Spanish Inquisition

We take the Spanish bull by its horns to bring you a round-up of trade in Iberia

Spain is a religious country with large areas of its population using Spanish as only their second language. Doing business there is made more difficult by old fashioned ideas of strict hierarchy in business, archaic working hours and adherence to manners more suited to century old practices. To compound the problems further, it is split into autonomous regions which although many share similar administrative practices, some are quite independent politically.

This was highlighted on 1 June 2018 as Spanish Prime Minister Mariano Rajoy was forced out of office by a vote of no confidence; the first Prime Minister in the history of modern Spain to be ousted by such a motion. Socialist leader Pedro Sanchez filed for no confidence after Mr Rajoy’s Partido Popular were implicated in a corruption scandal. With the backing of smaller parties such as the Basque Nationalist Party, Mr Sanchez recieved 180 supporting votes (vs 169 against) and will become the new Prime Minister.

A true world power in the 16th and 17th centuries, Spain ceded control of the seas to Great Britain and did not take part in the industrial revolution that accelerated Britain’s economy. Between an agrarian economy and politics that only led to democratic rule in 1975, Spain was left with a colonial history and a language second to English in adoption.

The country’s history contributed to fast economic growth in this century. This lasted until 2008 as companies took advantage of the low penetration of modern technology and fast growth in productivity.

Spain joined the EU in 1986 and is its fourth largest economy despite suffering badly from 2008 to 2014 with very high unemployment which reached over 26 per cent at one stage. As internal devaluation reduced labour costs on the back of the EU-imposed austerity programme, unemployment has fallen to around 16 per cent.

Today, Spain can boast of four consecutive years of economic growth and three years of above average EU growth. Many of its banks are believed to be recovering with the help of EU assistance following the property collapse from 2008, the year which marked the end of 16 years of positive economic growth.

The cost of recovery has been seen in Spain’s borrowing as the country’s debt level is approaching its GDP at 96 per cent, up from 60 per cent in 2010 although progress has slowed the build-up of this debt as the country’s budget deficit is now around 3 per cent down from double figures in 2010.

Doing business in Spain tends to reflect both its geography and history. Spain is not a homogeneous country. There are a multitude of ‘autonomous regions’ and each of these has its own elected parliaments, governments, administration, budgets, and resources. The push for independence in Catalonia is a good illustration of just how independent these regions are. It is said that a Spaniard gives loyalty to his region first and to Spain second.

It is, in many ways, like being Welsh or Scottish but perhaps felt more strongly and more entrenched by the surrounding politics and bureaucracy. These autonomous regions make doing business more difficult, not least of all because of the existence of different languages, best illustrated by the Basque region in the north of the country, where Spanish is a second language for many. Although three-quarters of the population have Castilian Spanish as their first language, Basque is the official language in Navarre and the Basque country, and Catalan the official language of Catalonia, the Balearic Islands, and the Valencian Community.

80 per cent of Spain’s population now live in towns or cities. With the exception of Madrid, Seville, and Zaragoza, the largest concentrations of urban populations are found along the Mediterranean and Atlantic coasts. There are many smaller cities spread throughout Spain’s interior reflecting the country’s agrarian heritage. Very dense settlement is found around the capital of Madrid which has a population of 6 million and Barcelona which has a population of 5 million.

There are over 1 million Britons living in Spain. This has helped continue a familiarity with UK products and companies. The UK Department of trade estimate that there are 900 UK companies operating in Spain and, because of Spain’s colonial heritage, it represents a closer and easier way to enter the South American market.

Familia Problems

The typical working day in Spain still allows for a siesta. Office hours typically begin at 8.30am but break at 1.30pm and begin again around 4 or 5pm and continue to gone 8pm. In days gone by, I was a speaker at a conference in Madrid and found even the conference respected these hours. It meant that we dined around midnight and subsequently negotiated into the early hours.

Spain maintains, in my experience, a very rigid adherence to seniority in business and, even today, a low penetration of the glass ceiling by female employees. If you are to attend meetings in Spain, it pays to know the seniority of the people you are meeting. It is easy for a senior person to feel that due deference has not been paid and it can mean the buying or selling decision is delayed or, worse still, not made, and not on its merits. This is less of a worry in the very large companies which have been dragged into the modern world because of their international business.

Using a local distributor is a must if selling in Spain. Internet selling of shooting accessories has been established and is growing quickly. Your distributor needs to be in this channel whether on a B2B basis and/or a retail basis. In the airgun business Gamo obviously dominates and there are many ex- Gamo people in this segment of the business.

In sporting shotguns and rifles, the large agrarian segment of economy means that country sports such as boar shooting and partridge shooting are well- established. Modern production methods of farming however mean that many tradition sporting estates, especially in the south are no longer suitable for these pursuits.

To own a shotgun, rifle or handgun a licence is required before purchase. There are eight different categories of licence and even after obtaining one, you cannot pick up your firearm. It will generally go first to the police from whom you can pick it up or via a specialised and police authorised carrier. It is a highly regulated environment.

There are a number of concerns about doing business in or with Spanish companies. At the top of the list is the remaining fragility of some of the banks and the practice of very long payment terms. It is not unusual for customers to expect 120 days or more to settle their invoices. On top of this is Brexit which adds not just the problems posed by leaving the EU (and the concomitant changes in export and import procedures and duties) but also the tension surrounding Gibraltar.

Brexit represents a possible zero on the roulette wheel in doing trade with Spain. If you have not already found your partner/distributor/supplier in Spain, do ensure you know what you will do come Brexit. My advice here is: Firstly, do not be in a position whereby you have money owed to you as Brexit is implemented; Secondly do your research and be prepared, so that as Brexit happens you do not have goods in transit between the countries.

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