Yearbook 2012 Internationalization of Spanish Companies

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Yearbook 2012 Internationalization of Spanish Companies

  1. 1. © 2012, Círculo de EmpresariosCalle Marques de Villamagna, 3, 10ª Planta, 28001 MadridAuthors:Ofelia Marín - Lozano - Head of the Economics Department, Círculo de EmpresariosMauro F. Guillén - Director of the Lauder Institute, The Wharton SchoolMaría Grandal Bouza - Economic Roling Analyst of the Economics Department, Círculo de EmpresariosLegal Deposit: M-38180-2012Design: Tres Tipos GráficosPrinter: Imprimex
  2. 2. YEARBOOK 2012 INTERNATIONALIZATION OF SPANISH COMPANIES
  3. 3. 2012 Yearbook on the Internationalization of Spanish CompaniesTable of contentsPresentation 13Prologue 151. The world and Spanish economies in 2011-2012 19 1.1 International trade 23 1.2 Foreign direct investment 27 1.3 Spain’s foreign sector 29 Analysis of the Balance of Payments: current account and capital account balance 29 Spain’s foreign sector: changes in capital flows 35 Spain’s foreign sector: reduced debt position 38 Other indicators relating to the international presence of Spanish companies 392. Spanish companies from an international perspective 41 2.1 Shareholders Returns in a European and Global Context 42 2.2 Investment bank analysts and Spanish companies 49 2.3 Visibility of Spanish Companies in the international financial press 53 2.4 Conclusion 603. Special Mentions for the Internationalization of Spanish Companies 63 3.1 Major Companies with a Significant Track Record of Internationalization 64 3.1.1 Banco Santander 64 3.1.2 Iberdrola 65 3.1.3 OHL 65 3.2 Internationalization Operations in 2011 66 3.2.1 Línea Ferroviaria Medina-La Meca 66 3.2.2 Gestamp Automoción 67 3.3 Medium-sized Companies with a Significant Track Record of Internationalization 68 3.3.1 Fluidra 68 3.3.2 Maxam 69 3.3.3 Tubacex 70 3.3.4 Privalia 71 3.4 Foreign Investment in Spain 72 3.4.1 Ford 72 3.4.2 Hutchison Whampoa 72 7
  4. 4. Yearbook on the Internationalization of Spanish Companies 2012 4. The New Latin Argonauts: Could they help in the internationalisation of Spain? (Author: Javier Santiso) 75 4.1 The Latin American diaspora 76 4.2 The Entrepreneur diaspora in Spain 79 4.3 Conclusion 81 5. Internationalization of the company (Author: Pablo Isla) 83 6. Statistical Annex 87 7. Bibliography 99 8. Recent publications of the Círculo de Empresarios 1018
  5. 5. 2012 Yearbook on the Internationalization of Spanish CompaniesList of TablesTable 1.1: IMF forecasts on GDP growth 19Table 1.2: Spanish non-financial multinationals among the world’s leaders by international presence, 2011 21Table 1.3: GDP and trade in goods by regions, 2009-2011 24Table 1.4: Main exporter of goods, 2011 25Table 1.5: Main importers of goods, 2011 26Table 1.6: Major cross-border mergers and acquisitions worldwide in 2011 29Table 1.7: Balance of payments: balances 30Table 1.8: Foreign trade in goods, specialization by product 31Table 1.9: Foreign trade in goods, specialization by geographical area 32Table 1.10: Spain’s foreign trade performance by geographical area 33Table 1.11: Geographical breakdown of remittance payments in 2010 and 2011 34Table 1.12: Foreign Direct Investment transactions in 2010 and 2011. Breakdown by sector of economic activity 36Table 1.13: Foreign Direct Investment transactions in 2010 and 2011. Breakdown by geographical area 37Table 1.14: International investment position. Breakdown by sector (% of GDP) 38Table 1.15: International investment position Breakdown by instruments (% of GDP) 39Table 2.1: Top 25 Spanish companies by total shareholder return rate in 2011 44Table 2.2: Top 10 IBEX 35 companies by total shareholder return rate (Companies and rates ranked by 2011 figures) 45Table 2.3: Top 10 IBEX 35 companies by total shareholder return rate (Companies and rates ranked by 1995-2011 average) 46Table 2.4: Top 10 IBEX 35 companies by total shareholder return rate (Companies and rates ranked by 1995-2011 average) 47Table 2.5: Top Spanish companies by total shareholder return rate in 2010, relative to companies in the same sector in Euro area 48Table 2.6: Stock market analysts` recommendations on IBEX 35 companies, 1998-2011 50Table 2.7: Top 10 Spanish companies by average recommendation from stock market analysts in 2011, compared to companies in the same sector within the Euro area 52Table 2.8: Top 25 Spanish companies by references in the international financial press, 1995-2011 56Table 2.9: Top 25 Spanish companies by references in the international financial press in 20101, by publication 58 9
  6. 6. 2012 Yearbook on the Internationalization of Spanish CompaniesList of ChartsChart 1.1: FDI inflows 1980-2011 27Chart 2.1: Number of references to Spanish companies in articles published in the international financial press, 1995-2011 55Chart 2.2: Top 5 Spanish companies by references in the international financial press, 1995-2011 57Chart 2.3: Number of references to Spanish companies in articles published in the international financial press, by publication, 1995-2011 59List of BoxesBox 1.1: Commodity price performance in 2011 and 2012 22Box 2.1: The Total Shareholder Return Rate 42Box 2.2: Stock market analysts` recommendations 49Box 2.3: Methodology for compling references to Spanish companies in the international financial press 53 10
