The distinction between ‘the three Italies’– the northern industrial triangle, the underdeveloped Mezzogiorno and the industrial districts of the north east – was first made ten years ago. This distinction aimed to legitimize the existence of regional situations that had previously been ignored. After some years of investigating the southern economy, we need to revisit the analysis of ‘the second Italy’, since it has complex features requiring detailed study. Recent research has revealed the existence of partially underground local systems in the Italian Mezzogiorno, which are not captured by traditional statistical data and display different kinds of linkages. The clothing and textile industry in San Giuseppe Vesuviano is one example of a competitive local production system. Commercial and production enterprises, homeworkers and workshops make up this local fabric. This article focuses on certain aspects of this situation, which have developed spontaneously: regulation mechanisms of informal work, competition and cooperation within the system, the attraction of an immigrant labour force (the Chinese community), evolutionary trends, the low level of criminality and the role of institutions.