The Spanish firms looking east
Countries such as Hungary and Poland have been attractive for overseas expansion.21 January 2008
MADRID - If Latin America was the big foreign gamble of Spanish corporations in the 1990s, then Eastern Europe is filling that same role in the second half of the current decade. Warsaw may not be Buenos Aires and Budapest may not be Lima, but in the eyes of Spanish companies they are starting to look alike.
"There are real estate groups from across Europe in Warsaw, but the biggest operations all have a Spanish name," notes Agustín Redondo, the director of the Uría and Menéndez law firm's office in the Polish capital.
Indeed, companies such as MartinsaFadesa and Hercesa are building thousands of homes across Poland. The Zara and Mango clothing stores are on all major high streets. Neinver is racking in zlotys with its outlet stores in Wroclaw and Poznan. Half the cell phones in the Czech Republic run on a network operated by Telefónica, and Unión Fenosa is supplying electricity to Moldavans even in the breakaway republic of Transnistria.
The change has come thick and fast. After years ignoring the region in favour of Latin America, Spanish companies started to take Eastern Europe seriously in 2005, a year after eight countries in the region joined the EU.
In the first three quarters of last year, Spanish firms invested EUR 7.6 billion in the former Soviet republics of Eastern Europe and the Baltic, up from barely EUR 230 million in 2000. In 2005, the year the Spanish investment boom began, Spain invested more in the region than Germany did.
"Eastern Europe has such spectacular potential that Spain couldn't stay away," argues Miguel Garrido, the managing director of the Chamber of Commerce in Madrid.
Unlike in Latin America, where the investment boom was encouraged by governments in a top-down fashion, the growth in interest in Eastern Europe has been largely voluntary on the part of Spanish companies. "It's really just happened in the last two years," notes Jaime Fuster, who heads the law firm Bufete Garrigues's office in Warsaw.
In that period, for example, constructor FCC has snapped up three local firms for EUR 1.14 billion, while Telefónica acquired a 51.1 percent share of Czech operator Cesky Telecom for EUR 2.746 billion. Cie Automotive, Roca, Comsa and Santander bank also bought local companies, while other Spanish groups such as Gamesa, Inditex, Indra, MartinsaFadesa, Gonvarri and ACS set up shop there and started to grow organically.
"The entry of these countries into the EU was the essential ingredient," notes Emilio Martínez Lázaro of Spain's Companies Institute. "It gave confidence to Spanish business leaders, who, until then, had focused primarily on one market with which they had a cultural affinity: Latin America. They were also worried about the exaggerated difficulties of doing business in the economies that Eastern European countries inherited from communism."
[Copyright EL PAÍS / FERNANDO BARCIELA 2008]
Subject: Spanish news