  7. 7. 2012 Yearbook on the Internationalization of Spanish CompaniesPresentationThis is the sixth edition of the Yearbook on the the managers of Spanish companies who haveInternationalization of Spanish Companies, pu- looked abroad with a spirit of optimism andblished by the Círculo de Empresarios in con- confidence. And, in particular, I would like tojunction with the University of Pennsylvania’s highlight the efforts of those companies which,prestigious Wharton School. From the outset, based on a survey of Círculo members, havethe Círculo-Wharton Yearbook has pursued the been distinguished in this Yearbook.dual objective of gauging the activity of Spanish companies abroad whilst encouraging those Once again, I would like to thank Whartonthat have not yet made the decision to interna- School, one of the world’s most prestigioustionalize to take this decisive step, so essential academic establishments in all aspects rela-for their development and survival. This joint ting to the business world, for its collaboration,project has resulted in the consolidation of an which is pivotal to the ongoing success of thisexcellent observatory of the performance of publication. I would also like to thank everyoneour companies abroad. from Wharton and Círculo de Empresarios in- volved in producing the Yearbook. And a verySince the launch of the Yearbook to date, the special thanks to Pablo Isla, the Chair of theworld economy, and most notably Spain’s, have Inditex Group and to Javier Santiso, Professorbeen ravaged by one of the worst crises in his- of Economics at ESADE Business School, fortory. Recovery still remains weak. Despite the their contribution to this new edition.gloomy outlook, companies that have taken thedecision to venture abroad, or to further their Many thanks to all, and thanks to the loyalinternationalization goals have reaped the be- readers whose interest makes our efforts wor-nefits of market diversification, even though thwhile.the global crisis is very much alive.As stated in previous editions of this Yearbook,in a highly globalized economy, the quest fornew markets and increased foreign presenceare the most advisable strategies. This 2012edition discusses clear examples of companiesthat have successfully applied these principals.In this connection, I would like to congratulate Mónica de Oriol Chair of Círculo de Empresarios 13
  8. 8. 2012 Yearbook on the Internationalization of Spanish CompaniesPrologueIn 2011 the world economy continued to reco- of -1.5% and -1.3% respectively, which confirmsver. However, this recovery was undermined the fragility of the recovery.by the uncertainties and lack of confidencewhich flooded the markets, affecting most no- Despite this complicated economic situation,tably the developed economies. Consequently, many national companies continue to opera-world growth fell from 5.1% in 2010 to 3.8% in te abroad, pursing their internationalization2011, as noted by the International Monetary strategy. In addition, some bolstered their pre-Fund in its latest report World Economic Out- sence in the rankings of the UNCTAD Worldlook, October 2012. Moreover, there are fears Investment Report, which refer to the world’sthat the European crisis may worsen the global leading multinationals, and in other well-knowneconomic scene, which has prompted the IMF league tables such as Fortune Global 500 orto revise downwards the growth data relating to Forbes 2000.the world economy for 2012 and 2013. The sixth edition of the InternationalizationThe economic policies implemented by govern- of Spanish Companies Yearbook coversments, unilaterally or in a coordinated fashion, these and other phenomena. Through this pu-helped reduce systemic risk. However, these blication, once again this year, Círculo de Em-measures need to be strengthened so as to presarios wishes to offer the public an instru-consolidate the recovery and contain downside ment with which to gain insight into the foreignrisks. The priorities in developed countries con- activity of Spanish companies and the mosttinue to be reform of the financial sector, fiscal significant challenges they face going forward.consolidation and structural reforms to boost The 2012 Yearbook is structured into two mainpotential output. In emerging and developing parts:countries, it is necessary to introduce greatermacroeconomic discipline, avoiding the build- • The first, which comprises three chap-up and widening of imbalances. ters, examines the economic context in which Spanish companies are operating both in SpainIn the specific case of the Spanish economy, and abroad, as well as their achievements andaccording to data from the International Mone- challenges.tary Fund, while GDP improved slightly (0.4%) in2011, forecasts for 2012 and 2013 predict falls 15
  9. 9. Yearbook on the Internationalization of Spanish Companies 2012 Chapter one offers a brief overview of the glo- two operations involving foreign investment in bal and national economic framework, and an Spain receive a mention. analysis of the main characteristics of interna- tional trade and direct foreign investment for • The second part comprises, on this oc- the period 2011-2012. casion, two chapters. The first chapter focuses on the importance of business diasporas, Latin The second chapter reviews, from the interna- ones in particular, in driving the internationa- tional standpoint, the performance of Spanish lization of the Spanish economy. This chapter companies in terms of total shareholder returns, has been written by Javier Santiso, Professor of equity market analysts’ recommendations and Economics at ESADE Business School. companies’ coverage in the international finan- cial press. In general, the situation in 2011 re- The second article in this section, which bears presents a continuation of the negative trends the signature of Pablo Isla, the Chairman and from 2010 in relation to stock market perfor- CEO