2026 Compliance Guide for Chinese Enterprises Expanding into Italy: 604 Companies Across 36 Industries, Lawyers Explain Four Major Legal Risks
Chinese-funded enterprises are accelerating their entry into Italy. According to statistics released by the Italy China Chamber of Commerce in December 2025, Chinese-funded investment in Italy has covered 36 major industries, with equity participation in 604 companies, providing more than 30,000 jobs and generating over 24 billion euros in turnover. In the first quarter of 2026, bilateral trade between China and Italy grew by 21.2% year on year, surpassing the 70 billion US dollar mark for the fifth consecutive year. From the largest greenhouse solar power station in Europe built by Jiangsu Juneng Silicon in Sardinia, to the first commercial offshore wind farm in the Mediterranean put into operation by Mingyang Smart Energy at the Port of Taranto, and to Alibaba bringing 300 Italian companies onto its international platform, the expansion of the business map is visible to the naked eye. But as lawyers deeply engaged in foreign-related legal services, what we see is not these glittering investment figures, but the compliance risks accumulating behind the numbers. Italy is a civil law country, and with the overlay of EU law constraints, legal pitfalls in four major areas—foreign investment access, data compliance, labor and employment, and dispute resolution—are enough to make unprepared enterprises pay a high price.
I. Foreign Investment Access: Golden Power Screening under EU Rules
Many companies assume that registering a company in Italy is merely a formality. That assessment may have been valid five years ago, but it is now quite dangerous. The Italian government strictly scrutinizes foreign mergers and acquisitions under the Golden Power Law (Golden Power), and by 2026 its scope of application has been expanded to key sectors such as energy, telecommunications, semiconductors, biopharmaceuticals, and food supply chains. Under this law, non-EU investors in transactions involving strategic assets must notify the Italian Prime Minister's Office if they acquire control or substantive influence, and violators face invalidation of the transaction and fines of up to twice the transaction value.
In practice, many Chinese companies acquire small and medium-sized Italian hidden champions to obtain technology, which makes them particularly prone to crossing review red lines. In 2024, a transaction in which a Chinese-backed fund acquired a Milan-based automotive sensor company was ordered to unwind the transaction and pay a substantial fine for failing to file for golden power review in a timely manner. Following the full implementation of the EU Foreign Subsidies Regulation (FSR) in 2023, the review dimensions have further expanded: where a company’s M&A within the EU involves foreign government subsidies, the European Commission may launch an investigation on its own initiative.
Lawyers recommend that before going overseas, companies should complete a compliance pre-assessment of the transaction structure, determine whether it triggers a Golden Power filing obligation, and reasonably design the shareholding ratio and governance structure. Where necessary, they should conduct preliminary consultations with the Italian Ministry of Enterprise Development in advance and incorporate the approval timeline into the transaction schedule.
II. Data Compliance: The Dual Constraints of the GDPR and Italian Data Protection Law
The digital economy is an emerging field of China-Italy cooperation, but enforcement of the EU’s General Data Protection Regulation (GDPR) is among the strictest in the world. The Italian Data Protection Authority (Garante) is one of the most active regulatory bodies in the EU and in 2025 imposed a fine of several hundred million euros on an international tech giant. When Chinese companies engage in cross-border e-commerce, smart healthcare, cloud computing, and other business in Italy, they fall directly within the scope of the GDPR.
Specifically, companies need to focus on several core obligations: the legal bases for data processing (consent, performance of a contract, legitimate interests, etc.), cross-border data transfer rules (transferring data to China requires reliance on standard contractual clauses or an adequacy decision), the triggers for data protection impact assessments (DPIAs), and the obligation to notify within 72 hours after a data breach. Smart healthcare cooperation such as the connected ambulance project in Verona, Italy, involves health data, a special category of data, and therefore has more stringent compliance requirements.
Italy itself has also enacted the Data Protection Act (Legislative Decree 196/2003), which supplements the GDPR and sets out more detailed rules on data processing in employment contexts, video surveillance, marketing automation, and other areas. Many Chinese companies, after establishing subsidiaries in Italy, directly continue to use their domestic human resources management systems to process employee data, which is almost inevitably a violation under the GDPR framework.
Lawyers recommend that before expanding overseas, companies complete a data compliance audit, establish a data processing agreement system compliant with GDPR requirements, appoint an EU representative, and deploy Standard Contractual Clauses in advance for business involving cross-border data transfers.
