Within the 17 autonomous communities in Spain, Madrid and Barcelona are the primary economic hubs, home to most agents, distributors, foreign subsidiaries, and government-controlled entities, with other cities serving as regional centers of economic power.
Spanish commercial procedures are in line with the rest of Western Europe, where price and value remain paramount. However, credit terms, marketing assistance, and after-sales service are important factors in local purchase decisions. The use of credit to purchase consumer goods is widely accepted in Spain, particularly in cities, with banks competing to offer coverage.
The Spanish government has eased regulations at all levels and increased incentives to attract foreign firms and investments. In recent years, investment incentives designed to reward investors for establishing manufacturing operations in less developed areas have dispersed some investment from the major hubs. Except for in a few cases, Spanish law permits foreign investment of up to 100 percent of equity, although investment screening by the Spanish government is required for investments in a list of strategic industries. Despite recent changes in labor legislation, these laws remain relatively inflexible.
Spaniards tend to be more formal in personal relations than Americans. The approach to doing business is like that of Italy or France. Professional attire is recommended.
To break into the Spanish market, there is no substitute for face-to-face meetings with local business representatives. The global pandemic has forced everyone to adapt to virtual realities, but Spaniards still expect a personal relationship with suppliers and partners. It can be challenging to elicit a response to initial communication by phone or e-mail. Direct mail campaigns generally yield meager results. Spanish language proficiency is highly recommended as less than 30 percent of local managers are fluent in English.
Spaniards tend to be conservative in their buying habits, but recognized U.S. brands do very well. Large government and private sector buyers appear more comfortable dealing with other large, established organizations, or with firms that are recognized as leaders within their sectors. Introductions on the part of the Foreign Commercial Service and U.S. Embassy often result in higher response rates than a direct approach from an unknown company.