of the Inditex Group, discusses the inter- mance and, in particular, investment banks’ nationalization experience of this textile group, equity market analysts’ recommendations. an international leader in the fashion industry. Shareholder returns fell sharply in outright terms, although in comparison with the Euro Area, the drop was less dramatic. Investment bank recommendations deteriorated steadily, which, on interpretation, may reflect the antici- pation of analysts who predict new difficulties in 2012. Owing to the problems faced by Spa- nish financial and non-financial companies, the coverage of Spanish companies in the interna- Belén Romana, tional financial press increased significantly in General Secretary of Círculo de Empresarios 2011, surpassing the 2006 coverage record. This part ends with chapter three, in which Cír- culo de Empresarios recognizes the work of those Spanish companies which, through their internationalization, contribute to Spain’s glo- bal economic reach. There is a special mention for overseas business operations conducted by Spanish companies which, according to the members of Círculo de Empresarios, are espe- cially significant, and for both medium and lar- ge companies with an outstanding track record of internationalization over the past few years. Lastly, and as a new feature of this sixth edition,16
  10. 10. 2012 Yearbook on the Internationalization of Spanish Companies1 The world and Spanish economies in 2011-2012 Throughout 2011, the world economy slowed down, highlighting the fragility of the reco- very, especially in the developed economies. Consequently, having closed 2010 with 5.1% growth, driven by gains in the main production ratios in emerging, developing economies and advanced economies, the world economy closed 2011 with 3.8% growth, according to the latest figures published by the IMF (Table 1.1).IMF forecasts on GDP growth Table 1.1 Source: IMF (WEO October 2012) Percentage variation 2010 2011 2012* 2013*World 5.1 3.8 3.3 3.6Advanced economies 3.0 1.6 1.3 1.5 United States 2.4 1.8 2.2 2.1 European Union 2.1 1.6 -0.2 0.5 Euro area 2.0 1.4 -0.4 0.2 Germany 4.0 3.1 0.9 0.9 France 1.7 1.7 0.1 0.4 Italy 1.8 0.4 -2.3 -0.7 Spain -0.3 0.4 –1.5 -1.3 Japan 4.5 -0.8 2.2 1.2 United Kingdom 1.8 0.8 -0.4 1.1 Canada 3.2 2.4 1.9 2.0 Other advanced economies 5.9 3.2 2.1 3.0 Newly industrialized Asian economies 8.5 4.0 2.1 3.6 Emerging and developing economies 7.4 6.2 5.3 5.6 Sub-Saharan Africa 5.3 5.1 5.0 5.7 Central and Eastern Europe 4.6 5.3 2.0 2.6 Commonwealth of Independent States 4.8 4.9 4.0 4.1 Russia 4.3 4.3 3.7 3.8 Excluding Russia 6.0 6.2 4.7 4.8 Developing Asia 9.5 7.8 6.7 7.2 China 10.4 9.2 7.8 8.2 India 10.1 6.8 4.9 6.0 ASEAN 5 ** 7.0 4.5 5.4 5.8 Middle East and North Africa 5.0 3.3 5.3 3.6 Latin American and the Caribbean 6.2 4.5 3.2 3.9 Brazil 7.5 2.7 1.5 4.0 Mexico 5.6 3.9 3.8 3.5 * Forecasts ** ASEAN 5: Phillipines, Indonesia, Malasia, Thailand and Vietnam. 19
  11. 11. Yearbook on the Internationalization of Spanish Companies 2012 Growth in the euro area slowed down in 2011 and forecasts for 2012 point to negative growth (-0.4%). This evolution has been strongly influenced by the performance of the financial mar- kets, affected by the debt crisis in the euro area. Tensions in the markets increased notably from summer 2011, on becoming systemic, and amid growing fears of feedback between sovereign risk, bank risk and loss of economic dynamism in several countries in the euro area. In Spain, financing terms became tougher and bond yields reached all time highs. The eco- nomic situation was very complicated. In 2011, average annual growth stood at 0.4%, and negative growth has been forecast for 2012 and 2013. The contribution of internal demand was once again negative (-1.9%), while for the fourth consecutive year, the contribution of net external demand was positive (2.3 pp). In this context, the IMF warned of the persistence of global downside risks. The con- cern is that the deepening of the crisis in the euro area may trigger a widespread shift towards lower risk assets or that political uncertainty may cause a hike in oil prices. Furthermore, the implementation of excessively restrictive measures may lead to a situation of sustained deflation or a prolonged period of very subdued activity in some of the major economies. According to this Organization, other latent risks include turmoil on the global bond and world foreign currency markets due to high budget deficits in Japan and USA, and a rapid slowdown in the activity of some emerging economies. Economic policy measures taken to date have helped reduce the systemic risk. However, in the face of persistent uncertainty, these measures need to be strengthened so as to con- solidate the recovery which has been weak so far and to contain downside risks. In the short term, this involves stepping up efforts to tackle the crisis in the euro area, reducing fiscal austerity in response to the downturn in activity, and maintaining lax monetary policies and ample liquidity for the financial sector. In the long term, the challenge consists in improving medium term prospects for the major advanced economies. The priorities continue to be reform of the financial sector, fiscal con- solidation and structural reforms to boost potential output. In the case of emerging and developing economies, there is a need to gauge the macroeco- nomic policies so as to tackle the downside risks of the advanced economies, by controlling the overheating pressures resulting from greater activity, credit growth, and volatile capital flows, as well as high commodity prices and the recurrence