The case for Ibero-America: Why should Spanish companies invest in the region?

Manrique Blen,  June 21, 2024

"The Spaniard who has not been to America does not know what Spain is".

With this phrase, García Lorca was referring to the unbreakable connection between both geographies, materialized culturally, in its history and of course, in its economy.

Last April, Casa América and IE University, with the support of Iberia and Auxadi, presented an Analysis of Spanish Investment trends in Ibero-America for 2024, and it is certainly worthy to further review.

According to such report, 76% of the Spanish companies surveyed plan to increase their investments in Latin America during 2024; and of these, 60% plan to do so through organic growth.

But it gets even more interesting, since 58% of large Spanish companies estimate that by 2024 their turnover in Latin America will exceed what they currently have in Spain; and, furthermore, that it will be here, and not in Asia, the United States, Canada or even the rest of the European Union, where they will see their income increase by a greater proportion this year.

With almost 700 million people, the Ibero-American market offers 52% more consumers than the entire population of the European Union. Only considering Mexico, Brazil and Colombia, you already have access to a market with 8 times more population than in all of Spain. This strengthens the logic why Spanish companies use Mexico City, Bogotá, Miami and Sao Paulo, respectively, as their top 4 most attractive cities to locate regional operations.

But it’s not all volume. 33% of companies estimate that the attractiveness of the region also lies in the qualified workforce and, as a materialization of this, 65% confirmed that they have exported some type of innovation or development from subsidiaries in America to the Iberian Peninsula. 

This growth strategy not only gives access to a gigantic market, but also brings significant improvements to the entire corporate or operational aspects of the companies that embark on this adventure.

There are always challenges. For example, Brazil has been characterized by having the most complex tax system for Spanish subsidiaries, followed by Argentina, Venezuela, Colombia, Bolivia and Mexico respectively. The companies surveyed are also concerned about the expectation of economic slowdown in countries such as Brazil, Venezuela and Costa Rica, the fluctuation of the exchange rate in Argentina, Colombia and Peru or citizen insecurity in several of the cities in the region. However, they are not unique challenges for the region and can always be navigated with a good compass.

To find out about the road ahead, ask those who return. These statistics undoubtedly invite expansion towards a profitable Ibero-America for the Spanish company, in overwhelming propositions.

Check out the reference link:
PANORAMA DE INVERSION 2024 WEB 1 PAG (ie.edu)

Author: Manrique Blen, Auxadi