Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
The impact of the COVID-19 pandemic on supply chains has affected the entire Eurozone, with the Spanish economy proving to be no exception. The war in Ukraine has exacerbated the situation resulting in a disruption in both production and trade. A byproduct of the war and rising energy prices is an abnormally high actual inflation rate in the country. Annual Eurozone inflation rate in June 2022 was 10.2 percent.
Concerning the energy crisis due to Russia’s war in Ukraine, Spain is less dependent than other European countries on Russian gas. Russian gas imports to Spain in 2021 are estimated to be 8.9 percent, a minimal dependence compared to other European countries. The Bank of Spain calculated that the halt to commercial trade between Russia and Spain would affect Spanish GDP by approximately 1 percent.
While U.S. products are well respected for their high level of technology and quality, they sometimes fall short of their competitors in flexibility on financing, adaptation of product design to local market needs, and assistance with marketing and after sales service. U.S. exporters to Spain must compete with European companies who often provide generous financing and extensive cooperative advertising, and most European governments support exporting with trade promotion events. The Government of the People’s Republic of China (PRC) and PRC companies have also adopted a very proactive commercial/economic approach towards Europe in recent years. In fact, PRC companies are emerging as formidable competitors, especially in areas of strategic importance such as ports and airport security.
Delays in reimbursement from the public sector can be problematic, although the situation has improved substantially since 2015 when additional legislation was passed to enforce more timely payments by the regional and local governments.
As a member of the European Union, Spain is a party to EU legislation covering broader data protection throughout the EU, which came into effect in May 2018. Additional details are available via the Trade.Gov website.
Spain is a price-sensitive market, and foreign goods must conform to EU and local standards. U.S. exporters must pay attention to labeling regulations to export and sell products in the Spanish or EU market. A local agent or distributor should be able to assist with obtaining the necessary certifications and permits required for importation.
Spain has 17 regional governments, known as autonomous communities, each with varying degrees of autonomy and cultural identity. This factor can complicate the launch of a nation-wide marketing strategy as decision makers should be consulted in each region. Autonomous communities are similar to the U.S. states. The level of autonomy varies from region to region, with Catalonia and the Basque Country being the most advanced in this regard. The Catalan government’s requirement that products for distribution in the region be labeled in the Catalan language implies higher costs and administrative requirements for almost all firms.
The economic downturn precipitated by the global pandemic, the war in Ukraine and the resulting energy price increase, may result in some Spanish companies (particularly in areas where public spending is an important component) becoming more reluctant to commit to purchasing in advance or taking on the expense of introducing and marketing new products or services. However, the economy is starting to show signs of recovery, and export-ready U.S. firms are urged to continue to explore opportunities in Spain and throughout the Eurozone.