of risks related to energy prices (Box 1.1). The IMF, in its latest report World Economic Outlook, has broadly revised downwards fore- casts for 2012 and 2013. World growth will fall by 0.2% in 2012 and 0.3% in 2013. The Euro Area will also experience negative growth in both periods, of -0.1% and -0.5% respectively. In the specific case of Spain, the economy will contract by 1.5% in 2012 and 1.3% in 2013. In this scenario, world trade suffered a severe setback in 2011, posting a volume growth of 5%, compared to 13.8% in 2010. According to statistics compiled by the World Trade Organization (WTO) and published in the World Trade Report 2012, in 2011, Spain maintained its position as the 18th largest exporter of goods in the world (with a share of 1.6% of the world total) and in relation to imports, Spain clim- bed a position, ranking 15th (holding a share of 2%). With regard to trade in services, Spain ad- vanced a position to rank 8th for exports (3.4%), and remained in 14th place for imports (2.4%).20
  12. 12. Yearbook on the Internationalization of Spanish Companies 2012Regarding foreign direct investment (FDI), global inflows grew 16% in 2011, surpassing forthe first time the average for the three years preceding the outbreak of the world economicand financial crisis (2005-2007), but not exceeding the high of 2007.According to the data published in the World Investment Report 2012 by the UNCTAD, in 2011,Spain recovered the status it had lost in 2010 as a net foreign investor (in terms of FDI). Thiscan be accounted for by the sharp drop in FDI inflows (-27.7% compared with 2010), whileoutflows stabilised. In 2011, Spain retained 15th position in the world ranking of FDI flowsreceived and 14th in terms of outflows of this kind of investment.As to cumulative FDI, Spain maintains a relatively stable position. With 3.1% of the world to-tal, Spain fell two places to 9th position, losing ground to China and Brazil, in terms of stockreceived. And with 3% of the world total, Spain ranked 11th in terms of stock abroad, losing aposition to Canada.Finally, setting aside the doubts regarding the future of the world economy and of Spain’s inparticular, some Spanish companies have decided to start or to continue their internationa-lization processes, a clear exponent of which are the operations and companies mentionedin Chapter 3 of this Yearbook. This is fully consistent with the role played by the Spanish eco-nomy on the international stage, since its activity in the various areas of the world economysurpasses even its contribution to global GDP, which in 2011, fell below 1.8% in purchasingpower parity terms.The rankings of the world’s top multinationals published in WIR 2012 underpin this idea.Among the top 100 non-financial multinationals, three are Spanish companies, holding thefollowing positions in terms of assets abroad: Telefónica (ranked 10th), Iberdrola (25th) andRepsol (47th) (Table 1.2).Other well-known league tables confirm this impression. There are 8 Spanish companies inthe Fortune Global 500 index of leading worldwide companies. There are 28 Spanish compa-nies in the Forbes 2,000 index, which refers to the top 2,000 global companies.Spanish non-financial multinationals among the world’sleaders by international presence, 2011 Table 1.2 Millions of dollars and number of employees Source: WIR 2012, UNCTAD Assets Sales Employees Abroad Total % of total Abroad Total % of total Abroad Total % of total Telefónica S.A. 147,903 180,186 82.1 63,014 87,346 72.1 231,066 286,145 80.8 Iberdrola S.A. 88,048 134,702 65.4 23,211 44,896 51.7 19,436 31,885 61.0 Repsol YPF S.A. 58,336 98,634 59.1 44,115 83,572 52.8 26,441 46,575 56.8 21
  13. 13. Yearbook on the Internationalization of Spanish Companies 2012Box 1.1 Commodity price performance in 2011 and 2012 Any analysis of the global economic situation must include a look at commodity price performance, in view of its enormous impact in a number of areas, from glo- bal inflation to access to food in developing countries. World commodity markets lost some momentum in 2011. Prices fell for most of the year, with the exception of the crude oil price. In the first quarter of 2012, commo- dity prices picked up, but in general terms, they remain below the levels recorded at the end of 2010. Index of commodity prices (2005=100) Source: IMF 230 210 190 170 150 130 110 90 70 2005M12 2006M12 2007M12 2008M12 2009M12 2010M03 2010M06 2010M09 2010M12 2011M03 2011M06 2011M09 2011M12 2012M03 2005M9 2006M3 2006M6 2006M9 2007M3 2007M6 2007M9 2008M3 2008M6 2008M9 2009M3 2009M6 2009M9 Some of the main factors that account for the fall in prices in 2011 are uncertainty regarding the short term global economic outlook; a more marked downswing than expected in emerging and developing economies; a downturn in the Chinese pro- perty market, increasing concerns over a hard landing in the country; and doubts as to the continuance of the commodity market boom. Crude petrol prices performed differently, which was mainly due to heightened geopolitical risks.22
