billion metric tons. Suppliers of crude oil are, in order of importance, Saudi Arabia, Iran, Kuwait and Libya.

Domestic production of coal supplied 500,000 metric tons in 1972 while imports totaled 12 million metric tons. The U.S. led with 28% of the market. Poland, the ECSC, and the U.S.S.R. were other major suppliers.

Advertising and Research

Marketing Aids

Advertising Media.

In the last 10 years, advertising in Italy has grown in volume, importance, and sophistication. A relatively new industry, it is nevertheless making itself felt as a strong social, economic and commercial force in the country. There is a growing awareness of the value of market studies, and use of technical, economic and social as well as business data in planning promotions to reach the largest market as effectively as possible.

This growth in advertising has been accompanied by a proliferation of advertising agencies and an expansion of services offered. Along with Italianowned agencies, there are joint ventures with other European or U.S. firms, as well as several American firms with large subsidiaries in Italy. While some agencies specialize in specific services and media, a large number of full service agencies deal with all advertising media and have market research facilities.

Newspapers and Periodicals.-The main means of product advertising in Italy is through the daily newspapers. Newspapers in all sections of the country work closely with advertising firms, both Italian and foreign. However, since the newspapers themselves do not maintain advertising departments, advertising firms must place their ads with special agencies commissioned by the papers to receive advertising for them.

Of about 90 daily newspapers in Italy only a dozen or so are read throughout the country, and while some 230 Italian and foreign periodicals are on sale in Italy, only about 20 have a large circulation.

Television.-Television and radio networks are owned and operated by the Italian Government through its agency Radiotelevisione Italiana. The two channels of the television network carry advertisements. Advertisement programs called "magazines” are presented a few times each evening.

Advertising time is sold by the "quarter." Each "quarter" consists of several 40-second spots presented at intervals of several days.

Radio. Although the networks are Government-owned, commercial time is available. About 1.5% of radio time is devoted to commercials. While many agencies handle radio advertising, the Societa Italiana Publicita per Azioni (SIPRA of Italian Advertising Corporation) in Turin has a monopoly in the actual placement of advertising in radio and television.

Motion Picture Theatres.-Wide use is made of slides and film clips for advertising purposes. There are some 10,000 motion picture theatres and many regularly show advertising films. The rates for advertising vary according to the showing time and class of the theatre. Advertising is shown during every intermission. This medium, therefore, may be used to reach a wide market cutting across economic strata. However in the last decade competition from television and other forms of entertainment has cut sharply into movie attendance and advertising in movies has declined somewhat in importance.

Posters, Billboards.-Poster advertising is handled by a number of specialized companies, as is electric sign advertising, which is subject to special regulations. Poster advertisements on walls, along streets, in street cars, buses, and other means of transportation are used to reach the consumer market. Both posters and billboards are subject to the approval of provincial authorities and to payment of a tax on poster advertising.

Show Windows, Flyers.-Show window advertising is extensively used in Italy. Displays are usually attractively done and show prices of the items for sale.

Advertising flyers are in general use and street banners are used also for special occasions. Loudspeakers are used for advertising at sporting

events.

Direct advertising, through the distribution of gifts, samples, and price reduction coupons, is frequently used to reach the Italian consumer, particularly the lower economic strata.

For such consumer goods as soap, soft drinks, and groceries it is not unusual to enclose in the package a free gift or gift certificate, a discount, or a chance in an advertising lottery. Samples appear to be especially effective in Southern Italy.

Consumers are also quite receptive to advertising catalogs, which are frequently passed along from person to person. Distinctive and imaginatively designed letterheads and trademarks are quite important in publicizing a company.

Market Research and Trade Organizations

Market research is closely related to advertising, and a number of firms specialize in this work. There are about 40 market research agencies operating in Italy, of which 14 are the subsidiaries of well-known U.S. companies. Large Italian companies, including the leading manufacturers of consumer goods, conduct market research either through their own specialized departments or by employing market research agencies.

Most of the many different manufacturers' associations are members of the General Federation of Italian Industry (Confindustria), Via dell' Astronomia 30, Rome. This association publishes much material of possible interest to U.S. businessmen, including an annual review of the Italian economy, and a bulletin in English several times a year.

There are chambers of commerce in all major Italian cities, and some, particularly those in large industrial centers such as Milan, publish economic reviews of their particular regions. A monthly review of the Italian economy is published by the Union of Italian Chambers of Commerce (Unione Italiana Delle Commercio, Industria E Agricoltura), via Piazza Sallustio 21, Rome. The American Chamber of Commerce in Italy, via Agnello 12, Milan, publishes a monthly review in English containing information on current business developments.

