Jesus Sainz, PromoMadrid
Release Date: 2009-12-08
Jesús Sainz Muñoz, Chairman of PromoMadrid, has been interviewed by GreenTechFocus to talk about Madrid as one of the most competitive European FDI destinations and the opportunities that Madrid offers as an investment cluster.What have been the factors of success behind the rapid increase of FDI in Spain in recent years?
The Spanish market provides direct access to over 1.200 million potential customers. It has become a key entry point to the rest of Europe and other Mediterranean countries, and is also an ideal platform towards Central and South America.
In addition to its strategic geographic location, the Spanish market offers labor costs well below the EU average, competitive rental prices for offices and factories and excellent transport infrastructures. These are the main reasons why more than 11,100 foreign companies are established in Spain.
Also contributing to the attraction of foreign investments to the country is the fact that some Spanish corporations have become reference multinationals for certain industries. According to Invest in Spain’s “2009 Barometer of the Business Climate in Spain” foreign companies located in Spain specially appreciate the quality of transports, communications and utilities as well as the business environment. Despite the global crisis, their overall valuation remains at 3.1 (out of 5) and none of the specific areas enquired is valued below 2.8. A significant majority (65%) of their executives plan to increase or maintain their investments in our country.
What are the competitive advantages for foreign companies setting up their European headquarters or R&D centres in Madrid?
Madrid Region is the political and economic centre of the country and most of Spanish multinationals, as well as the main foreign companies established in Spain, are headquartered here, It also offers a large, multicultural and wealthy population, with some 6.2 inhabitants, 17% of whom are foreigners, earning the highest income per capita in Spain (32,047€).
In addition, the region has highly-qualified professionals at competitive costs when compared with other EU countries, like United Kingdom, France, Germany, Belgium, the Netherlands, Luxembourg or Ireland. Office space is also available at competitive costs when compared to other European capitals.
Madrid Region also offers a very stable political context, very proactive in creating a business-friendly environment for foreign companies -eliminating bureaucratic obstacles and applying liberal policies - where possible, like reducing taxes or promoting innovation and high value-added industries. That’s the reason why the region leads domestic R&D expenditure, with 2% of GDP dedicated to innovative projects, implementing since 2009 a 3-year R&D&i regional plan and setting up Madrid Network, a regional clusters and scientific parks network, under public-private collaboration. This network accounts already with 4 Science and Technology Parks, with 140 companies installed which have created more than 6,000 jobs, and 11 clusters for strategic industries, among which we can find Aerospace and Renewable Energies.
The region is also the ideal platform for markets in Latin America and the Maghreb, to which we are linked by strong cultural and business ties (Madrid is the main Spanish region investing in Latin America) and represent a market of more than 700 million consumers, emerging markets for which some financial aids are available. Also many people from these areas have chosen Madrid to work, live or study, making those ties even tighter.
How would you define PromoMadrid success in raising Madrid’s international investment profile since its instauration?
Very high, in recent years the Madrid Region concentrated more than 60% of FDI into Spain, reaching an 82& market share in 2008. Despite the global downturn in cross-border investments this trend continues and Madrid attracted 740€ million during the first quarter of 2009, almost six times higher than Catalonia.
To promote further these investments PromoMadrid recently published “Doing Business in the Madrid Region”, a practical guide providing answers to the main questions business people raise when considering several locations for their investment project. This guide includes information about the region, its business activity and the way of life.
What is the current and potential contribution of the renewable energies sector to the economic performance of the Madrid region?
In the Madrid Region there are 484 companies with activity in some stage of the value chain within the renewable energy sector. Over 50 % of the companies in the sector have been created since 2000, therefore it is a relatively recent field of activity creating an important concentration of employment, richness and technological know-how.
We have solid estimations of over 14,000 people in Madrid with exclusive dedication to the renewable energy sector (and over 44,000 employees in renewable energy companies, without regarding their specific function in the company). Moreover, employment in Madrid in this sector is characterized by a high percentage of stability (over 84% are indefinite contracts, compared to the Spanish average of 70%).
Concerning the quality of the activities developed in Madrid, it is important to mention that companies established here are working in areas that create more added value: 81% of Madrid’s renewable energy companies are developing projects (in Spain and abroad), 67% have engineering activity and 46% of them have launched innovative R&D activities.
It is difficult to estimate the contribution to the Regional GDP, but we can already talk about a national contribution of 0.5%, which in the case of the Madrid Region would mean 10.312 € million coming from the renewable energy sector. The objective is to exceed 20.000 € million in 2020.
If we take a look at the ambitious European and Spanish objectives in the implementation of renewable energy, we can assure the future is very promising for Madrid and the companies based here. Taking into account that we are targeting 20% of the total energy consumption in Europe in 2020 coming from renewable energy sources, it’s very clear that we are in the right way but with still a long distance to walk. This is an obvious opportunity for the development of the companies in the renewable energy sector, which shows a huge potential contribution to the regional economy of Madrid in the future.
How would you define Madrid’s current competitiveness as a centre of excellence for renewable energies and what are the region’s ambitions in this sense?
The first thing we have to take into account is Spanish competitiveness. The country is the 3rd wind energy producer in the world (the 2nd if we consider the percentage of the total electricity consumption) and the country in which most new PV capacity was installed in 2008 (4 % of the world’s new capacity), being now the leader in power installed per inhabitant. Spain was also the first country in the world to establish a national obligation for the installation of solar thermal collectors in new buildings.
In fact, Spain is considered by Ernst and Young the 5th most attractive country in the world for investments in renewable energy, over countries such as Italy, UK, France, Canada, Greece, Australia, Brazil or Japan.