  14. 14. 2012 Yearbook on the Internationalization of Spanish CompaniesWorld oil demand in 2011 was lower than expected owing to weaker global activity.However, the supply disruptions in major oil-producing economies (particularlyLibya) interruptions due to maintenance and other reasons in non-OPEC oil produ-cing countries led to supply shortages which pushed up prices.Additional production by other OPEP members, primarily Saudi Arabia, and theweakening of demand enabled the matching of supply and demand at the endof the last quarter. However, at that time, the oil stocks of the OECD economiesand the surplus capacity of the OPEC had fallen below five-year averages. At thesame time, geopolitical risks increased, pushing up the precautionary demand forstocks. These events took place in a context of persistent oil shortages. In thesecircumstances, price increases are inevitable.Forecasts point to little improvement in conditions in the oil markets, since supplyfrom non-OPEC countries is only expected to increase moderately in the shortterm. On the basis of the future prices for oil, it is anticipated that spot prices willdrop gradually but remain above the average level until 2012-13. Since inventorystocks and surplus capacity are below average, the upside risks for oil prices re-main a cause for concern, in spite of the downside risks for oil demand and globaleconomic growth.International trade 1.1 Global trade slumped in 2011, following the significant mi and the nuclear accident in Japan or the floods inrecovery in 2010. Thailand).The reasons that account for this fall include in par- As a result, trade growth in 2011 was below average.ticular financial and economic uncertainly at interna- According to the WTO the volume of global trade intional level (negative growth recorded in the European goods grew 5% (in real terms), compared to 13.8% inUnion or the debt crisis in the euro area), civil strife 2010 (Table 1.3).(rioting in North African countries, especially in Lib-ya) and natural disasters (the earthquake, the tsuna- 23
  15. 15. Yearbook on the Internationalization of Spanish Companies 2012 Table 1.3 GDP and trade in goods by regions, 2009-2011 Annual percent change at constant prices Source: WTO Secretariat GDP Exports Imports 2009 2010 2011 2009 2010 2011 2009 2010 2011 World -2.6 3.8 2.4 -12.0 13.8 5.0 -12.9 13.7 4.9 North America -3.6 3.2 1.9 -14.8 14.9 6.2 -16.6 15.7 4.7 US -3.5 3.0 1.7 -14.0 15.4 7.2 -16.4 14.8 3.7 Central and South America a -0.3 6.1 4.5 -8.1 5.6 5.3 -16.5 22.9 10.4 Europe -4.1 2.2 1.7 -14.1 10.9 5.0 -14.1 9.7 2.4 European Union (27) -4.3 2.1 1.5 -14.5 11.5 5.2 -14.1 9.5 2.0 Commonwealth of Independent States (CIS) b -6.9 4.7 4.6 -4.8 6.0 1.8 -28.0 18.6 16.7 Africa 2.2 4.6 2.3 -3.7 3.0 -8.3 -5.1 7.3 5.0 Middle East 1.0 4.5 4.9 -4.6 6.5 5.4 -7.7 7.5 5.3 Asia -0.1 6.4 3.5 -11.4 22.7 6.6 -7.7 18.2 6.4 China 9.2 10.4 9.2 -10.5 28.4 9.3 2.9 22.1 9.7 Japan -6.3 4.0 -0.5 -24.9 27.5 -0.5 -12.2 10.1 1.9 India 6.8 10.1 7.8 -6.0 22.0 16.1 3.6 22.7 6.6 Newly industrialized countries c -0.6 8.0 4.2 -5.7 20.9 6.0 -11.4 17.9 2.0 Developed economies -4.1 2.9 1.5 -15.1 13.0 4.7 -14.4 10.9 2.8 Developing economies and CIS 2.2 7.2 5.7 -7.4 14.9 5.4 -10.5 18.1 7.9 a Including the Caribbean b It is a supranational organization comprising 10 former Soviet republics c Hong Kong, China, Rep. of Korea, Singapore and Chinese Taipei According to IMF forecasts, real growth in world trade Japan (reducing its exports by 0.5%), disrupting supply will be even lower for 2012, falling to 3.2%, but will be chains which affected exports from developing coun- followed by an acceleration in 2013 (4.5%). tries such as China - fewer components were sent, which led to a reduction in the output of export goods. As to export performance, Asia, with an increase of 6.6%, was ahead of all the other regions. The increa- As to imports, demand in 2011 was adversely affected ses of 16.1% in India and 9.3% in China are noteworthy. by sluggish growth in the major economies, its growth falling from 13.7% in 2010 to 4.9% in 2011. By regions, Export growth in the developed economies in 2011 ex- the CIS experienced the highest growth (16.7%), which ceeded expectations, reaching 4.7%, on the back of a accounts for the greater increase in developing eco- sharp rise (7.2%) in US exports as well as an expansion nomies and the CIS (7.9%), compared with developed of 5.2% in EU exports. economies (2.8%). For their part, the results of the developing economies In 2011, exchange rates were considerably volatile, (including those of the CIS) were lower than forecast, which affected the competitiveness of some econo- with an increase of barely 5.4%. The factors that con- mies and prompted measures to be taken (Switzerland tributed to their worst performance in exports were the and Brazil). The fluctuations were largely due to attitu- interruptions in oil supply from Libya (75% reduction), des towards risk in relation to the sovereign debt crisis which led to an 8.3% fall in African exports in 2011; the in the euro area. floods in Thailand; the earthquake and the tsunami in 24
  16. 16. 2012 Yearbook on the Internationalization of Spanish CompaniesNominal trade flows were also affected by recent eco- With regard to exports of goods, in 2011, China retai-nomic shocks. In 2011, the value in dollars of world ned its world leadership (Table 1.4). It has graduallytrade in goods rose 19% to reach 18.2 trillion dollars, distanced itself from the US and Germany to hold aexceeding the high (16.1 trillion dollars) attained in 2-point lead in terms of share of total world exports,2008. A substantial proportion of this growth was due with a share of 10.4%.to the increase in commodity prices.The share held by the developing and CIS economiesin the world total rose to 47% in the case of exportsand 42% for imports.Main exporter of goods, 2011 Table 1.4 Billions of dollars and by percentage Source: WTO Percentage as Annual percentage Rank Value per global total variation China 1 1,899 10.4 20 United States 2 1,481 8.1 16 Germany 3 1,474 8.1 17 Japan 4 823 4.5 7 Netherlands 5 660 3.6 15 France 6 597 3.3 14 Rep. of Korea 7 555 3.0 19 Italy 8 523 2.9 17 Russia 9 522 2.9 30 Belgium 10 476 2.6 17 United Kingdom 11 473 2.6 17 Hong Kong, China 12 456 2.5 14 - National exports 17 0.1 14 - Reexports 439 2.4 14 Canada 13 452 2.5 17 Singapore 14 410 2.2 16 - National exports 224 1.2 23 - Reexports 186 1.0 10 Saudi Arabia 15 365 2.0 45 Mexico 16 350 1.9 17 Chinese Taipei 17 308 1.7 12 Spain 18 297 1.6 17 India 19 297 1.6 35 United Arab Emirates 20 285 1.6 30 25
