Although more commonly known as a cheap and cheerful holiday destination among the British public, it seems the tourist industry is not the only Spanish industry that has attracted British business in recent decades. In fact, according to Invest in Spain, a Spanish organisation which promotes foreign investment in the country, Spain is the UK’s 7th largest export market and the UK is Spain’s 5th largest. British companies traditionally manufactured products in Spain in a number of different industries including food, chemicals and automotive components before diversifying into the service industries of estate agency, law, project management and consultancy.
Nowadays there are approximately 700 UK companies operating in the country, notably including Barclays, BP, Diageo, Easyjet, British Airways, Vodafone, AB Foods, BT, Shell, GlaxoSmithKline, British Imperial Tobacco and the BBC. Interestingly, it is said that every time a Spaniard lights up a cigarette, purchases private medical insurance or uses their mobile telephone it is almost certain that they are contributing to the profits of a British rather than a Spanish company.
There are a number of reasons to invest in Spain in particular. Firstly, there is ease of commercial access thanks to the country’s free market and the government’s priority of privatisation. Secondly, the sheer size of the country, – it is the second largest country in the EU and is two and a half times the size of the UK – is an indication of the profitable results that investment there can achieve and the vast amount of land that is available for building factories, shops and offices. Thirdly, let us consider the workforce. Fortunately, there is a silver lining to the ominous cloud of Spanish unemployment which currently exceeds 22% of the population (more than twice the Eurozone average) and that is the fact that both the government and those out of work would welcome with open arms the creation of new jobs made by a British investor. Despite this high unemployment figure, Spain has a skilled workforce which is in part owing to its high-quality business schools. In addition, recruitment agencies are well-established throughout the country and are expanding rapidly.
Geographically-speaking, Spain is strategically positioned to be a commercial stepping stone for entering the South American (this is also thanks to historical, cultural and linguistic ties), European, North African and Caribbean markets, which collectively represent a market of more than 600 million people.
Spain boasts a high quality of life and a good level of quality in its services and infrastructures (its high-speed railways, airports and motorways are highly regarded). Furthermore, British manufacturers would benefit from EU law as they would find themselves exempt from import duties upon entry into Spain and, in the majority of cases, would not be liable for prior authorisation of an investment. As for Spanish law, the latter permits foreign investment of up to 100% equity and there is full liberalisation of capital movement. The tax system is also pro-business.
Of course the current recession has affected both economies and consequently the bilateral commercial relationship. For example, although in recent decades Spain was the UK’s number one holiday destination, it seems that nowadays British holidaymakers are opting for the cheaper but equally sunny and beach-filled Turkey to spend that well-deserved summer break. Likewise, after a booming Spanish property market during the 1990s and early 2000s in which Britain was the second largest overseas investor, a factor aided by the introduction of budget flights between the two countries, the industry’s subsequent slump has meant that possible buyers are now researching cheaper locations such as Morocco and Croatia. However, that is not to say that investment in Spain is no longer possible if we consider the potential size of its economy and the various government programmes in place designed to generate growth. In fact, there are strong opportunities in the automotive, aerospace, telecommunications and pharmaceutical sectors and in particular in biotechnology, renewable energy, education, IT and technology, healthcare and creative industries.
Biotechnology remains one of the most dynamic industries in Spain, with a substantial potential for expansion given that many companies are still in the early stages of development. With regard to financial incentives for breaking into the market, there are several regional financial packages for biotechnology companies as well as central government financial motivation in the areas of R&D and innovation. Spanish companies in this industry seek international partnerships in order to share costs and shorten the product development period. Oncology, regenerative medicines and agro-biotechnology are sectors that are particularly strong while opportunities exist for firms with experience in clinical trials (a field in which Spain is renowned) and knowledge transfer.
Despite shrinking during the economic crisis, the IT and technology sector still occupies an important place in the Spanish economy, employing 350,000 staff and generating a turnover of €17 billion. Growth forecasts expect the software, systems integration and outsourcing markets to all grow considerably whereas it is anticipated that the hardware market will diminish in size.
In terms of the penetration of fixed and mobile broadband Internet access and the existence of online businesses, Spain’s European (and global) competitiveness is an issue. Bantr, the social network designed exclusively for interaction between football fans, is a British IT business that has enjoyed notable success in Spain. The website’s popularity has spread overseas where Spanish football fans have requested that La Liga’s (the Spanish Premiership’s) teams be added to the British Premiership and Champions League teams already part of the interactive network so they too can take part in the sporting “banter”.
Creative industries in Spain are an emerging market that aspires to the UK in terms of its products and advertising within the sector. Multimedia, performing arts, design and museums are all areas looking to expand and currently imports exceed exports in the industry, which represents around 4% of Spanish GDP. In specific relation to the film sector, not only is it highly subsidised but the UK is the preferred country of choice for film collaborations.