III. Labor and Employment: Dismissal and Trade Union Challenges Under a High-Protection System
Italian labor law is known for its high level of protection for workers. Article 2118 of the Italian Civil Code establishes the principle that dismissal without just cause is prohibited, while Article 18 (as amended by the 2012 Fornero reform) provides that in enterprises with more than 15 employees, compensation for unlawful dismissal may amount to 12 to 24 months' wages, and a judge may order reinstatement of the employment relationship. For Chinese enterprises accustomed to the domestic flexible employment model, this is a tremendous management challenge.
In addition, Italy’s collective bargaining agreements (CCNL) have extremely broad coverage, and almost every industry has a corresponding national collective agreement setting standards for minimum wages, working hours, leave, benefits, and other matters. Even if a company does not negotiate directly with a trade union, it must still comply with the CCNL for its industry. In 2025, a Chinese-invested manufacturing enterprise’s factory in Veneto was sued by a local trade union for failing to pay night-shift allowances in accordance with CCNL standards, and ultimately the back pay plus penalties exceeded EUR 800,000.
For Chinese investors intending to establish factories in Italy or acquire existing enterprises, particular attention must also be paid to labor law due diligence in acquisitions. Italian law imposes strict procedural and consultation obligations for collective dismissals (involving more than five employees within three months). Failure to comply with the consultation procedure may render the dismissals invalid, and the enterprise must reinstate all dismissed employees to their positions.
Lawyers recommend that before entering the Italian market, companies should complete a labor law compliance audit, establish a remuneration system compliant with CCNL standards, and include labor law-specific due diligence in M&A transactions to avoid inheriting historical employment liabilities.
IV. Dispute Resolution: Choosing the Path Between Arbitration and Litigation
Resolving Sino-Italian commercial disputes requires a strategic choice among domestic arbitration, litigation in Italy, and international arbitration. Italy is a contracting state to the New York Convention, and there is a clear legal basis for the recognition and enforcement of foreign arbitral awards in Italy. However, the duration of court proceedings in Italy is among the longest in Europe; ordinary commercial litigation takes an average of more than two years at first instance, and an appeal may extend it by another three to four years.
Therefore, stipulating an international arbitration clause in the contract is a more pragmatic choice. The Milan Chamber of Arbitration (CAM) is Italy's principal arbitral institution, and its arbitration rules are close to those of the International Chamber of Commerce (ICC). For joint venture contracts, equipment procurement contracts, and technology licensing contracts between Chinese and Italian enterprises, it is generally recommended to agree to arbitration before the CAM or the ICC, applying Italian law or the law of a neutral third country.
It should be noted that Italian courts scrutinize the validity of arbitration agreements relatively strictly. If an arbitration clause is unclear or ambiguous, it may be held invalid, and the dispute may proceed to litigation. In addition, there is currently no bilateral treaty between China and Italy on judicial assistance in civil and commercial matters, and the mutual recognition and enforcement of judgments remains uncertain. This is also an important reason for giving priority to arbitration.
Lawyers advise that dispute resolution clauses in cross-border contracts should clearly specify the arbitration institution, seat of arbitration, governing law, and language, and avoid ambiguous wording such as either arbitration or litigation. Once a dispute arises, evidence preservation and property preservation proceedings should be initiated promptly to prevent the other party from transferring assets.
V. Lawyer’s Perspective: From Transaction Service Provider to Industry Co-Builder
The demand for legal services in the Italian market has never been limited to company registration or contract review alone. New energy projects must address legal issues across the entire chain, including obtaining project development rights, land-use planning approvals, grid connection, application of subsidy policies, ESG compliance, equipment procurement, and construction; digital economy projects must simultaneously address the GDPR, cybersecurity directives, cross-border e-commerce platform rules, and cross-border intellectual property protection.
The success of Chinese enterprises in Italy increasingly depends on the upfront design of legal structures and the localized implementation of compliance systems. Guangdong Zhiming Law Firm has long been deeply engaged in foreign-related legal services and has accumulated extensive practical experience in cross-border investment structuring, EU data compliance, international commercial arbitration, and other areas. It can provide Chinese enterprises expanding into Italy with end-to-end legal support, from market access and compliance system development to dispute resolution. Going global is not a simple business decision but a test of legal capability—the more thorough the preparation, the steadier the progress.