  17. 17. Yearbook on the Internationalization of Spanish Companies 2012 Likewise, China increased its proportion of total world it continues to close this distance in the ranking of the imports (Table 1.5), attaining a 9.5% share and conso- top importers of goods. lidating its second position behind the USA. However,Table 1.5 Main importers of goods, 2011Billions of dollars and by percentage Source: WTO Percentage as per Annual percentage varia- Rank Value global total tion United States 1 2,265 12.3 15 China 2 1,743 9.5 25 Germany 3 1,254 6.8 19 Japan 4 854 4.6 23 France 5 715 3.9 17 United Kingdom 6 636 3.5 13 Netherlands 7 597 3.2 16 Italy 8 557 3.0 14 Rep. of Korea 9 524 2.9 23 Hong Kong, China 10 511 2.8 16 - Imports-reimports 130 0.7 16 Canada a 11 462 2.5 15 Belgium 12 461 2.5 17 India 13 451 2.5 29 Singapore 14 366 2.0 18 - Imports-reimports 180 1.0 27 Spain 15 362 2.0 11 Mexico 16 361 2.0 16 Russia a 17 323 1.8 30 Chinese Taipei 18 281 1.5 12 Australia 19 244 1.3 21 Turkey 20 241 1.3 30a Imports according to FOB values Finally, as far as trade in services is concerned, the growth owing to the fact that Egyptian exports in tra- value of world exports increased 11% in 2011 to 4.1 vel-related services dropped by over 30%. trillion dollars, with marked differences in the annual growth rates of the various countries and regions. For The proportion of trade in services in total trade in instance, African exports were seriously affected by goods and services stood at 18.6%, the lowest level the rioting in the Arab countries and experienced zero since 1990.26
  18. 18. 2012 Yearbook on the Internationalization of Spanish CompaniesForeign direct investment 1.2According to estimates published by the United they rose 21% with respect to 2010, reaching 748Nations Conference on Trade and Development billion, but are still 25% below the average attained(UNCTAD), which is the main source of statistical data between 2005 and 2007. In spite of this progression,on this subject, in spite of the throes of the world eco- developing and transition economies taken togethernomic and financial crisis and the debt crisis, in 2011, accounted for over half of global FDI (45% and 6%global Foreign Direct Investment (FDI) flows exceeded respectively). In the first group, FDI inflows increasedthe average level attained in the period prior to the 11%, reaching a record figure of 684 billion - 10% inworld economic and financial crisis, reaching 1.5 tri- Asia, and 16% in Latin American and the Caribbean.llion dollars. The actual growth rate was 16%. However, And in the transition economies, the increase wasthe level remains 23% below the 2007 record. 25%, to 92 billion. Africa and less developed econo- mies experienced a fall in FDI inflows for the third con-Some of the factors that boosted this growth were hig- secutive year. In Africa, the regression is essentiallyher profits earned by multinationals and the relatively explained by divestment in North Africa (specifically tostrong growth of developing economies. Egypt and Syria, due to political instability).The inflows of this kind of investment increased acrossthe board in 2011 (Chart 1.1). In developed countries,FDI inflows 1980-2011 Chart 1.1Billions of dollars Source: UNCTAD Developed economies2,500.0 World Developing economies Transition economies2,000.01,500.01,000.0 500.0 0.0 2004 2002 2003 2000 2005 2006 2007 1994 1984 2001 2009 1987 1989 1990 1991 1993 2008 1986 1988 1992 1997 1980 1982 1983 1985 1995 1998 2010 1981 2011 1996 1999 27
  19. 19. Yearbook on the Internationalization of Spanish Companies 2012 As to FDI outflows, flows towards advanced countries by the increase in the number of mega-operations (for rose sharply by 25% in 2011, reaching 1.24 trillion do- more than 3 billion dollars) from 44 in 2010 to 62 in llars. This increase is essentially explained by reinves- 2011, which is a reflection of the increase in the value tment of profits from US multinationals (82% of total of assets on the stock markets and the greater finan- outflows), mergers and acquisitions of the European cial capacity of buyers. Union, and Japanese purchases in North America and Europe favoured by the appreciation of the yen. New investment (greenfield) stayed around 904 billion (more than two thirds invested in developing and tran- Investment from developing countries fell 4% to 384 sition economies), and continues to outstrip mergers billion, while their share of global outflows remained and acquisitions, as has been the case since the start high at 23%. FDI from Latin America and the Caribbean of the crisis. fell 17%, essentially due to the repatriation of capital owing to financial considerations (exchange rate, in- On a corporate level, in 2011, despite the turbulent terest rate etc.). In the case of East and Southeast economic situation, important operations were per- Asia, the flows stagnated, while those from West Asia formed throughout the globe, as evidenced by the rose to 25 billion. UNCTAD ranking of the largest mergers and acquisi- tions in the world (Table 1.6). By sectors, FDI flows rose in three production sectors: primary, manufacturing and services. In the service Finally, forecasts regarding performance of FDI flows sector, FDI recovered in 2011 after falling in 2009 and have improved continuously from 2008-2009, while 2010, to reach 570 billion. Similarly, investment in the still being subject to macroeconomic and financial primary sector changed trend, reaching 200 billion. conditions. Due to economic uncertainty, UNTCAD The share of both sectors increased at the expense forecasts point to a slowing of the upward trend. of industry, where investment in the following areas is Growth in FDI is expected to slow, leveling off in 2012 noteworthy: the mining and chemical industries, uti- at around 1.6 billion dollars. Longer term forecasts, for lities, transport, communication and other services. 2013 and 2014, indicate a moderate rise to 1.8 trillion and 1.9 trillion, respectively. By FDI entry modes, cross-border mergers and acqui- sitions rose 53% in 2011 to 526 billion dollars, driven28
