Doing business in Spain: “Patience is a virtue”
Spain is the fourth largest economy in continental Europe after Germany, France and Italy, so it isn’t any wonder that Dutch entrepreneurs looking to expand have the country on their radar. Opportunities abound – for those who are patient.
Businesses that manage to gain a foothold in Spain have a potential customer base of 47.5 million Spaniards. But that isn’t all. Spain is also home to some 400,000 retirees from the Netherlands, the UK, Belgium and other countries. And their expendable income is above average. Spain is an interesting market, and not only because of the opportunities it offers, but because it represents a stepping stone to Latin America. “Business owners who operate here are already used to the Spanish-speaking culture and already have their communication channels in Spanish,” says Gerald Baal, founder and CEO of TRANSFER. “On top of that, many large Spanish firms have offices in Latin America. So once you’ve gained access to the head office in Spain, you’ve opened the door to a host of opportunities.”
Beyond the border
Baal is in love with Hispanic culture. As a child, he holidayed in Spain year after year, lived in Barcelona as an exchange student and spent several years living and working in Latin America. He and his business partner founded TRANSFER to help entrepreneurs transact business across borders – initially, in Spain and Brazil, but later in the rest of South and North America and Europe.
Five things to avoid when doing business with Spaniards
- Don’t be too quick with informality. The first time you speak to your Spanish counterparts, use the formal form of “you” (Usted) and address them by their surname. Once they themselves become more informal, you can follow their lead. The same goes for your attire: don’t wear trainers or a short-sleeved shirt to your first appointment.
- Spaniards love humour, but refrain from making “jokes” at the expense of others. They often don’t go down well in Spain.
- Don’t be arrogant. Spaniards are a proud people, so treat them with respect.
- Don’t imagine you can do business in Spain “on the side”. The market is too big and diverse for that. Focus and local presence are the keys to success.
- Don’t be offended if a Spaniard interrupts you during a conversation. It is quite common to do so in Spain and is not considered rude. On the contrary, it means that your conversation partner is interested and engaged.
Sustainability and retail
There are plenty of opportunities for Dutch companies in Spain, says Baal. “Examples include healthcare, agribusiness, automotive, construction, mobility and energy transition.” Sustainability is a particularly promising avenue in those sectors because, like the Netherlands, Spain aims to be carbon neutral by 2050. Spanish companies have accordingly submitted 4,000 project proposals laying out how they plan to switch from fossil fuels to renewable energy sources. And Dutch companies can take advantage of these projects and the associated investments. “So if you have an innovative product or solution that supports sustainability, you stand a good chance,” says Baal. “Especially if it’s cost-effective, because the average income in Spain is slightly lower than in the Netherlands.”
Another promising sector is retail, according to Baal. “The fashion group Inditex and the El Corte Inglès department store are global enterprises. Once you’re in, you can expand globally.” Dutch e-commerce operators can make a mark in Spain too, because the Netherlands has a head start in this field. “For example, in terms of short delivery times. In Spain, delivery within five days is common. If you can deliver within two, say, you’ll make a good impression.”
“The Spanish want to get to know you before they’ll do business with you,”
Gerald Baal, founder and CEO of TRANSFER
The Dutch are known for their directness, not only in what they say but also in their approach to business. “We inspect a product, consider the price, quality and terms of delivery, and if we like all of that, we close a deal.” Hispanic culture, on the other hand, is very person-centric: without the right contacts, you won’t get anywhere. “It’s all about personal relationships,” says Baal. “The Spanish want to get to know you before they’ll do business with you. If they like what they see, only then will they move on to talking business – the product or service.”
Spaniards therefore like to take the time to get to know their business contacts. An invitation to lunch – which can easily last three to four hours – is consequently nothing more than the first step towards getting acquainted. And things can get very personal straight away. “Are you married, do you have children, which football club do you support? Football is important,” laughs Baal. “It’s a great way to break the ice.” Being proficient in Spanish is hugely helpful in such conversations. “It helps set the right, more personal tone. And although many Spaniards speak English, not all of them do.”
“It’s important to get in at the right level,”
Gerald Baal, founder and CEO of TRANSFER
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A Dutch person having lunch with a potential business relation might think their conversation at that point has nothing to do with business, but the opposite is true. Spanish people use such opportunities to find out more: do I like this person? Could I work with them in the long run? Baal: “It’s very important to build up relationships calmly and to take your time. So don’t fall into the trap of emailing a draft contract immediately after lunch. Not even after your second meeting. This would offend them. If you want to do business with Spaniards, you really need to be patient.” Being over-hasty at the outset will not be seen as an innocent mistake, Baal emphasises. “Patience is essential to get anything done.”
The key is to put lots of energy into building a relationship with the right person. The culture is hierarchical: often, only the managing director will have the authority to sign. Sometimes not even that, in which case you will need to sit down with the owner. “So, it’s important to get in at the right level. Often you can inquire in advance. Or ask your contact person in a polite, indirect way.”
Just as people who live in Groningen differ from those in Limburg and people in Zeeland vs. Amsterdam, major differences are also noticeable in Spain. Baal: “In my experience, Catalans are the most similar to the Dutch: they are the most punctual and also have a dry sense of humour. Madrilenians are mostly known for their pride. Southern Spain is a bit more traditional: shops may be closed in the afternoon. You don’t see that in Barcelona nowadays, for example.”
“If you really want to do things properly, you need to appoint a local team,”
Gerald Baal, founder and CEO of TRANSFER
If at all possible, Baal recommends choosing a local representative from the region in question. “If you really want to do things properly, you need to appoint a local team.” Choosing the right region is also important, because industries differ from region to region. Madrid is home to many financial service providers and headquarters of large companies. Barcelona is known for being a stronghold in ICT and industry. Agribusiness is largely concentrated in the south of Spain. “Proper preparations are vital.”
The personal nature of your contact remains important, even once the deal is done. To maintain good relations, it’s important to have live contact. “Of course you can meet using Teams, but you also have to visit regularly – and invite the Spaniards to the Netherlands. It may take more time, but it will pay off,” says Baal. “Once you’ve signed the contract, you’re often assured of a long-term relationship. That’s because the foundations of your business deal are personal. A Spaniard will not just toss you aside, even if the neighbour’s product is slightly cheaper.”
“Relationships are everything in Spain”
Wouter Draijer owns Spanish solar panel company SolarMente, which he founded in 2019. Among other cities, he supplies panels to individuals and companies in Madrid, Barcelona and Alicante. He lives in Barcelona, where SolarMente is based. “I’m a mechanical engineer and have always had a passion for sustainability. Five years ago, I drove a van to Spain and founded SolarMente. The mother of an acquaintance was my first customer; together with a friend, I installed solar panels on her roof. She was so satisfied that shortly afterwards she invited all her neighbours around and before we knew it, everyone living in her street became customers. Something similar happened with another order. Through my network, I came into contact with the CEO of a consultancy, who in turn introduced me to a company that wanted four hundred panels installed on the roof of their factory. Within a few weeks, we had bagged a huge deal. This is typical of how you do business in Spain: relationships are everything. Spaniards can be quite suspicious, so if they hear through the grapevine that people are satisfied with us, they dare to take the plunge. As many as 80% of our new customers are referrals through existing customers. We not only install the panels, we also do the maintenance and optimise the yield using our own AI software. We’ve heard that customers are very satisfied with our service. And that’s also our goal; we’re serious about achieving this. For instance, we know that they like to communicate in their own dialect. So our sales representative who calls customers in Madrid is also from Madrid. The same applies to the other cities we serve. Spaniards are proud of their country and their language, it is important to take this into account when doing business here.”