Trade Relations China and Spain
Relations thatbecomes more importantas time goes by.
In times of crisis for the economies of the European Union and other key markets for Spanish foreign trade, Asian and particularly Chinese markets are both a challenge and an opportunity. The actual demand of the growing Chinese middle class, requiring better products and services, should mark the horizon of any business strategy.
China is the fifteenth global market for Spain (the largest in Asia, ahead of Japan) and fourth external supplier (almost at the level of Italy in 2009). It is also the first responsible for the Spanish trade deficit. In 2009, exports amounted to 1.989 million Euros, compared to imports worth 14.454 million. The imbalance in the trade balance in 2012 showed a negative balance of Euros 13.865.millones. This deficit stems from imports valued Euros 17.631.millones and imports worth Euros 3.765 million. The comparison with the worst year of the global crisis highlights two facts, namely, the pace of activity has picked up, but the deficit persists.
The problems affecting these trade relations are easy to summarize: little significance, imbalance, reduced diversification and poor brand image of Spain in the eastern giant. The progressive purchase of Spanish debt in significant amounts, or the acquisition, in the past October 2010, of 40% of the subsidiary of oil group Repsol in Brazil by Sinopec, a deal worth Euros 5.400 million, could set a course of greater intensity in the bilateral relations. During the visit of the then deputy prime minister, Li Keqiang to Spain, both nations agreed to establish two working groups (energy and investment promotion) that can detail an agenda explicit opportunities. The establishment of a Spanish Goods Center in Beijing can contribute to a better diffusion and product presence in areas like fashion, wine, footwear and leather goods.
The evolution of bilateral trade with China offered a clear perspective for growth in the early 2000s, although with stagnation and decline of Spanish exports, coinciding with the crisis in 2008 and 2009. Most Spanish exports to China are inputs for industry. In 2009, China’s imports were reduced by an average of 29.47% and in 2010 showed clear signs of a gradual recovery, which was confirmed and solidified in 2012. Moreover, it should be noted that five regions (Catalonia, Madrid, Basque Country, Andalusia and Valencia) accumulate about 75% of exports to China, mainly concentrated in the Beijing-Tianjin axis and areas of Canton and Shanghai . Thus, despite the limitations, some data seem to invite to optimism (as increased Spanish business presence in China by 70 percent in just three years), demonstrating the potential of this relationship and the need to address it in a comprehensive and sustained manner. The Spanish business presence focuses on service companies and representative offices. Only 40 percent, roughly, are involved in directly productive activities.
The possibilities for cooperation in the financial sector have as main protagonist Banco Santander (the only Iberoamerican bank with operational presence in Mainland China) and BBVA (which has opened offices in Beijing and Shanghai, as well as a subsidiary in Hong Kong).
Tourism has a good outlook. During the visit of Li Keqiang, Spain announced a plan to move from the 90,000 Chinese who visited Spain in 2009 to 300,000 in 2012 and one million in 2020. Improving air links and administrative management on visas are among the most pressing policies. It should be noted that in 2010 China overtook Spain as the third destination in the world with 56 million international arrivals during the year, according to the World Tourism Organization (WTO). The same sources of UNWTO highlight that Spain receives 100 tourists per 100 inhabitants, while China 4 per 100, a result of demographics.
The opening of a representation of ICBC (Industrial and Commercial Bank of China (the largest bank in the world) or he announcements of new subscription of Spanish debt (China is already Spain’s second creditor) can help attract Chinese investments to Spain. They also may serve as incentive for Spanish SMEs to do business with or in China, giving them more facilities and lessening the fear when approaching China. This process should be promoted more intensively, taking into consideration the plans to change the economic model in China, towards growth based on domestic consumption. The actual demand of the growing Chinese middle class, of products and services, must mark the horizon of any business strategy.