  20. 20. 2012 Yearbook on the Internationalization of Spanish CompaniesMajor cross-border mergers and acquisitions worldwide in 2011 Table 1.6 US$ billions Source: UNCTAD, WIR 2012 Objective Buyer Ranking Amount Company/ country /sector Company/ country GDF Suez Energy International Power PLC 1 25.1 (Belgium) Natural gas transmission (United Kingdom) Weather Investments Srl VimpelCom Ltd 2 22.4 (Italy) Telecommunications (Netherlands) Genzyme Corp Sanofi-Aventis SA 3 21.2 (United States) Biological products, except substance analysis (France) Nycomed International Management GmbH Takeda Pharmaceutical Co Ltd 4 13.7 (Switzerland) Pharmaceutical products (Japan) Petrohawk Energy Corp BHP Billiton PLC 5 11.8 (United States) Oil and natural gas (United Kingdom) Foster´s Group Ltd SABMiller Beverage Investments Pty Ltd 6 10.8 (Australia) Beverages (Australia) Centro Properties Group BRE Retail Holdings Inc 7 9.4 (United States) Property (United States) Reliance Industries Ltd BP PLC 8 9.0 (India) Oil and natural gas (United Kingdom) Skype Global Sarl Microsoft Corp 9 8.5 (Luxemburg) Software (United States) Morgan Stanley Mitsubishi UFJ Financial Group Inc 10 7.8 (United States) Bank holdings (Japan) Spain’s foreign sector 1.3A) Analysis of the Balance of Payments: current accountand capital account balanceSpain’s external imbalances continued their course of ad- The lower recourse to external funding can be explainedjustment in 2011. According to the data compiled in the broadly by the decline in investment, to 22.1% of GDPreport on the balance of payments 2011 (Table 1.7), pu- (against 23.3% in 2010), since gross national savings fellblished by the Bank of Spain in 2012, the funding requi- moderately to 18.7 % of GDP (0.6 pp less than the previousrements for Spain’s economy from external sources, year).measured as the overall balance of the current and capitalaccount, fell further in 2011 (by 22%) to 3% of GDP (practi-cally one point lower than in 2010). 29
  21. 21. Yearbook on the Internationalization of Spanish Companies 2012 Table 1.7 Balance of payments: balances % of GDP Source: Bank of Spain 2004 2005 2006 2007 2008 2009 2010 2011 CAPACITY (+)/FUNDING (-) REQUIREMENTS -4.2 -6.5 -8.3 -9.6 -9.1 -4.4 -3.9 -3.0 Current account -5.3 -7.4 -9.0 -10.0 -9.7 -5.2 -4.5 -3.5 Goods -6.4 -7.5 -8.5 -8.7 -8.0 -4.0 -4.4 -3.7 Services 2.6 2.4 2.3 2.2 2.4 2.4 2.6 3.2 - Travel and tourism 3.2 2.9 2.8 2.6 2.6 2.5 2.5 2.9 - Other services -0.6 -0.5 -0.5 -0.4 -0.1 -0.1 0.1 0.3 Income -1.4 -1.9 -2.1 -2.9 -3.3 -2.8 -2.0 -2.4 Current transfers 0.0 -0.4 -0.7 -0.7 -0.9 -0.8 -0.7 -0.6 Capital account 1.0 0.9 0.6 0.4 0.5 0.4 0.6 0.5 FINANCIAL ACCOUNT a 4.1 6.7 8.7 9.6 9.2 5.0 4.1 3.2 Excluding Bank of Spain 5.8 6.9 11.3 8.3 5.9 4.2 2.6 -7.1 Foreign direct investment -3.4 -1.5 -6.0 -4.8 -0.7 -0.1 -0.1 -0.6 Portfolio investment 10.2 6.5 20.3 10.0 0.4 4.3 2.9 -2.3 Other investments -1.0 1.9 -3.2 3.5 7.0 0.5 -0.9 -4.5 Financial derivatives 0.0 0.0 -0.2 0.4 0.6 -0.6 0.8 0.2 Bank of Spain b -1.7 -0.2 -2.6 1.4 2.8 1.0 1.5 10.2 ERRORS AND OMISSIONS 0.1 -0.2 -0.4 0.0 -0.1 -0.5 -0.2 -0.1 a Variation in liabilities less variation in assets b A negative (positive) sign implies an increase (decrease) in the Bank of Spain’s net assets vis-à-vis abroad In 2011, the current account deficit recorded a new The trade balance in relation to the EMU and the UE low in the series since 2004, by falling to 3.5% of GDP, was positive for the first time since the mid 1980s. against 4.5% in 2010. The correction of the deficit is primarily attributable to the improvement in the trade As to trade flows, exports grew 15% (despite the down- balance. A contribution was also made by the increa- turn in global trade), against 8.7% for imports. The an- se in the services surplus and the reduction in the nual coverage ratio (exports/imports) was above 80%. current transfers deficit, which offset the marked de- Moreover, in light of the performance of exports, the terioration in the negative income balance, caused by percentage share of Spain in world trade, in real terms, higher funding costs. As far as the capital account is continued to grow for the third consecutive year. concerned, the surplus shrank by one tenth, to 0.5% of GDP. This progression is largely explained by the impact on exports of accumulated gains in competitiveness- In 2011, the trade deficit fell considerably, to 3.7% price and competitiveness-cost in recent years. In of GDP (0.8 pp lower than in 2010), especially due to addition, this effect has been strengthened by the the marked decrease in the non-energy trade balance growth in the number of international trade relations, (-69%), since the energy trade balance continued to favoured by the increase in the number of exporting rise (16%) due to high oil prices. countries, (12.5% in 2012) and by the diversification of destinations where Spanish companies operate. 30
