Boosting Spanish Exports: A Guide to Public Support & Financing

Posted on Oct 28, 2024 in Economy

The Spanish Institute of Foreign Trade (ICEX)

The Spanish Institute of Foreign Trade (ICEX) is a public entity under the Ministry of Commerce. Its primary goal is to design, coordinate, and execute promotional activities that encourage Spanish companies’ export activities and boost their presence in foreign markets. ICEX also offers information services and assistance to Spanish companies looking to enter international markets. It collaborates with commercial offices abroad, as well as territorial and provincial trade offices. Some offices house centers that develop specific commercial trade promotion policies for certain sectors and market activities.

ICEX is led by two Directorates: the Directorate General for Information and the Promotion Department. Its main trade promotion services include:

  • International trade fairs
  • Trade missions
  • Sectoral plans
  • Export consortia
  • Business plans

These activities are co-financed, meaning ICEX participates in the promotional costs with companies and sectors, rather than fully funding them.

International Fairs

Trade fairs are highly effective promotional tools due to the numerous professional contacts made in a short time, their geographical diversity, and the insights they offer into competitors, demand characteristics, and market trends. ICEX supports Spanish companies’ participation in international fairs through five programs:

  1. Official Pavilions: Joint participation of several companies from one or more sectors in an international exhibition, with ICEX managing organization and logistics.
  2. Group Participation: An Exporters Association or sectoral advocacy group acts as the managing entity.
  3. Individual Participation: Support for individual companies exhibiting Spanish-made products marketed under Spanish brands.
  4. Expotecnia in Strategic Markets: Showcasing technology and equipment from Spanish companies to project an image of advanced technology and facilitate sales, investment, or technology transfer agreements.
  5. Expoconsumo: Promoting Spain’s image as a producer of quality consumer goods and food products.

Trade Missions

Trade missions allow groups of companies to travel to foreign markets to showcase Spanish products and identify foreign demand (trade missions), research market potential (study missions), or present and sell Spanish products (tasting missions).

Reverse trade missions bring foreign business journalists and potential buyers to Spain to learn about Spanish products through visits to production centers or trade fairs.

Sectoral Plans for Promotion Abroad

This program coordinates promotional activities for specific markets, including technical seminars, market research, joint fair participation, direct and reverse missions, and advertising campaigns. ICEX determines the percentage of total aid.

Export Consortia

Export consortia encourage groups of exporting companies, particularly those with limited capacity or international experience, to jointly promote or market their products in foreign markets, sharing the investment of maintaining a permanent presence abroad. Consortia can be formed in Spain (origin consortia) or abroad (destination consortia).

Business Plans

These plans support companies in promoting their brands and establishing themselves internationally, targeting businesses with some foreign trade experience. Submitted plans must have a three-year projection. Funded activities include:

Promotion Expenses

  • Market research and feasibility studies
  • Promotional materials
  • Advertising investments
  • Commercial prospecting trips
  • Individual participation in international fairs
  • Other promotional activities (sponsorship, public relations, exhibitions)

Expenses Abroad

  • Lodging expenses
  • Maintenance expenses (rent, wages, tax and accounting advice, etc.)

The Cameral Export Plan

The Cameral Export Plan comprises information, training, and foreign trade promotion activities conducted jointly by the Chambers of Commerce and the Higher Council of Chambers, along with individual activities by each chamber. Chambers are legally required to allocate two-thirds of their resources from business contributions to foreign trade promotion. Key actions within the plan include:

Promotional Activities Abroad

  1. Cameral Plan and Trade Missions/Clusters in collaboration with ICEX.
  2. Official pavilions at selected international fairs.
  3. Joint efforts in trade fairs and missions without ICEX collaboration.

Training Measures

Training in foreign trade is crucial for companies expanding internationally. Training activities include:

  1. Trade courses tailored to the company’s internationalization level
  2. Seminars
  3. Conferences

Information Actions

Chambers provide companies with information tools like databases, market research, and publications.

Other Institutions Promoting Exports

Expansión Exterior, a public company involving ICEX, BBVA, and the National Institute of Industry, organizes trade with developing countries, acting as:

  • Commercial Agent: Providing services to Spanish exporters without owning the operation.
  • Financial Officer: Securing financing for exports, turnkey plants, and infrastructure projects.
  • Main Contractor: Assuming the entire risk of the operation.
  • Promoter: Facilitating clearing and triangular operations.

