China I presume know that plastics are invented by Italians. The iPod had been invented by Italian. Radios had been invented by Italian. There are many signs of this creativity and this is something not only historical, its something present in the activities of Italian companies today. We open a center for technical innovation in the Tongji University in Shanghai. And even in Hunan, in Changsha, there is a university for design and for all the Italian innovations. There is a large number of Chinese students working there after a period of spend in Italy. And you find a lot of Italian products made by this institution. The last to remark, we, 51-52% of our export to China is made by small machines, by small companies. The difference between import and export with China is very negative for us. About one to three, we export one, but import from China three. It's incredible that Chinese companies don't explore the opportunity of these good Italian machines, and don't increase the number of machines imported from Italy from these small companies. I visited a fair here in Beijing two months ago were full of high quality tools, high quality machines made by these companies. The proportion I said this 51% of the total export but it's not enough. And this is the opportunity lost by both sides because these machines are cheap, very well-made and with very high good technology. This is one of the first targets for small Chinese enterprises.

Xie Ning: So I think enhance the contact and enhance exchanges between the SMEs between the two countries maybe will benefit Chinese small and medium-sized enterprises. They can learn from the Italian counterparts a lot. In recent years, the Chinese government is implementing the strategy of developing the western and central part of China. I think it's a very import strategy in the next five years. But meantime, coincidently, I think, I notice that the Italian government, even the different administrations put the priority, want to bridge the north-south gap, bring the north south divide as the top priority, by different governments. So do you think there are opportunities, for the two countries' strategies to be opportunities for the companies from both countries?

Ambassador: I'm fully with you that the Italian companies could find new opportunities in this movement of development from east coast, the east part of China to the west. We are pushing our companies just like to have a look to these western areas where there are several opportunities. The level of development of these areas is smaller than in the east coast. But we have to leave the east part of China. We have to follow this movement of the development of the economy, but not competing with big Chinese groups which are doing roads, railroads and big infrastructures to increase the development of these areas. We make alliances with these big groups. A small Italian group will never do work that these big Chinese groups are doing there. But they could give them their smaller products to support the action of the company. For example, if, it's a symbol, if a Chinese company is making the road, the Italian small company could make the oil station. This proportion, you are big, we are not to compete with big companies. We will give them our small products in specific areas.

Xie Ning: Mr. Feng, do you have any suggestions about this, um, what kind of role do Italian enterprises play in China's developing western part?

Mr. Feng Xi: I think the ambassador made a good suggestion for Italian companies. They don't know the western development that well. I think the first thing is they go there and visit those places. I think there are opportunities. There, for example, in Xi'an, recently, the State Council of China just released news that the fourth country-level new economic development zone would be in Xi'an. It's called the "Xixian Economic Zone", so right after Pudong, Tianjin and one in Chongqing; this is the fourth one in Xi'an. It's going to be a huge huge area, you know, it's 882 square km. So it's a very very huge new area. So there are a lot of opportunities. So I would say, because we are doing several projects right now in Xi'an. So I would say we are doing something to help them too. We are inviting probably the ambassador or some other Italian companies to go and visit the western, you know, part first to get to know the opportunities. Then go from there. That's my suggestion, because they need to be there first.

Ambassador: You know, for, in this direction, for this purpose, I am planning and I hope to do it, to go by road, by Road 312, the road between Shanghai to Urumchi, by car, with some Italian cars, to show the Italian companies the opportunities along this road, on the right side on the left side, passing through Xi'an, of course, and going to Urumchi until Kazakhstan, the border with Kazakhstan. It's full of opportunities. Even passing through the village where there are the last Romans forgotten there.

Mr. Feng Xi: Yeah, excellent idea.

Xie Ning: Just to restore the Silk Way.

Ambassador: Yes, but to show that the western part of China is not to be forgotten. We must push our companies to go there, because there are new areas of development. They are not to insist on Beijing and Shanghai only. They have to move towards the west.

Mr. Feng Xi: Yeah, that's an excellent idea, you know, driving through this, you know, western part of China. He will be there himself, to promote, you know, understanding and to explore opportunities.

Xie Ning: You just mentioned that the political dialogue is very important for guarantee the future economic development, future bilateral relations. So during the past few years, we have witnessed more frequent exchanges in different areas, including the culture, including the science and including the education. Would you give us some brief introduction about this?

Ambassador: Well, in historical, increase of number of visitors from China, up to now from Italy to China. We had last year, the visits of President Hu Jintao, Prime Minister Wen Jiabao, the year of Chinese culture in Italy, this has been historical, um, historical events to see the sequence of Chinese visitors and Chinese ideas in Italy. Now, next, we would like visit of the Secretary-general of the Italian Ministry of Foreign Affairs. And in a few weeks, we would like visit of minister of foreign affairs Franco Frattini. This is important because during this visit, we don't' speak only about business or economic opportunities, we consider each other as political counterparts for cooperating, and working together on the main regional issues, on international problems, on international issues, such as global issues, such as environment, such as regional crisis, etc., therefore, the United Nations' institutions etc.. We have a lot of views in common. On the bilateral relation, our approach is to respect the internal situation of the country, to know before to judge, and to know better, to understand better the reason of certain decision taken here in China. It's not a secret, but we are trying to develop here a historical approach of famous Italian person, a very well-known in China Matteo Ricci, Li Madou. He didn't condemn the fact that Chinese vary from Christianity. He tried to understand them, and to give them some values of the western civilization we have in common with you, family, honesty, traditions, culture, for example. We can give you some more elements, in the scientific fields, but you can do the same with us. This is the approach to the better knowledge with flexibility and if we don't agree on some issues, we don't condemn you because you have a different position. You just say that, no, we don't agree, if you want our position, want to know our opinion, we can explain why we don't agree but we would like to understand better why you are in a different position. This is the effort, present effort of the embassy, of the Italian government with Chinese authorities.

Xie Ning: I'm sure that the bilateral relation will be further improved by your efforts. So today, thank you very much Mr. Ambassador and Mr. Feng.

Ambassador: Thank you. Thank you very much.

Mr. Feng Xi: Thank you.

(This transcription is written by Li Jingjing and Yang Haiyang, collated by Xie Ning.)