The Italian government is going to help small and medium-sized companies in the eyewear sector both through specific funding for promotional initiatives in international markets, and through new tax regulations for the country's system of specialized industrial districts.

On the promotion side, the government will continue to provide half of the funds for a program of initiatives to support the ?Made in Italy? label. Drawn up by ANFAO, the Italian eyewear manufacturers' association, the program for this year involves participation in 11 international trade shows and the organization of catwalk shows and MIDO-ANFAO ?information points? on the Italian eyewear industry in the Shanghai, Moscow and Paris fairs. At the Shanghai trade show later this month, for example, some 22 firms will be hosted in the Italian pavilion.

While most of these initiatives are not quite new, the program for 2006 will also see the introduction of a special design project giving firms the chance to strengthen their creative departments by benefiting from qualified resources made available by the research center of the European Institute of Design.

Producers in the Belluno area - for the most part small and medium-sized companies - have shown particularly lively interest in the promotion program, which they helped to develop. They will also benefit from new legislation that allows firms working together within a specific industrial district to be taxed on their joint consolidated results, as if they were all subsidiaries of the same holding company. They will draw up special contracts stipulating that taxation will apply to the cumulated net results stemming from the profits and losses of the participating companies. For example, if a company makes a profit of €100 million and its manufacturing partner incurs a loss of €20 million, taxes will be paid on earnings of €80 million.

Such contractual arrangements, which must be endorsed by regional authorities, will also give the companies access to other governmental incentives and schemes. They are also designed to help determine their credit rating to obtain bank loans and other forms of financing, possibly including dedicated investment funds. The new regulations should become operational from the second half of this year, following approval of the relevant implementation decrees. They will likely be tested out before any large-scale application.

These new facilities are being launched on the back of apparently encouraging results for Italian sunglasses in international markets. The last trade figures made public by ANFAO, which refer to the first six months of 2005, showed a 16 percent increase in their exports to a level of €574 million. They offset a 0.9 percent drop to €301.6 million in exports of prescription frames, leading to overall growth of 9.3 percent to €876 million for both kinds of eyewear products.

Sales of Italian sunglasses in North America grew by 19.1 percent to €153.8 million during the 6-month period, probably due in part to the increasing penetration of industry leaders like Luxottica and Safilo in those markets (see articles on the two companies in this issue). Exports to Asia rose by 20.7 percent to €90.3 million. European exports increased by 12.2 percent to €287.6 million, with gains of 23.0 percent in Spain, 15.2 percent in the UK and 28.8 percent in Greece.

Sales of prescription frames grew by 19.0 percent in North America, but they fell by 11.2 percent in Asia and by 8.2 percent in the rest of Europe. In particular they were down by 12.9 percent in Germany and by 11.1 percent in the UK, but they did 19.9 percent better in Japan and jumped by 46.5 percent in Australia. In Russia, Italian sunglasses rose by 29.2 percent and frames were up by 21.4 percent. In China, the increases were of 89.9 percent and 48.6 percent, respectively.