May 2006

I.- Travel Advisory and Visas

Entry Requirements:

A passport is necessary but a visa is not required for tourist or commercial stays of up to three months; visitors may subsequently apply for an extension of stay at a Spanish immigration office. For further information concerning entry requirements for Spain, travellers may contact the Embassy of Spain at:

74 Stanley Avenue
Ottawa, Ontario
Canada K1M 1P4
Tel: (613) 236-0409 - Fax: (613) 563-2849

You can also contact the following Spanish Commercial Offices:

Ottawa
151 Slater Street, Suite 801
Ottawa, Ontario
Tel: (613) 236 0406/00 - Fax: (613) 563 2849

Toronto
55 Bloor Street West, Suite 1204
Toronto, Ontario
Canada M4W 1A5
Tel: (416) 967-0488/2862 - Fax: (416) 968-9547

Registration:

Canadian citizens who register in the consular section at the Canadian Embassy or consulate may obtain updated information on travel and security in Spain.

Address of the Embassy and Consulates:

Canadian Embassy in Madrid
Núñez de Balboa, 35
28001 Madrid
Tel: +34 91 423 3250
Fax: +34 91 423 3252
Opening hours: 8h30 - 17h00

Canadian Consulate in Barcelona
Elisenda de Pinós, 10
08034 Barcelona
Tel: +34 93 204 2700
Fax: +34 93 204 2701

Canadian Consulate in Malaga
Plaza de la Malagueta, 2-1st floor
29016 Málaga
Tel: +34 95 222 4023
Fax: +34 95 222 3346

Business Hours:

Foreign companies business hours are generally from 8:30 or 9:00 a.m. to 5:30 or 6:00 p.m., with one hour for lunch. Banks are open to the public from 9:00 to 2:00 p.m. on weekdays and from 9:00 to 1:00 p.m. on Saturdays. Government offices are generally open to the public from 9:00 a.m. to 2:00 p.m.

Weights and measures:

Spain follows the metric system for all weights and measures.

Holidays:

The government of Spain publishes a list of official holidays every year.

National Holidays-2006

Medical facilities:

Good medical care is available. Travellers have found that in some cases, supplemental medical insurance with specific overseas coverage has proved to be useful.
Travel advisory strongly recommends additional health insurance coverage.

II.- Business Customs: hints for the visiting business travellers

There is no substitute for face-to-face meetings with Spanish business representatives to break into this market. Spaniards are not mail order shoppers; they expect a personal relationship with suppliers. Initial communication by phone or fax is far less effective than personal meetings. Mail campaigns generally yield meagre results. Less than thirty percent of local managers are fluent in English.

Spaniards are more formal in personal relations than Americans but much less rigid than they were ten years ago. The biggest mistake a Canadian business person can make is to assume that doing business in Spain is comparable to business practices in Mexico and Latin America; Italy or France would be better comparisons.

Spaniards tend to be "conservative" in their buying habits. Known brands do well. Large government and private sector buyers appear more comfortable dealing with other large, established organizations or with firms that are recognized as leaders within their sectors.

One thing for Canadians to remember when travelling to Spain is that the cost of utilities is in general far higher in Europe.

Canadian cellular phones can´t be used in Spain, but it is very easy to rent one upon arrival. Hotels are also very well equipped to provide facilities for business travelers who bring their computer and need to connect with their office in Canada.

Business Cards:

Business cards are largely used in Spain. Cards are given usually at the beginning of meetings, although sometimes people give them before they leave. When you receive a business card from a Spaniard, if the card is written in Spanish you will note that there are two surnames. In Spain, the first name is the father´s surname while the second is the mother´s surname. A married woman does not lose her maiden name.

Business Etiquette:

At any normal business meeting, a formal suit with a tie is worn. Removal of your jacket is not recommended unless your counterpart takes his off, which is not at all usual or well regarded in Spain, unless one is in a private familiar meeting. For this reason, we suggest that a light suit be used if coming to Spain during the summer holiday season.