Several of the leading banks, such as the Banco di Roma, and the Banca Nazionale Del Lavoro, publish economic reviews. There are also a number of periodicals specializing in commercial and financial matters which provide marketing information.

Reports on Italian industry are prepared by U.S. Foreign Service posts in Italy and are made available to U.S. firms by the Export Information Division of the Bureau of International Commerce, Washington, D.C. 20230.

Credit

Source of Credit

Italy has a well-developed banking and credit system. Banks are subject to close government supervision since the granting of credit and the administration of savings are considered functions of "national interest". The establishment of a new bank and/or the opening of a branch of an existing bank must be authorized by the Bank of Italy, the central bank of Italy. The Italian banking system consists of two sectors: a commercial banking sector (banks that primarily ac

cept demand and short-term deposits and make loans of a short-term nature and a second sector made up of "special credit institutes."

Short-term financing for foreign and domestic firms is available from the commercial banking sector, including branch offices of many U.S. banks. (See section on Credit Facilities.)

Medium and long-term financing is available from some 70 "special credit institutes." Each institute generally specializes in a particular type of investment finance, e.g., agriculture, industry, real estate, housing, credit, etc. Principal institutes for medium and long-term industrial credit are I.M.I.-Istituto Mobiliare. Italiano, Mediobanca-Banca di Credito Finanziario and EFIMBANCA, Ente Finanziario Interbancario.

U.S. firms desiring to finance a major portion of their investment outside the United States may find capital available in the Eurodollar market. Loans granted by European branches of U.S. banks are exempt from payment of the interest equalization tax. Several major U.S. banks have branches in Italy, principally in Rome and Milan.

There are 10 stock exchanges in operation in Italy, the most important one being in Milan.

Credit Facilities

There are banking offices located in all important cities and towns throughout the country, with nearly 500 banks and 8,500 branches performing commercial services. Among the most important are the Banca Nazionale de Lavoro, Banca Commerciale Italiana, Credito Italiano, Banco di Roma, Banco di Napoli and Monte dei Paschi di Siena. These banks are a principal source of credit information.

Several U.S. banks perform banking services through branches, subsidiaries, or representatives. The Chase Manhattan Bank has offices in Milan, Rome and Bari; the First National City Bank of New York and the First National Bank of Chicago have commercial banking facilities in Milan and Rome, the American Express Bank in Milan, Venice, Florence, Rome, and Naples. The Morgan Guaranty Trust Co. and the Bank of America operate through their respective subsidiaries, i.e. the Banca Morgan Vonwiller S.p.A. and the Banca d'America d'Italia. The Chemical Bank of New York, the Marine Midland Bank and the Manufacturers Hanover Trust Co., have representatives in Rome while the Continental Illinois National Bank and Trust Co. has a representative office in Milan.

Most of the commercial banks correspond with

U.S. banks, thus enabling the foreign departments of many American banks to give service throughout Italy.

Foreign Exchange Policy.

Italy has no restrictions on the amount or type of foreign exchange instruments, including currency and checks, which may be imported. However, the amount of Italian banknotes permitted to be introduced into, or reexported from, the country cannot exceed lire 35,000 (approximately $55). The amount of foreign exchange instruments which may be exported by nonresidents leaving Italy must not exceed that registered on entry and/or legitimately acquired in Italy.

Italian foreign exchange regulations are issued by the Italian Exchange Office (Ufficio Italiano dei Cambi, Via Quattro Fontane 123, 00184 Rome) under instructions of the Ministry of Foreign Trade. Foreign exchange instruments may be sold or acquired from the Bank of Italy or any of the banks authorized by the Bank of Italy. In practice, all commercial banks in operation are authorized to engage in foreign exchange transactions.

Dollar banknotes, travelers checks, and, in some cases, personal checks, may be exchanged at banks, exchange offices, and authorized tourist offices and hotels.

Quotations and Terms of Payments

While f.o.b. price quotations for certain commodities are readily understood by the larger Italian business firms experienced in dealing with U.S. suppliers, c.i.f. terms are the usual basis for quotations. Experience indicates that use of f.o.b. terms in dealings with the average Italian businessman can in some cases lead to misunderstandings and perhaps even the loss of an order because of miscalculation of what the final landed cost of the import from the United States will be.

The customary terms of sale in Italy are either cash or net. Sales made on cash terms call for payment before delivery, on delivery or shortly. after delivery-usually within 10 days from the date of delivery. A 2 to 5% discount is allowed on the amount of the invoice. Net terms call for payment of the full amount of the transaction at the end of the specified period-1, 2, 3 or 4 months-from the date of the invoice. The length of the period depends on the commodity involved and the credit standing of the purchaser. A period of up to 2 years is often allowed for payment of capital goods, store equipment, trucks, and similar equipment. Western Euro

pean suppliers are known to apply terms of sale comparable to those customarily offered in domestic Italian business.

