The Diplomat
China will continue to be an attractive market for Spanish companies despite the current high geopolitical uncertainty, according to a report by the Foro de Marcas Renombradas Españolas (Leading Brands of Spain Forum, FMRE) and ICEX Spain Export and Investment.
The Asian giant remains the world’s largest market in numerous sectors, a factor that is the main motivation for 71% of companies operating there, according to the survey conducted by both entities among Spanish companies operating in the Asian market. The survey is part of the report ‘Spanish companies in China. Perspectives and Challenges‘, which was presented yesterday at the ICEX auditorium in Madrid and provides information to companies to help them decide on the most appropriate strategy for the Chinese market in the current context.
According to the study, 90% of companies are very concerned about the current high geopolitical uncertainty. Other concerns of Spanish companies are the logistical restrictions arising from the zero COVID policy (the main obstacle for 30% of companies) and market access problems (the main barrier for 40%). In any case, and over and above these drawbacks, Spanish companies are committed to maintaining and consolidating their presence in China because of the volume of turnover that this market brings them (48.8%), although with changes in their strategy.
The survey was carried out among 136 companies. The report also includes the qualitative opinion of a number of experts on this market and different analyses of statistical and economic data. It also includes the assessments of companies with a long history in this Asian market, such as Gestamp, Meliá Hotels International, Indra, Corporación MONDRAGON, CaixaBank, Grupo Osborne and Grupo Simon.
The report indicates that all the companies consider their entry into the Chinese market to be “positive” because it has helped them to grow, despite the difficulty of the process caused by the presence of significant barriers to entry related to culture shock and regulatory complexity. However, the current geopolitical context generates great uncertainty in the Asian market because it drifts towards greater protectionism and the regionalization of production chains. In addition, the zero COVID policy is causing major difficulties for Spanish companies, which have suffered from problems of mobility restrictions that complicate, among other aspects, talent retention and supply chains. As a result, 55.44% of the companies surveyed have revised their strategy in the Chinese market, mostly with minor changes, to adapt to the new situation resulting from the health, economic and war crises.
In any case, China, with a projected growth of 4% by 2022 according to the International Monetary Fund (IMF), continues to be a benchmark for Spanish companies, and penetrating this market is no longer just a strategic growth issue, but, in many cases, a requirement to maintain the current positioning and continue to exist in the future. The world economy is becoming increasingly Asian and the new “Silk Road” presents new opportunities for the Europe-Asia relationship, according to the study.
During the presentation of the report, Javier Serra, General Director of Institutional Cooperation and Coordination of ICEX, declared that “this report is absolutely pioneering, to the extent that for the first time it offers an overview of the business of our companies in China, in which, in addition to having the vision of our office in Beijing, and several experts in the Chinese market, it gives voice to the companies themselves”. For his part, the general manager of FMRE, Pablo López Gil, said that the aim of this study is “to develop a tool that provides companies with some of the keys to the Chinese market today, in the light of the new and complex context”.