Business Lunches:

Business lunches are essential in the Spanish business sector and according to Spanish tradition. Most important decisions are taken during a well presented luncheon or dinner. The Spanish have not yet adopted working breakfasts. Business is often discussed over lunch at restaurants.

Time and Punctuality:

Punctuality is not rigorously respected, as in all major cities traffic is a problem. In Madrid or Barcelona a fifteen minute average timing margin is quite usual.

Invitation to Business Colleague´s Home:

In Spain, this kind of invitation is not as frequent as in other countries like Canada. Business lunches are their substitute. Canadian business people should not expect to be invited home by their future partners.

Gifts:

To give presents while doing business is quite a common tradition, but one has to be careful to ensure that the gift is not construed as a bribe. It is common tradition for spanish companies to offer gifts during the Christmas period.

Tipping:

Unlike in Canada, tips are not mandatory in Spain, as tax and services are already included in bills. Leaving a 5-10% tip in restaurants is common practise.

III.- Marketing Canadian products and services in Spain

The Spanish market is a series of regional markets joined to two major hubs -Madrid and Barcelona. The vast majority of agents, distributors, foreign subsidiaries and government-controlled entities that make up the economic power of the country operate in these two hubs. Dealers, branch offices, or government offices located outside of these two hubs will almost invariably obtain their supplies from their Madrid and Barcelona contacts rather than engage in direct importation. The key to a foreign firm´s sales success in Spain is to appoint a competent agent or distributor or to establish an effective subsidiary in either Madrid or Barcelona. However, important investment incentives, put in place in recent years, reward investors for establishing manufacturing operations in the poorer regions of the country.

The major competitors of Canadian exporters in Spain are Western European firms, but Japanese companies are swiftly becoming formidable competitors. Cost, financing terms and after-sales servicing play important roles in marketability of a firm in Spain. Since Spain acceded to the EU, member states´exports to Spain have benefited from lower tariffs than North American exports.

Canadian products retain competitiveness, in comparison to other exporters to the EU, because of lower production costs and the devaluation of the Canadian dollar vis-a-vis European currencies since 1994. European exporters provide generous financing and engage in extensive cooperative advertising. Their governments also support exporters efforts by assisting with trade promotion events. Although Canadian products are well respected for their high level of technology and overall quality, Canadian firms often fall short of their competitors in terms of flexibility or financing, adaptation of product design to local market needs, assistance with marketing, and after-sales service. Spanish producer's inclination follow those of the rest of Western Europe, where price remains paramount. However, credit terms, after-sales service, and marketing assistance are key factors in any successful transaction.

The Madrid hub principally serves the central, southern, and western parts of Spain, while Barcelona serves the north and east. Some overlapping occurs in Zaragoza, Bilbao, Valencia and the Canary Islands. Barcelona usually encompasses the Balearic Islands and the enclave cities of Ceuta and Melilla in North Africa. Regional characteristics influence buying patterns. A competent agent or distributor takes this into account when marketing his products. The Basque Country, part of Spain´s north coast, and Catalonia, which includes Barcelona, have long traditions as autonomous regions with their own official languages and customs. There are 15 other autonomous communities (similar to Canadian provinces) with varying but lesser degrees of autonomy and cultural identity.

Madrid is Spain´s centre for banking, administration and transportation, and it serves as the headquarters of many large international companies. Barcelona is the capital of Catalonia which boasts a strong industrial tradition. The primary industries have historically been textiles, paints, chemicals, printing, plastics, fertilizers, electrical engineering, and machinery manufacture. Barcelona and Bilbao, the seat of the Basque Country´s industry, are Spain´s leading ports.

As an important container port, the Bilbao region has extensive shipyards, steel-works, iron-ore mines, chemical and cement works, pulp and paper mills, and oil refineries. In eastern Spain, Valencia is the centre of the Spanish furniture and ceramics industries, as well as a major centre for citrus fruits and vegetables.

Seville, the centre of Andalucia with its river port, is a major source of olive oil, cork, wines and other agricultural products. The free port city of Vigo, in the far northwest, is Spain´s most important fishing and fish-canning centre.

