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Spain: Tips for successful market entry

After years of crisis, Spain's economy is flourishing once again. Industry is growing, the unemployment rate is falling and economic growth in 2017 was the largest in Western Europe. But how can Swiss SMEs successfully enter the Spanish market? Beat Kuster, Consultant for Southern Europe at S-GE, has the answer, as well as some valuable tips for Swiss SMEs.

The International Monetary Fund expects an average GDP growth of 2.2% in Spain between 2017 and 2021.
The International Monetary Fund expects an average GDP growth of 2.2% in Spain between 2017 and 2021.

The economy in Spain is basically growing in every sector. Beat Kuster, Consultant for Southern Europe at S-GE, currently notes one particularly strong development in the ICT sector: “Spain is going in big for digitization and has a large pool of skilled workers.” But it is not only the ICT industry that offers exciting business opportunities for Swiss SMEs. The MEM industry also has them. “Many MEM companies have not yet exploited the potential in Spain.”
To benefit from the business opportunities in Spain, knowledge of the country, population and the economy are key. Here are five tips on how to properly prepare your market entry.

1. Become familiar with regional and linguistic differences

Spain is a country of 46 million inhabitants and has four different languages. Castellano is the official language, along with three others in the form of Galician, Catalan and Basque. According to Beat Kuster, Swiss exporters need to be aware of this linguistic difference, but do not have to master all of them for exporting: “Swiss companies that want to expand into Spain should focus on the official language.” However, knowledge of Spanish is not necessarily the prerequisite for a successful export project: “More and more Spaniards speak English, which is a huge advantage for Swiss SMEs and facilitates communication.”
In addition to the linguistic differences, there are also regional differences in Spain that affect business life. “Madrid, for example, is the economic center for services in Spain. Barcelona is the center for petrochemicals, pharmaceuticals and the processing industry,” explains Beat Kuster.

2. Examine export conditions

Spain has been part of the European Union since 1986. The agreement between Switzerland and the European Union has removed many trade barriers and liberalized market access. “Nevertheless, some Latin countries in Europe have introduced additional product conditions to protect the population,” explains Beat Kuster. “These include, for example, products in the area of medtech or food.” You thus need to carefully check if your product requires additional registration or special approval before entering the market. “In Spain, these registration and licensing procedures are well regulated and unbureaucratic.”

3. Use “Swissmade” carefully

Swiss goods enjoy a good reputation in Spain. Spaniards are proud of being able to work for a Swiss company and they appreciate the quality of the products. According to Beat Kuster, Spaniards are not quite as price sensitive as other countries – as long as the service is right. Nevertheless, he advises some restraint: “Swiss goods have an expensive image, so Swissmade can have a negative effect.”

Would you like to examine the potential of your product or service in Spain? We will be happy to put together an individual market analysis for you. Additional information

4. Define payments with contracts

If you decide to export to Spain, you should also precisely define payment transactions. It makes a difference whether you are fulfilling a public or private order: it takes longer to trigger payments with government projects. “Swiss companies need a lot of patience and a financial buffer in this case.” For private orders, Beat Kuster recommends a down payment or advance payment. But in any case, a good contract should form the basis for cooperation and payments, whether you are working on a government or a private order. “We often hear that bad contracts were concluded in good faith.” Switzerland Global Enterprise has a good network in Spain, which can help with the conclusion of a contract: “For example, we work with a Swiss lawyer who lives in Spain and is licensed to practice in both countries,” says Beat Kuster. “She can check contracts and precisely point out the legal differences from a Swiss point of view.”

5. Get to know the local economy

According to Beat Kuster, the Spanish market is good for Swiss companies, even if it is their first export market. Nevertheless, sensible preparation is mandatory: “Spain is not a complicated market. But we often find that companies underestimate it.” To get your own idea of the Spanish economy, the potential competition, the population and the country, Beat Kuster recommends taking part in a Fact-Finding Mission. “We put together an individual program for interested companies. It allows them to get their own impression of the country and exchange views with Swiss companies already operating in Spain.”

Learn more about business trips and meet with potential business partners, official agencies or other market experts in Spain. Additional information

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