Taking this frame into account, it’s not strange that the Madrid Region plays a strategic role as the centre of excellence for renewable energies in Southern Europe. The specific know-how accumulated by the companies recently established in Madrid, thanks to the national development of this sector, allows us to appear as the reference in Spain and the Mediterranean countries, some of which are now profiting of the experience of our firms and employees, like Italy, Greece or France.
Speaking about the reasons that have helped us to be at this point now, we can mention the strategic geographical location in the Iberian Peninsula, the importance of the region as a gateway to European, Mediterranean and Latin American markets and, as a key decisive factor, the availability of a highly-qualified multilingual workforce (over 64,000 engineering students attend one of the 14 universities in Madrid) at competitive costs compared to other major European regions.
We are of course aware of the growing importance of the excellence in renewable energy and the necessity of a strong institutional support. Hence, Madrid’s Regional Government has created the Madrid Cluster for Renewable Energy and Sustainability, which is already acting as a platform for the sector, bringing together administration, companies, universities and R&D centres, sharing interests and developing specific projects together.
Our current position is supported by the concentration of national and international know-how, a factor that certainly helps us attracting more and more companies, because many decision-makers are already based in the Madrid Region. If we take a look at the solar PV sector, we have the presence of Suntech, Yingli, Sunpower, First Solar, Conergy; in solar thermal energy we have the most important European players, like Viessmann, Wagner Solar, Tisun, Bosch, Schüco, and in CPV the most advanced companies in the world are also established in Madrid, like Solfocus, Infinia Solar or Solar Reserve, which is developing projects in Spain with a total investment of 3,500€ millions. In wind energy we have the headquarters of Vestas Mediterranea, allowing the company to coordinate its sales to countries in the Mediterranean, the Middle East, North of Africa, Latin America and the Caribbean.
We can’t forget other subsectors, like biofuels –with Repsol’s R&D centre and presence of Lurgi, Abengoa, Alfa Laval, Gea Group- or bioenergy -with companies such as RWE Innogy or MT-Energie developing projects all around the country.
Our clear ambition is to continue growing in this sector, attracting more companies and developing even more added-value activities, especially R&D in renewable energy. A clear sign was the creation last year of Madrid Institute for Advanced Research in Energy (IMDEA Energy), which concentrates important resources and talent for the innovation in renewable energy. But this is not the only top R&D centre in the Region: among others, we host prestigious canters like the Solar Energy Institute (IES), the National Centre for Research in Technology, Environment and Energy (CIEMAT) or the National Institute for Energy Saving and Diversification.
We want also to continue being the main business centre between Europe and Latin America, allowing renewable energy companies based in the Madrid Region to develop their activities in this new and for the future very promising markets, particularly when they get near the grid parity.
How important is China’s booming renewable energies sector in Madrid’s internationalisation of its economy and what are Madrid’s ambitions in this sense?
China is the third biggest economy in the world, the 2nd country in energy demand, and the 1st producer of carbon dioxide. With a growing necessity of energy resources, due to its impressive economical development, it is expected China will become the first energy consumer in the world in 2030. This, added to China`s interest in reducing energy dependency from other countries, bring China to make a big effort and dedicate important resources to the development of renewable energy production.
The Chinese Law for Renewable Energy established in 2006 ambitious objectives for 2020: 100 GW wind energy (100,000 million RMB investments) and 1,800 MW solar PV energy. Total investment needed for the fulfilment of those objectives is approximately 166,000 $ million, including investments in hydro-electricity.
We are very aware of these facts, and we are confident in the important role that companies in the Madrid Region can play in the future Chinese development in the renewable energy sector. Just to mention some examples, the Madrid Region is present in China with the Madrid International Office in Shanghai, and with additional workforce specialized in internationalisation working in Beijing and Hong Kong. These local resources have an important function in detecting opportunities and helping in the establishment of relationships between potential partners. With this aim, the Madrid Region was present at EcoExpoasia trade fair, held in Hong Kong last October. .
Additionally, Madrid Cluster for Renewable Energy and Sustainability is also establishing contacts with Chinese administrations, and only some weeks ago we had a visit from the Foreign Investment Promotion Bureau of Xi’an Hi-tech Industries Development Zone, Its Director was very interested in the successful model we have in Madrid for development of renewable energy and other hi-tech activities.
In summary, renewable energy is a booming sector in China. We know it and we want to cooperate in this development, having in mind that the existing know-how of Madrid’s companies, with a decisive experience accumulated in the last years, can be very useful for the Chinese governments and companies.
What is PromoMadrid’s development and marketing strategy in raising Madrid’s profile in China?
China’s potential growth makes it one of the two leading emerging markets from FDI perspective, together with India. Our main challenge is to provide Chinese decision-makers with enough quality information about Madrid, so they can have a clear picture on the region’s performance during the last years and also on its potential development for the near future.
Initially our strategy will be focused in Shanghai, Beijing and the Pearl River area. Actually, we are currently developing an international Business Centres network in a joint effort with other regional institutions, and Shanghai is one of the first 5 offices we have open abroad. This network serves both for attracting FDI into the region and assisting companies from Madrid when expanding overseas.
What is your final message for our readers in Europe, China and worldwide about Madrid’s excellence?
Madrid enjoys and offers some unique attributes which have made it one of the most competitive destinations for FDI in Europe, as shown by the fact that in 2008 Spain ranked 6th among OECD countries as destination of FDI, and Madrid concentrated 82% of all FDI received by Spain.
| Company: | PromoMadrid |
| Position: | Chairman |
| Country: | Spain |