Most exporters sell their products in Spain through distributors. Agents and distributors are generally exclusive, covering the entire country. Although a majority of Spanish distributors have their head offices in Madrid or Barcelona, many are located in Bilbao, Valencia and other Spanish industrial cities where a particular industry may be concentrated.

Distributors normally have sub-offices, enabling them to cover other parts of the country. In general, a distributorship is governed by the conditions agreed upon between the parties. Spain applies the "freedom of contract" theory, by which the contracting parties may establish any stipulation, condition, or undertaking provided that it does not violate Spanish law, morals, or public policy.

The Commercial Division of the Canadian Embassy in Madrid can greatly assist Canadian business representatives in their search for qualified representation in Spain. The Commercial Division of the Embassy is ready to help Canadian firms to participate actively and profitably in this rapidly expanding market.

Sales to the Spanish Government and official organizations are goverened by calls for tender published in the Official State Gazette (Boletín Oficial del Estado) and in these cases a Spanish agent is mandatory. The paperwork involved is cumbersome and all documents must be presented in Spanish. Furthermore, a financial deposit has to be made, normally 2% of the value of the bid being presented. If the contract is awarded, another 2% must be added to the previous deposit. This 4% deposit is returned once the sale and/or service has been concluded, after a one year period considered as a warranty period.

Spanish tariffs for EU countries were eliminated as of January 1, 1993, while third-country goods including the United States, Canada and Japan, are subject to the EU´s Common External Tariff. Since 1988, Spain has used the Harmonized System of tariff nomenclature for applying duties. Canada goods are taxed under EU´s normal dutiable rate. Spain has adhered to the GATT code since 1963. It subscribes to the 1969 Multilateral Trade Negotiations (MTN) codes on technical barriers to trade, subsidies and customs valuation.

For agricultural products, import documentation and tariffs are exactly the same as for other EU countries. While a few agricultural commodities are duty free or subject to minimal duties (soybeans, sunflower seed, corn by-product, lumber) the great majority of agricultural products (those covered by the Common Agricultural Policy) and food products are subject to high duties or variable import levies which generally preclude access into the Spanish market. Spanish customs value shipments at C.I.F. prices. For Canadian products the tariff rate averages 5 percent. A shipment must be cleared through customs by a registered customs agent. Usually, total costs to clear customs fall in the range of 20 to 30 percent of the shipment's C.I.F. value. This includes tariffs, value added tax (15 percent), customs agent and handling fees.

Several different forms of documentation may be required for shipments to Spain. Exporters are required to present one commercial invoice, one bill of lading, and three copies of a certificate of origin for all shipments. Other certificates are needed for exporting pharmaceutical goods, perishable foods, live animals and some medical goods.

Companies are advised to use the carnet procedure to temporarily bring goods into Spain for demonstration purposes without paying duties or posting bond. The carnet must be presented to the customs authorities whenever entering or leaving the country. Consumable items and give-away samples are not included under carnet procedures. ATA carnets are predominantly used for cinematographic, audio visual, medical, scientific, or other professional equipment that will be imported for a period of less than a year. The advantage of the ATA carnet is that it allows exporters to avoid normal customs clearance formalities.

The carnet also provides a financial guarantee to foreign customs officials that, if the goods are not re-exported, the duty will be paid. A bond equivalent to the duty is charged.

The ATA carnet is used internationally and should be distinguished from the EU carnet, sometimes referred to as the ESC carnet. Introduced in July 1995, this carnet is used for the temporary movement of certain types of goods between EU countries, usually equipment and working materials. Unlike the ATA carnet, it does not require posting a bond. Carnet applications are available from all district offices of Industry Canada, most Canadian chambers of commerce, and authorized export insurance companies.

Foreign companies and individuals are advised to hire legal advice for any operation they intend to do in Spain, whether setting up a subsidiary or a branch, carrying out business transactions or acquiring residency in Spain. Regulations are complex and legal help is useful in many every day commercial life activities.