Traditionally, architecture has always been an important industry in Spain, with British architects being hugely respected and purposely chosen to design for example the new Terminal 4 at Madrid’s Barajas airport (Richard Rogers) and Bilbao’s metro system (Norman Foster). Art and design courses are high quality, resulting in a skilled local workforce and The Ministry of Science and Innovation actively promotes and invests in design businesses.
As for furniture design, the UK is regarded as a trend-setter in this field and in regard to auction houses, many British firms including Sotheby’s, Christies and Bonhams can boast their share of the Spanish market. Top-end retailers such as Burberry and Karen Millen have many successful Spanish outlets but that does not mean to say that businesses at the other end of the fashion market cannot experience similar success, as the Irish/British company Primark has illustrated. It seems that their on-trend clothes and tiny prices have been a hit in Spain because there is no direct competitor: Zara may be able to compete on product with its fresh-off-the-catwalk fashion but cannot match Primark’s prices and C&A can offer cheapness but less up-to-date products given the fact that it receives new product delivery every 3-6 months whereas Primark gets delivery every 3-4 weeks.
When expanding abroad, firms must do their research about the culture of the markets they are entering. For example, the fact that Spaniards have different business hours compared with the UK must be taken into consideration as ignoring this could lose precious custom and sales.
For example, retail and industrial premises generally begin work at 8am, close between 1pm and 4pm for a lunch break (mealtimes therefore carry more importance in Spain than in the UK where people tend to eat on-the-go) and then re-open in the evening. When Primark opened for the first time in Spain the directors quickly realised that they would have to adjust their opening times in order to obtain maximum sales on discovering that retailers’ busiest sales period was between 7pm and 10pm. Offices, on the other hand, often stay open until 8pm and from June to September shorter office hours come into effect (closing at 3pm) due to the hot weather.
Localisation is key, and it’s strongly advised that British businesses appoint a local representative, ideally one who is well connected and knows the market. Making your presence known is very important and there is absolutely no substitute for face-to-face communication. And although English is accepted as a business language, with most large Spanish firms having English-speaking employees, it should not be exclusively relied on. Spanish, is usually the local language of choice. The British company VIP Industries Ltd. found this out the hard way after months of emails in English to potential clients, agents and distributors, fruitlessly sent without a single response. It was not until the firm’s Export Manager decided to start learning Spanish and consequently began communicating through that medium that the business finally managed to break into the Spanish luxury luggage market.
Using Spanish to ensure commercial success is precisely where Wolfestone can help you. Not only do we offer a high-quality, efficient and affordable translation service (with the sole use of native speakers) to translate all your advertising material and correspondence with Spanish businesses and individuals, we also offer an interpreting service of trained mother-tongue interpreters. These interpreters can effectively act as an intermediary in your business dealings, eliminating the possibility of any miscommunications and providing that personal touch so highly regarded in Spanish business. If you already have an adequate level of Spanish but wish to have your written material double-checked we are also very happy to proofread translations and, as an extra feature, make them more visually appealing using our Desktop Publishing services (particularly advisable for websites, posters, flyers etc. used to promote your business). Furthermore, we offer both voiceover and subtitling services should you wish to endorse your company through an online video clip or television or radio advertisement. Lastly, we have the technology to transcribe (and translate) phone calls or other audio material that you may have received from Spanish clients and do not fully understand.
Linguistic mistakes can cost companies infinite amounts in loss of sales, custom, reputation and costs incurred in the attempt to rectify the situation, as Parker Pens embarrassingly discovered with the translation of its advertising slogan “It won’t leak in your pocket and embarrass you” in Mexico for a new ball-point pen. Unfortunately the company got caught in the common linguistic “false friend” trap by making the mistake of assuming the Spanish verb “embarazar” meant “to embarrass”, when its actual translation is “to get pregnant”.
The Dairy Association also made a cringeworthy faux-pas when its hugely successful Anglophone “Got Milk?” campaign curdled somewhat in Hispanic countries, where the catchphrase was very inappropriately translated as “Are you Lactating?”
As for General Motors, it took a while for the penny to drop as to why their new Chevy Nova was not at all selling in South America: they clearly had not looked up the meaning of the model’s name in Spanish as “no va” unfortunately translates as “it won’t go”, a discouragement to say the least to would-be car buyers! The company had to consequently rename the model, no doubt costing them enormous amounts in administrative, manufacturing and marketing costs.
In summary, Spain offers much promise to British companies wishing to expand abroad. This is clear from the progress various UK companies have already made and the great potential that exists for future investment thanks to several gaps in the market across the biotechnology, renewable energy, education, IT and technology, healthcare and creative sectors. This is in addition to Spain’s good infrastructure, its readily available workforce, the many governmental financial investment incentives that are available, the size of the country’s potential customer base, the availability of land for construction, the lack of EU and Spanish legal restrictions to market entry and the fact that in the long term Spain can be considered as a platform to further expansion into more distant geographical markets. However, the success or failure of a British business in Spain can only be partially attributed to the product. Ultimately it’s dependent on cultural and linguistic research to ensure effective communication and maximum sales.
That’s why clients come to Wolfestone.
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