What you have in your hands is an atlas, a geographical guide revealing how to find someone and where to find them. In this particular case, it shows you how to find the presence of Spain and its leading brands around the world. entrepreneurs may search here in order to try to find, satisfactorily, their own companies thinking something along the lines of, “it took us a while but we did well to choose that market”. Or perhaps they will study it to envision, with a certain sense of urgency, a location to establish the company along the lines of “it’s time to go ahead; this seems like a good place”. A person seeking the future looks in closer detail. He weighs up whether to stand alongside other companies already established or to take a risk in these gaps in the map that remain vacant. This is the game when we glance at a map. However, in this written map, I will mention the sin but not the sinner, or, in this case rather speak of virtues but without citing the virtuous. We will not name specific brands, but they are easy to guess, that is, it is easy to recognise those who had the good sense to invest in Latin America or the America north of the Rio Grande and, on the other hand, those who are looking for a gap in the sister continent can think of places and ways to carry out the adventure that they now undertake.
To speak of the vast Atlantic let’s start by taking a historical look at the Mediterranean. And so as not just to talk about economics, we will mention Plato. At first glance it is curious that Plato, when he finally decided o implement his political ideas – ideas that, by adhesion or opposition, have all influenced the political mindset of the past 2,500 years – he did so in Syracuse, on the island of Sicily. One could argue that no one is a prophet in his own land, but certainly nobody is a prophet where he is not understood. Plato went to Sicily because he saw an opportunity there and because he was going to a land where they were going to understand him, where they spoke Greek and where there was a common culture with that of Greek soil bathed by the Aegean. Later on, Plato would fail, but he undertook the journey and he even repeated it after the first ill-fated attempt. for valid reasons, it was a matter of “third time lucky” after two failed attempts, but, as an entrepreneur, his lack of determination cannot be denied.
In the Mediterranean we have more examples: an imperial Rome that accepted emperors from the entire empire – even in Hispania – or the Islamic-inspired empire that for centuries established peace, prosperity and a lingua franca throughout much of the Mediterranean. In both cases one language and a common culture allowed the easy movement of ideas, people and goods.
In the three periods mentioned above (Greek, Roman and Arab) “Spanish” lands, located on the western tip, were present more or less peripherally in the political world that existed then, excluding china, with the Mediterranean in the centre. Afterwards, history and geography – reading an atlas one must not forget – placed Spain in the centre of the world, because it became, despite the ocean separation, a driving force of new civilisation in most of the American lands. In America there have been other civilisations and cultures before, but, after centuries of trade with the mainland and after liberating movements, American lands were shaped like a huge politically diverse territory, coming close to the Brazilian and American giants, but with a single language and a common culture.
Spanish companies ventured into internationalisation starting with their common cultural space
The centuries of a long, slow decline in Spain that occurred in the enlightenment by the back door and remained, since independence, was always one of the major european events and, on the other hand, the Spanish American wars, obstinacy in warlordism and oligarchic distribution, prevented the vast cultural and social space formed by Spain-Portugal and Latin America, that we call Ibero-America, from flourishing as an area of common prosperity. Of course, the bloody Meridian counter-example was provided by the north Atlantic neighbours. countries of common language, english, with cultural and family ties, naturally tend to trade, to invest in each other; their citizens study in each others’ universities here and there and move around ideas and those who devise them. But that was not the case with Spain and Latin America. no, no and thrice no, or only on a very small scale. A small folly deserves to be erected somewhere in the middle of the Atlantic for all the missed opportunities.
But all it would take in Spain is for favourable winds to blow for a few decades so that some of those missed opportunities could be recovered in the form of business. Spanish companies in the nineties had the money and know-how. Should they have gone to china? Perhaps now they would be enjoying a competitive advantage in a giant market. Did Plato go to try to establish his Republic before the King of Kings in Persia? no, he tried to lead those who spoke his language, those with whom he shared blood and culture. Spanish companies also went where Spanish and its sister language, Portuguese, were spoken. These companies ventured into internationalisation starting with their common cultural space.
In the nineties, newly privatised companies in Spain left and in turn they took advantage of the entry that privatised companies offered in Latin America. In America, companies from our country provided solutions to needs not met by local companies and ones that other multinationals shunned for fear of political and economic instability in the region. Some Spanish economists criticised the fact that Spanish companies ventured boldly into markets that the US stepped into more cautiously. Time proved the Americans right for some years, but today it seems as though they weren’t so right and that the Spanish strategy has since been revealed to be both strategic and opportune. In the current Spanish situation, firms with better American presence can ride the crisis better thanks to this temporary transatlantic shelter.
However, the presence of Spanish companies in Latin America has not only been beneficial for their bottom lines. It could be said that they have contributed decisively to providing quality services to an emerging Latin American middle class that wants and needs fast and reliable telecommunications, access to funds previously reserved for large groups, and infrastructures that are a vehicle for development. This seems to be the decisive contribution of banks, construction companies and other service companies. Over the solid foundation of emerging economies, with economic and fiscal systems that were transformed to facilitate the relocation of the middle classes in the centre of their economies, the Spanish multinationals have provided useful technological, managerial and entrepreneurial resources that the middle classes required. The praise is rather grand, but deserved.