  22. 22. 2012 Yearbook on the Internationalization of Spanish CompaniesIn terms of the Quarterly National Accounts (CNTR), to this marked progression in exports, capital goodsreal exports of goods grew in 2011 by 9.5%. According as well as intermediate goods played an importantto Customs, the increase was 10.1%. Both figures re- role, at the same time, consumer goods showed no-flect the strength of exports in the context of a down- table recovery (5.4% in 2011), in particular foods andturn in global trade and, in particular, the strength of other manufactured products. Actual sales of capitalSpain’s export markets. However, while in real terms goods increased by 15.9% in 2011, owing to exports ofthe share of Spanish exports in the world total rose, rail and air transport material, and construction ma-in nominal terms, it fell, due to higher energy costs. chinery. Exports of energy intermediate goods grew 36.7% and non-energy intermediate goods by 10.7%.By sectors, there were no significant changes inSpain’s trade pattern in 2011 (Table 1.8). In relationForeign trade in goods, specialization by product Table 1.8 % of total Source: Own research based on data from the Spanish Ministry of Economy and Competitiveness 2011Products Exports ImportsFoods 14.2 10.4Energy products 7.4 21.4Commodities 2.7 4.3Non-chemical semimanufacturing 12.2 7.5 Non-ferrous metals 2.2 1.4 Iron and steel 4.1 3.1 Paper 1.6 1.3 Ceramic products and similar items 1.3 0.2 Other semimanufacturing 3.0 1.5Chemical products 13.7 14.5 Organic chemical products 1.6 2.8 Inorganic chemical products 0.4 0.8 Plastics 3.8 3.0 Medicines 4.1 4.3 Fertilizers 0.3 0.3 Tanning and dyeing products 0.9 0.5 Perfumes and essential oils 1.5 1.1 Rest of chemical products 1.2 1.8Capital goods 20.1 17.9 Industrial machinery 5.1 4.6 Office equipment and telecommunications 1.3 4.5 Transport material 5.1 1.8 Other capital goods 8.6 7.0Automotive sector 15.4 10.4 Cars and motorcycles 10.5 4.2 Auto parts 5.0 6.2Durable consumer goods 1.7 2.5Consumer manufacturing 8.2 10.5 Textiles and clothing 4.6 5.9 Footwear 1.0 0.9 Toys 0.3 0.7 Other consumer manufacturing 2.3 3.0Other goods 4.4 0.7 31
  23. 23. Yearbook on the Internationalization of Spanish Companies 2012 By geographical areas (Tables 1.9 and 1.10), as in By sectors, in real terms, imports of consumer goods 2010, it is worth highlighting the growth in nominal fell 2.2% and imports of capital goods by 3.1%. Inter- terms of sales outside the EU to the OPEC countries, mediate goods sales halted their progression, falling Russia and associated countries as well as Japan and from 19.1% in 2010 to 2.6% in 2011, owing in particular China. While exports to the euro area slowed down, to the slowdown in purchases of non-energy interme- those destined for France and Germany showed sig- diate goods. nificant progress. By geographical areas, in real terms, purchases outsi- Imports suffered a setback, with a real growth rate de the EU (from Russia, Latin America etc.) grew more of 0.6% in 2011, according to data from the Quarterly sharply than those from the euro area, whose relative National Accounts, and 1% according to Customs. weighting as a goods supplier for Spain fell further. It This lower growth is mainly due to weak domestic de- is worth emphasizing the weighting of imports from mand for consumption and investment, the downturn France, Germany and Italy. in exports and the increase in prices, in particular of commodities.Table 1.9 Foreign trade in goods, specialization by geographical area% of total Source: Spanish Ministry of Economy and Competitiveness 2011 Regions/countries Exports Imports EUROPEAN UNION 66.0 52.8 EURO AREA 52.8 42.8 France 17.9 10.8 Germany 10.2 11.8 Italy 7.9 6.6 Portugal 8.0 3.9 REST OF EU 13.3 10.0 United Kingdom 6.4 4.0 REST OF EUROPE 7.6 6.9 Russia 1.2 3.2 NORTH AMERICA 4.2 4.5 US 3.7 4.1 LATIN AMERICA 5.6 6.1 Mexico 1.4 1.4 Brazil 1.2 1.4 Argentina 0.5 0.8 REST OF AMERICA 0.1 0.6 ASIA 7.9 19.8 India 0.6 1.1 China 1.6 7.1 Japan 0.9 1.2 AFRICA 5.4 8.9 Morocco 1.9 1.2 Algeria 1.2 2.2 OCEANÍA 0.8 0.5 Australia 0.7 0.3 OECD 77.8 64.2 NAFTA 5.6 5.9 MERCOSUR 1.8 2.3 OPEC 3.9 11.2 32
  24. 24. 2012 Yearbook on the Internationalization of Spanish CompaniesSpain’s foreign trade performance by geographical area Table 1.10 Nominal variation Source: Bank of Spain. Balance of Payments Report Total 2005-09 2010 a 2011 a Exports Total 1.7 17.4 15.4 OECD 0.4 16.2 13.5 EU 27 0.2 15.4 12.6 United Kingdom -5.3 15.1 19.5 Euro area (EMU 16) 0.7 15.0 9.6 Germany 0.7 10.7 12.2 France 1.7 12.4 13.3 Italy -0.3 25.8 4.4 United States -0.3 12.5 20.8 OPEC 9.3 11.0 28.5 CIS and other Central and Eastern European countries b 9.7 26.6 49.5 NIC c 8.4 25.2 1.8 Rest of world 5.6 25.8 17.5 Imports Total -0.2 14.2 9.6 OECD -2.5 7.7 6.5 EU 27 -2.4 6.9 5.9 United Kingdom -5.0 10.7 -2.2 Euro area (EMU 16) -2.9 4.5 6.7 Germany -3.7 -6.6 10.0 France -5.4 2.0 10.6 Italy -4.7 12.1 2.4 United States 2.4 10.1 12.8 OPEC 6.7 34.9 20.5 CIS and other Central and Eastern European countries b 6.1 23.1 33.2 NIC c -4.6 6.9 -3.5 Rest of world d 6.3 27.2 10.0a Provisional data, Department of Customsb Including Russia, Ukraine, Belorussia, Moldavia, Georgia, Armenia, Azerbaijan, Kazakhstan, Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan, Romania, Bulga-ria, Albania, Croatia, Bosnia and Herzegovina, Serbia and Montenegroc Includes Republic of Korea, Taiwan, Hong Kong and Singapored Does not include items without geographical allocation 33

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