Reports from Italian sources indicate that some American suppliers have been too rigid in their payment terms and have lost business to other suppliers because of it. While these U.S. manufacturers requested payment upon receipt of the goods, successful bidders were offering terms allowing settlement of the account from 60 to 120 days following receipt of the order. In the cases of machinery, store fixtures, and similar equipment, even more liberal terms have been offered.

Information on particular Italian firms is available from the U.S. Department of Commerce through its World Traders Data Reports service. Italian and American banks also provide credit information service. Credit information is available as well from such private agencies as Foreign Credit Interchange Bureau, 44 E. 23rd St., New York, N.Y. 10010; and Dun and Bradstreet, Inc., 99 Church Street, New York, N.Y. 10007.

There are no collection agencies in Italy. If a case proves troublesome, the debt can be collected only through the courts, and such legal process is usually long and expensive. A list of attorneys is available from the U.S. Department of Commerce, Washington, D.C. 20230.

Just as the terms of any sales offer should be presented in a clear and detailed manner, shipments should conform to the contract and to any samples which may have been sent to the Italian importer. Special attention should be given to the prompt observance of agreed delivery schedules as, especially during times of business prosperity, prompt delivery may be a decisive and possibly an overriding consideration of the importer in placing additional orders.

The use of irrevocable letters of credit in Italian purchases from the United States has declined appreciably in recent years. Although such instruments are still required by American exporters, especially when the Italian customer's credit reputation is not well known, the growing reluctance of Italian businessmen to provide letters of credit has forced American exporters to utilize either other avenues for assuring payment or lose to other suppliers in the highly competitive Italian market. The Italian businessman is understandably hesitant to pay the relatively high fees for a letter of credit when other means are open to his supplier or to himself. U.S. exporters have shown growing confidence in the credit-worthiness of Italian buyers and also have put to greater use the ex

port credit insurance and guarantee programs available to them through the Foreigh Credit Insurance Association.

Investment in Italy

U.S. Investment in Italy

Italy's membership in the EC, its Mediterranean location, relatively low wage rates and the availability of labor have been factors stimulating U.S. investment in Italy. Moreover, the Italian Government welcomes foreign capi-' tal and provides an elaborate series of investments and tax incentives to attract capital to the less developed southern part part of the country (Messogiorno) as well as other designated areas.

The United States has been the leading foreign investor in Italy for over a decade. Approximately, 5,000 firms have subsidiaries, distributors, or licensees there. Some 40% of U.S. investments are estimated to be wholly U.S. owned.

At the end of 1972, the book value of direct investments by American companies in Italy was nearly $2 billion, an increase of $107 million, or 5.7% over the preceding year. More than half of all U.S. direct investments in Italy are in manufacturing areas (58.6%) and in the petroleum and petrochemical sectors (25.4%). The majority of U.S. investment is in the MilanTurin-Genoa area of Northern Italy; the remainder is in and around Rome.

Requirements for Business Operation

A foreign citizen wishing to establish temporary or permanent residence in Italy to administer a business or to manage a corporation should obtain a visa for this purpose from the Italian consulate having jurisdiction in the individual's place of residence. All persons or entities engaging in business in Italy in any capacity must be registered with the local Chamber of Commerce, Industry and Agriculture, a quasi-governmental office, operating essentially as a field office of the Ministry of Industry and Commerce. To register with this office, an agent for a foreign company must produce a power of attorney duly notarized by an Italian consular or diplomatic official in the country of the principal.

There is no longer in Italy a general requirement that all new industrial plants must be authorized by the Ministry of Industry and Commerce. However, major industrial investments in industry are required to be submitted to CIPE (Interministerial Committee for Economic Planning) to verify that the proposed

investments conform to the objectives set forth in the economic plan. Specifically, investments subject to verification are those with a capitalization of more than 5 billion lire (about $8 million) and/or any investment project in excess of lire 7 billion (or $11.2 million).

Licenses are required for numerous activities including the manufacture of pharmaceutical chemicals and patent medicines, infant foods and meat preparations, explosives, firearms and ammunition, radio and TV sets, and electronic tubes. Insurance companies cannot operate in Italy without special authorization from the Ministry of Industry and Commerce. Trading firms wishing to import or export goods subject to licensing procedures must be registered with the Ministry of Foreign Trade. Any organization dealing in retailing or wholesaling, including mail order and vending machine sales, must obtain a license from the national and/or local authorities.

