Spanish exports
August 23, 2012
Zara, Telefonica and Santander are straws the Spanish economy clings to as if it were drowning. As Spain is drawn further into the maelstrom of the financial crisis in the wake of the burst real estate bubble, these firms and the country's national soccer team at least provide a bit of good news on the Iberian Peninsula. Despite the euro fiasco, Zara, Telefonica and Santander generated an export surplus.
Telefonica is among the most important global telecommunication firms and Santander is one of the euro zone's most valuable banking houses. Inditex, a major textile group, is particularly successful. Stores belonging to subsidiaries Zara and Massimo Dutti throng shopping streets across the globe. Inditex is represented in 82 countries with more than 5,500 stores and about 110,000 employees.
From New York to Mecca
The companies named above are by no means isolated cases.
"If you mention clothing retailer Zara, you should also add: Mango, Desigual, Imaginarium," Walther von Plettenberg, general manager of Germany's Chamber of Commerce for Spain, told DW. "All of them are brands that are becoming more and more popular."
He added that if you name service providers such as Santander and Telefonica one must "name in the same vein all the construction firms that work internationally. Think Metro London, Metro New York, Metro Moscow, high velocity train between Mecca and Medina. The Spanish are competing everywhere."
Economist Guntram Wolff of think tank Bruegel in Brussels said Spanish companies are not merely playing abroad, but generating almost record-breaking growth on the European level.
"In the last three or four years, Spanish companies have shown one of the strongest rates of export growth in the eurozone," Wolff said. "Spain had stronger forms of growth than any other country in the eurozone except for Estonia."
Little relief for labor market
Still, none of this is letting Spain breathe easily. That's because growth abroad is not enough to effectively combat misery at home. In the end, exporting companies only make up a small part of the Spanish labor market. Such businesses mainly create new jobs abroad. Thus, the approximately 5.5 million unemployed people in Spain profit little from prospering foreign-oriented businesses.
Spain's export successes are arguably more important as a balm for the country's ailing self-confidence. In the eyes of Spaniards, exporting companies show the world that Spain still represents something - that the country is neither bankrupt nor lacking in entrepreneurial power. More or less openly, prominent Spaniards from business and politics point to Spain's foreign trade to distance their country from Greece, another beleaguered eurozone member.
Exports have thus become a consolidation prize for Spain, the wounded fourth-largest economy in Europe. Von Plettenberg said you can follow the story every day in the newspapers.
"Every time Spain undertakes a large project abroad, it is announced in the press," he explained. "Spaniards know it is important for them. They are accurately noticed around the world."
Inspired by German success
The trend seems to be continuing. According to the German Chamber of Commerce in Spain, exports rose in the first quarter of this fiscal year by 3.4 percent over the previous year. From 2000 to 2011, Spanish exports to Germany rose by 50 percent and Spanish exports to markets worldwide rose by 72 percent.
These successes are no accident. In search of new opportunities for growth - and to protect industry following the collapse of the Spanish housing industry - Madrid sought to make foreign trade a national priority. The Spanish government did so with an eye to exporting giants like Germany.
Wolff is convinced Spain's exporting successes are first of all thanks to the country's own clever companies.
"What we are seeing is less a result of Spanish economic policy," he said, "as it is a reflection of certain companies' strengths."
Wolff singled out a few large companies that are especially strong in Latin America and Africa and can celebrate success there.
Credit crunch slows expansion
Spain's flagship companies are the main ones to shine in international markets. Smaller and medium-sized businesses have little presence on the export market. A major obstacle for them is financing investment. At the moment, Spanish companies are having huge problems getting financing on the capital market. Small and medium-sized companies are still reliant on credit injections to take steps outside the Spanish domestic market. There are other obstacles besides.
"They simply lack export capacity," von Plettenberg said, "they lack language knowledge, they lack a sense of export tradition."
He added Spain is yet to pull off developing these abilities at the level of small and medium-sized businesses.
"But when you see the positives," von Plettenberg continued, "Spain has a lot of potential ahead, if medium-sized business commit to exporting."
Still, it is Spain's large companies that can take care of export surpluses. Zara, for instance, wants to expand its presence on the German market. At the end of September, the company announced the opening of a new branch in Munich. That would be the sixth Zara story in the city.