Enterprise decisions leaning towards domestic production (reshoring) and strategic partnerships (friendshoring) shaped by global politics

Enterprise decisions leaning towards domestic production (reshoring) and strategic partnerships (friendshoring) shaped by global politics

Impact of Geopolitical Uncertainties on Lombardy's Internationalized Companies

In a time of great geopolitical uncertainty, internationalized companies in Lombardy, Italy, are re-evaluating their strategic choices to adapt to the changing landscape. A recent survey, conducted by Confindustria Lombardia, Assolombarda, territorial associations, Ispi, and Sace, sheds light on the challenges and opportunities faced by these companies.

The survey involved over a thousand already internationalized companies and revealed that nearly 15.6% of the sample had already replaced foreign suppliers before last year, with 14.4% replacing one or more foreign suppliers in the previous year. This shift represents around 30% of companies that have had to review their supply chains.

Geopolitical scenarios emerged as the macro-trend with the greatest influence on medium to long-term strategic choices for 65.5% of the sample. Technological evolution followed closely, affecting 26% of the sample.

Cost containment, better product quality, and flexibility factors are driving the reconfiguration of supply chains. As a result, 26.1% of companies are managing procurement more carefully, 28.1% are evaluating counterparties more carefully, and 27.7% of those who have changed their supply networks have chosen new extra-EU suppliers, mainly in the United States or Asia. Interestingly, 51.1% of those who have changed their supply networks have replaced a foreign partner with one located in Europe, Italy, or Lombardy.

The survey also indicated that foreign policy is currently more determinant in the strategic choices of internationalized companies than ever before. Germany, France, the United States, and Spain are the top four countries generating export revenue for Lombardy companies, while China remains in eighth place with 10.8% of the export revenue.

Several sectors, including textiles and leather goods, key industries in Lombardy, are experiencing challenges due to geopolitical tensions. For instance, Italian textile machinery exports dropped by 32% in China and 47% in Turkey in 2025. The Italian leather goods sector is also facing declining exports (down 8.5% in early 2025), lower domestic demand, and production drops over 16%.

However, the evolving macroeconomic and fiscal landscape also offers some strategic predictability for financing and investment decisions. For example, Italy’s inflation is aligning with ECB targets, and bond yields are stable, providing some stability in the broader economic environment.

Moreover, Italy’s geopolitical position and tax incentives are attracting high-net-worth individuals, indicating potential for luxury sector growth and capital inflows, which may influence the strategic outlook of internationalized companies aiming to tap into affluent demographics and lifestyle markets.

Seven out of ten companies have modified their strategies due to geopolitical scenarios, and 30.5% of companies have increased the centrality of internationalization activities. Accessibility to critical raw materials is the third most influential factor, affecting 18.1% of the sample, with 5.7% of companies choosing suppliers that respond to sustainability criteria.

In summary, geopolitical uncertainties in 2025 are driving Lombardy’s internationalized firms to reconsider markets and supply chains, manage tariff and currency risks, and adjust production and export strategies, especially in sectors like textiles and leather goods. The evolving macroeconomic and fiscal landscape also shapes medium to long-term strategic choices, balancing challenges with emerging opportunities linked to Italy’s attractiveness for global capital and consumers.

[1] Source: [Link to the source] [2] Source: [Link to the source] [3] Source: [Link to the source] [4] Source: [Link to the source]

1. Given the geopolitical uncertainties, Lombardy's businesses are reassessing their financial strategies to accommodate changes in both local and international markets, with foreign policy becoming a more significant factor in their strategic choices.
2. To mitigate risks and seize opportunities, some Lombardy-based companies are realigning their business activities, moving toward new EU suppliers or high-net-worth individuals' attractive geographies like the United States and Asia, while also prioritizing suppliers who adhere to sustainability criteria in their pursuit of critical raw materials.

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