Chinese investments in Italy, although still limited compared with that in the rest of Europe, are growing with more and more Chinese firms operating in the country's strategic sectors, said an Italian government agency.

Invitalia, the Italian governmental agency for promoting foreign investment and enterprise development, said there are just38 Chinese firms operating in the country, but Chinese investments have grown rapidly since 2000.

Four Chinese companies, namely Chongqing Lifan (motorcycle), Enhalor (chemicals), Zhejiang Xiongfeng Holdings (textile) and a major producer of tools and accessories for safety in sport activities, entered the Italian market in July.

Most of the Chinese companies in Italy are small in dimension and are highly concentrated in the northern region of Lombardy, with the metropolitan area of Milan as the prevailing investment zone.

The nature of Chinese investments has recently changed, undergoing a high value and quality evolution. The establishment of sales and marketing offices prevailed in the past, while Chinese companies are currently launching activities such as product development and design.

Giuseppe Arcucci, foreign investments' director of Invitalia, said at the China Overseas Investment Fair which took place Wednesday in Beijing that he looked forward to increasing Chinese investments in Italy and strategic partnerships between Chinese and Italian companies.

Arcucci explained that what moves Chinese investors towards Italy is primarily the search for new markets and strategic assets.

Chinese firms have a tendency to invest in those sectors in which the host country enjoys a particular competitive advantage, and for them what matters is Italy's excellent design expertise, innovation and technology, as well as its strategic position as an important sea-gateway to Europe, said Arcucci.

One of the leading Italian investment sectors for Chinese companies is the automotive industry, where Chinese firms aim to improve their technical know-how. A dynamic area is the one around the northern city of Turin, where three major Chinese companies are operating successfully.

Another strategic area is logistics. Italy can be considered as a central Mediterranean hub with one of the most capillary networks in Europe, with 18 logistics terminals in operation and five under construction. Such infrastructure advantages have thus attracted major Chinese logistics operators such as China Ocean Shipping Corporation (COSCO) and China Shipping Corporation.

Machinery is the third leading field for Chinese investments. The recent takeover of Italian CIFA by China's Zoomlion is so far the largest acquisition in Italy and the second in Europe, with an estimated cost of 300million to 500 million U.S. dollars.

The operation has created the world's largest group in construction machinery, with annual sales over 1.3 billion euros (about 1.93 billion dollars).

Looking to the future, Invitalia expects to boost cooperation between Chinese and Italian firms in the field of renewable energies, where Italy has a leading role.

Arcucci went on to explain how the Italian government has done a lot in recent years to support foreign investments and create a more favorable business environment for Chinese investors. It has lately implemented a series of reforms which have lowered corporate tax and simplified administrative procedures.

The main problem, however, is that Italy's investment opportunities are not well known to the Chinese business community.

Therefore Invitalia's mission is to increase awareness, information and support to potential investors.

The agency, which works closely with Chinese investment institutions and authorities, organizes business trips to Italy and offers concrete investment projects for Chinese investors as well as financial incentives in certain areas.