Chinese companies have been urged to look at closer investment ties with Italian businesses. Italy is increasingly becoming a major investment destination for enterprises here. There are more than 60,000 Chinese firms with a presence in Italy, according to a report by PricewaterhouseCoopers, the multinational professional services network.

"China has the requirement to move from mass production, with strong leverage on relatively cheap labor costs, to a more sophisticated high-end manufacturing," Massimo Benedetti, transaction services leader of PwC in Italy, said.

To improve China's manufacturing level, the State Council, or the cabinet, unveiled the "Made in China 2025" plan in May. It laid out strategies for switching from low-end manufacturing to more value-added production, with domestic companies expected to make technological breakthroughs in a number of emerging industries.

"In Italy, Chinese investors can find just that manufacturing ability, supported by production robots and other machines," Benedetti said. "But in Italy, there are many niche players with very nice technology."

Benedetti asked Chinese investors to value quality, not quantity. He also said Italy has a very favorable mergers and acquisitions environment. Following the financial crisis in 2011 that hit Italy's credibility, internal demand fell dramatically. Only companies with the ability to sell to international markets survived.

Also, a number of private equity houses closed their offices in Milan. This left a backlog of unexploited M&A opportunities in a country that has always been open to foreign investors. "In Italy, there are several industries which may draw more investment attention from China - industrial equipment, food, luxury, travel and leisure," Benedetti said.

He pointed out that Italy's industrial equipment and mechanical industry represents more than one-fifth of the country's global exports. Its competitive advantage derives from a combination of three key factors: flexibility, creativity and innovation.

Italy is home to thousands of micro-small multinational enterprises that specialize in "innovative and flexible manufacturing". They are good at providing tailor-made solutions for customers. "Recently, China National Chemical Corp's acquisition of Pirelli became a hot topic of Chinese outbound deals," Benedetti said. "It is a good example of the unique value of Italian companies both in terms of premium products, technologies and managerial capabilities that can be exploited with China-led entrepreneurship and capital."

But there are other sectors that Chinese companies should be looking at such as the Italian food sector. The product list includes wine, where Chinese investors are already very active, pasta, olive oils, vegetables, confectionery and juices.

According to Benedetti, Italy boasts one of the most active fashion and luxury industries in the world. Besides a few large players, the market has a large number of micro-small multinational companies, which often operate in a niche market.

Alexander Doorman, a Beijing-based partner of the law firm Freshfields Bruckhaus Deringer, said as China's middle class continues to grow, so does demand in the local market for high-end goods. This in turn will help drive Chinese investors to look at Italian assets.

"Beyond the brands themselves, northern Italy has a traditionally strong manufacturing sector and there are real opportunities for Chinese companies looking to broaden their supply chain access in Europe," Doorman said.

Being familiar with Italy's economic environment and business value chain may help Chinese enterprises find more valuable opportunities in Italy. Most of the small companies are still owned or run by families, who want to know their potential partners. To properly connect with them, it's crucial to build trust.

Leon Qian, transaction services leader at PwC Northern China, said Chinese investors should pay attention to the way they do business in Italy. Many family businesses have been passed down from generation to generation, building on the brand name.

Qian recalled that once he tried to help a Chinese company buy a family brand in Europe. But the deal fell through because the Chinese buyer wanted to change the brand after taking over the company.

"That is not going to happen because they see the family brand as being worth more than their lives," Qian said. "So show respect and value the legend. There is cultural meaning in that business, and Chinese investors must appreciate that."