Let’s look at the future and also on a smaller scale. After a first wave of large Spanish companies, small and medium businesses now have a renewed desire to increase their presence in Latin America. The Spanish economic situation is leading some to seek to internationalise their activity. There are two ways to go: one is to follow in the wake of large Spanish companies, and the other is to work in partnership with small local businesses.
The first option is what happened, for example, with the major contracts to expand the Panama canal. Several large Spanish construction companies won tenders for infrastructure in Panama. These are accompanied by dozens of Spanish SMes that will vie for subcontracts and provide services that the port expansion plans, the underground construction or the ciudad Sanitaria will require.
The second way, looking to penetrate a new market independently, seems to be replete with obstacles. It is not easy for a foreigner to know about the law and the market of the country in question. There are specialised firms and advisers for internationalisation, but for the micro-enterprise, now also eager to internationalise, there is a cheaper option. In Spain there are almost two million Latin Americans, people who arrived a few years ago to work and live in this country. This population is one of the great strengths of Spain, one which strengthens the historical and cultural links with American through ties of flesh and blood. for the small business owner, that population is a font of knowledge and connections. A Spaniard who wants to open a dry cleaners in Peru, for instance, sensing the growing Peruvian’s middle class need for the services that he offers, before launching into the American adventure, would do well to talk to the Latin American business organisations that are beginning to appear all over Spain. Peruvians living in Spain know their country better than anyone and maintain ties, through family, with the land they left.
Spain is the second investor in latin america in terms of stock
Here’s another prediction for the future. A snapshot of the economic relations between Spain and Latin America reveals two imbalances that, in a space of cultural affinity, will foreseeably be corrected and provide new opportunities. The first imbalance comes from the Spanish side. In view of the investment position of Spain in Latin America, with a direct investment stock of about one hundred billion euros and the second position as an investor in the region, it is shocking that our country exports more to Italy than to the whole of Latin America. It is expected that the weak export activity from Spain to Latin America will improve. There are two reasons for this: the increased demand of a growing region and the increased competitiveness of our exporters after price adjustments.
According to the BBVA eagles report, over the next ten years, Brazil will create twice as much new wealth as Germany and colombian GDP growth will be higher than that of Spain and similar to that of france. There is little left to say: the opportunities are vast.
The other imbalance is more obvious, but historically it has tended to be overlooked. In a region with so much in common as Ibero-America, it seems strange that capital investments blow only westwards. The faster growth in Latin America, the resulting accumulation of wealth and, on this side of the Atlantic, the fall in purchase value of companies, suggest that over the next decade Latin American capital will flow towards Spain.
By focusing on the short term, it is easy to become fixated on the clouds looming over the Iberian Peninsula, but below the more or less persistent clouds are global companies with knowledge, technology and a strong presence in Latin America. What better way is there for a Mexican company to increase its presence in Mexico itself and throughout Latin America than by joining a Spanish company that is already there and which has a similar business culture? Those that were purchased decades ago easily become the buyers of the next decade. Moreover, Spain is a good toehold for internationalisation into europe and north Africa.
It does not surprise or worry us that Tata, an Indian industrial group, has taken over and refloated historically english brands like Jaguar and Land Rover. nor are we concerned that for companies such as Rio Tinto and BHP Billiton it is unclear whether their head offices are in england or Australia. Where there was commonwealth, a common wealth is created. In the coming decades, it shouldn’t be surprising that we will witness investments in the Ibero-American space that blow from east to west, from Spanish employers and entrepreneurs who try their luck and launch enterprises in Latin America and from transnational companies that emerge from that substrate of a common culture and language that is Ibero-America. The Ibero- American exception cannot last forever.
Two final points. The presence of Spanish companies in Latin America has moved them closer to the new geostrategic centre.
The Pacific is the new Atlantic, which was previously the new Mediterranean. economic ties between Latin America and Asia are becoming tighter as is evident in political and strategic partnerships such as APEC or the Pacific Alliance. This partnership brings Chile, Peru, Colombia and Mexico together – and amounts to somewhere in the region on 200 million people, 35% of Latin America and 50% of its trade – with the clear intention of benefitting from large volumes of Pacific trade and Asia’s interest in Latin America. It is good news that in the four countries there is a strong presence of Spanish companies, and these bases may be used for the difficult but crucial Asian leap.
And lastly. We cannot forget the largest and most dynamic economy in the world. In the United States a large group of Spanish firms –pharmaceutical, banking, construction and energy companies – play with ease in what Americans call “the major league”. for a non-native, the language difference here can be confusing. The Americans obviously refer to baseball with this expression because as it is a sport they play well. Us Spaniards think of another sport at which we know we excel.
RICARDO AÑINO. Director of Tribuna Americana, Casa de América.