Government's Role in Industry

The Italian Government plays an important role in the nation's economy, with state agencies holding controlling interests in a large number of financial, commercial, and industrial enterprises. In Italy, as in other European countries, State participation in key economic sectors is very extensive, particularly in communications and transportation, where telephone, radio and television, railroads, the national airline. Alitalia, and large shipping companies are operated by Government holding companies. Most of the production and distribution of electric power is nationalized and, in addition, the Italian Government is also directly and significantly involved in a number of industrial sectors where it competes with private enterprises.

State participation in the industrial sector varies from direct management in the case of the salt and tobacco monopolies to indirect management through state holding companies or joint ventures in which the Government controls the majority of shares. State activities spread over a wide range of industrial branches from engineering, mining, metallurgy, shipbuilding, automobiles, chemicals, paper mills, printing and publishing, and hotels to the largest banks. Probably about one-third of Italian industrial output comes from State-owned firms. The State is, therefore, an important employer and customer, and its influence is felt in both the domestic and foreign trade sectors.

Most of the Government-controlled enterprises are affiliates of two giant holding companies:IRI (Industrial Reconstruction Insti

tute) and ENI (National Hydrocarbons Agency), which come under the supervision of the Ministry of State Holdings, and of ENEL (Electric Power Agency) under the Ministry of Industry.

Following the nationalization of the electric power industry in 1962, there was some concern among Italian businessmen that nationalization might be extended to other sectors. However, the present Government has stated that no further nationalization measures are foreseen. Foreign Ownership of Business Entities

In most instances, Italian legislation does not limit the extent of foreign control in an Italian business entity, regardless of the form of organization. Foreign ownership or management however, is subject to limitations in certain cases. These include, among others:

Vessels under the Italian flag are required to be owned by a corporation established in Italy in which the controlling interest and management are Italian.

Aircraft cannot be registered in Italy unless they are wholly owned by Italian nationals or by an Italian corporation in which foreign interest does not exceed 40%. The same restrictions apply to airlines.

Participation in competitive bidding on construction projects by the Ministry of Public Works is limited to contractors possessing Italian citizenship. In the case of bids by corporations, the directors are required to be Italian citizens. Italian residence is acceptable in lieu of citizenship for individuals who are nationals of states granting reciprocal treatment to Italian citizens.

The local representative of a foreign life insurance company must be an Italian citizen residing in Italy.

Several fields of activity controlled by the State are excluded entirely from both Italian and foreign private participation. These include the manufacture, import, and sale of tobacco, tobacco products and matches; the extraction of salt, except in Sardinia and Sicily, and the operation of railroads and the telephone system.

Forms of Business Organization

A foreign businessman setting up an enterprise in Italy may choose from several types of organizations that are specified in the Italian Civil Code Bood V, Title V.

Individual Proprietorship.-An individual proprietorship established for the production or exchange of goods and services is responsible for its

operation to the extent of the proprietor's business assets and his personal property.

Simple Partnership (Societa' Semplice, Art. 2251 ff.).—A partnership is a group of two or more persons conducting trade jointly. The simple partnership can be established without any particular formalities. The partnership is set up either through the joint operation of a business, or by contract. Each member of the firm is liable for any business debts, unless otherwise specified and publicized, to the full extent of his personal assets. Each partner's share in profits and losses is proportional to his contribution of capital.

Unlimited Partnership (Societa' in Nome Collettivo Art. 2291 ff.).-In an unlimited partnership, all partners are jointly and severally liable without limitation for partnership obligations. An unlimited partnership may not issue bonds. The partnership contract must contain the data specified in Article 2295 of the Civil Code and be filed in the Register of Enterprises at the local court. Any of the partners may be appointed to serve as directors.

Limited Partnership (Societa' in Accomandita Semplice, Art. 2313 ff.).-Liability in a limited partnership is joint, several, and unlimited for the general partners ("accomandatari"). Limited partners ("accomandanti") are liable only to the extent of their original capital investment. A limited partnership may not issue bonds. Subscribed capital cannot be represented by shares. The articles of partnership, as outlined in Article 2295 of the Civil Code, must specify who are the general and limited partners. The partnership contract is filed with the Register of Enterprises of the local court. Only general partners may participate in the management.

Corporation (Societa' per Azioni, S.p.A., Art. 2325 ff.). The Italian corporation is similar in form to the corporation in the U.S. and is usually the most suitable form for large enterprises. Participation quotas are represented by shares of stock. Personal liability is limited to the amount of the original investment. The corporation is a legal person, an entity separate from its shareholders, and is liable for its obligations only to the extent of its assets.

Incorporation.-A corporation must have at least two shareholders. A minimum of $1,600 is required for incorporation, 30% of which must be deposited with the Banca d'Italia in a non-interest bearing account until organization formalities are completed. The entire capital stock of the company must be subscribed. If the original stock exceeds $800,000, the Ministry of the Treasury must give special authorization.

The article of incorporation ("atto costitutivo")