GETTING TO KNOW YOUR MARKET: SPAIN
Spain is Europe’s fifth largest country and economy. Home to approximately 46 million people, it is classed as a high-income economy according to the World Bank. Although the nation entered a recession after the financial crisis of late 2007, it has since recovered, and its GDP has been steadily improving.
If you are thinking about tackling the Spanish market, then now is as good a time as ever. The majority of the nation’s labour force work in services (a transaction where no goods are transferred from the seller to the buyer), followed by industry, then construction. Prominent business sectors include automobiles, machinery, and pharmaceuticals. These areas are also several of the country’s principal exports. An industry that is growing significantly in Spain is e-commerce. Although smaller in comparison to the country’s primary industries, the lack of competition in e-commerce is enticing companies from all over Europe.
FIVE TIPS FOR ENTERING THE SPANISH MARKET
With some vital statistics covered, it is time to delve into the bulk of this article—advice on how you can successfully enter the Spanish market.
BEING PERSONAL MAKES A BIG DIFFERENCE
A significant part of entering any market is understanding the cultural differences to your own. In business, the Spanish favour a face to face approach over emails or mailing campaigns. Don’t underestimate the importance of setting up a meeting with prospective business partners, and having the opportunity to discuss deals in person.
If your business is one that will operate at a local level, then developing personal contacts is vitally important. Due to the autonomous nature of Spain, business procedures and ways of working can vary from region to region. Without someone to guide you who is local to the area you are expanding into, successfully navigating a new market will be far more challenging.
UNDERSTAND THE AUTONOMY OF SPAIN
Spain is made up of 17 autonomous communities. Each one carries a slightly different cultural identity, despite being unified under the banner of Spain. In the middle of these seventeen regions, you have the two main business hubs, Barcelona and Madrid. Any new business would be advised to start by building contacts in these areas, before branching out into specific regions.
Most Spanish companies will have offices in both Barcelona and Madrid, as they too recognise the need to have an area of common ground. That isn’t to say you cannot split production, head offices, and distribution across multiple regions, but there will be a greater need for local contacts—back to the point about being personal.
MAKE USE OF THE SKILLED WORKFORCE
The downside to Spain’s recession is that unemployment numbers are still high, at least by European standards. This, however, can be beneficial for new companies entering the market. There is an abundance of skilled and local workers who can be used to achieve a sizeable workforce in a short period. There is also an opportunity to offer highly competitive wages without having to pay above the market average.
The country also has a secure network of suppliers thanks to its growing volume of exports. Make sure you approach each supplier linked with your industry. The chances of negotiating will be greater because of competition between suppliers to lock in new business.
SPAIN CAN OPEN THE GATEWAY TO LATIN AMERICAN PARTNERSHIPS
Technically, this is advice on entering a market outside of Spain, but it is achieved by understanding the country’s export links to foreign nations. Spain has a strong relationship with its former colonies. This includes much of Latin America, and it’s a link that should not be ignored.
One of Spain’s longest-running partners is the UK; however, with the uncertainty of Brexit, trade deals may not be as appealing as they once were. This makes deals with Latin American countries an exciting opportunity, and presents the chance to secure market share in industries like oil, gas, and energy.
DON’T FORGET TO FACTOR IN CREDIT AGREEMENTS
The final point is a minor one, but it has significant repercussions. Credit agreements are commonplace in the Spanish market; you can expect to wait anywhere between 90 and 120 days for accounts to be paid up. If you haven’t factored this into your business plan, then it won’t take long before you feel the pinch. Ensure you have enough capital to factor in the delays to payments—a lot can happen in three months!
TIPS FOR ENTERING THE SPANISH MARKET—THE BOTTOM LINE
Combined, all of the advice above, along with a structured business plan, should ensure you get a successful foothold in the Spanish market. The country’s close ties with European and Latin American nations make it a highly desirable destination for any company expanding internationally.