The IMPI (Institute for Small and Medium Industry) actively promotes business development between companies.

The CEOE (Spanish Confederation of Business Organizations) supports business delegations and relations with foreign employers, focusing on business cooperation.

Financial Instruments

: 1) The Official Credit Institute (ICO) Through Contract Reciprocal Interest Adjustment (CARI), the ICO is committed to ensuring the entities that finance official export credits consistent performance over the life credit for grant funding for these institutions to the exporter in a better position than the market. In addition, the ICO pays the bank the difference between the interest rate applied and the market interest rate, whichever is higher than the first. Otherwise, the bank pays the difference, while maintaining constant performance. With this system, establishing a certain interest rate for the bank that finances a official export credit, without putting additional cost to the exporter.
– Formal credit is a type of loan that receives government support. The main features of these loans are: * You can only finance export contracts for equipment and turnkey plants. Excludes consumer goods and agricultural products .* We require that the exporter receives at least 15 100 of the total operation of the importer as advance payment .* apply interest rates below the market and within repayment between two and ten years.
– TheCredits FAD (Development Aid Fund) are carried out by agreement of the Council of Ministers, with the ICO the entity responsible for implementing and formalize transactions with targeted countries. The volume of credits granted is subject to agreements and financial protocols signed by Spain and other developing countries.
The processing of FAD differs depending on whether a specific loan or line of financing.
It is considered that specific credit that finances a specific project. In this case, the initiative belongs to the Spanish exporter must apply to the Administration (Directorate General for Trade Policy of the Ministry of Trade and Tourism) the financing of the operation from the FAD. Having examined the information provided by the exporter in a standardized questionnaire, the Directorate General for Trade Policy, if welcomes the proposal, write a letter of intent to export, with a limited duration, on the future extension of credit and their characteristics financial. Then, the exporter must submit two documents: a copy of the commercial contract signed with foreign customer and a statement informing the buyer country government of its willingness to extend its sovereign guarantee for the loan granted under the FAD by the Spanish government. The approval of the dossier is submitted to the Interministerial Committee for Development Assistance, so that this organization, if any, to make the proposal for approval to the Council of Ministers and the credit is granted FAD.
The ICO also offers a line of funding for the implementation of Spanish companies abroad, which is managed by partner financial institutions. The aim is to facilitate productive investment and the creation of commercial networks of Spanish companies in any area or foreign country.
-ICO-ICEX line for the internationalization of the company. Line is the financing of productive investments abroad, managed by the ICO in collaboration with the ICEX, projects aimed at small and medium enterprises. You can access it natural or legal persons residing in Spain or companies that meet the following requirements: having fewer than 500 employees, net fixed assets of less than EUR 75 million and has not involved a great company with a higher percentage than 33.33 100 in the capital. The line real estate financing those directly related to the activity that will develop up to 80% of the project, and intangible assets (technology, patents, softwre) to 20% of the project.
2) Insurance Company Spanish Export Credit (CESCE) CESCE is an insurance company involving the state (50.25 per 100), the main Spanish banks (45.40 per 100) and fifteen insurance companies general (4.35 per 100). It offers credit insurance, in general, in two cases: political risks. CESCE by the State covers the risks of currency transfer failure, public purchasers defaulted and the catastrophic risks of war. These are risks that neither importers nor the banks and other insurers are willing to take and, therefore, is the state that supports them. Commercial risks. CESCE self cover insolvency and protracted default of private borrowers, national and international guarantors.
3) Spanish Company Financing for Development (COFIDES) is a partnership involving the ICEX and BBVA aimed at promoting productive capital investments of Spanish companies to contribute to industrial development in less developed countries (those who are not the OECD and have a grade lower than development of Spain). Among the services provided COFIDES can include: 1) Contacts between Spanish investors and partners extranjeros2) Financing of feasibility studies and assistance técnica3) Financing of investment in the medium and long plazo4) Management of access to EU financial resources
4) Program for Investment Projects (PAPI) The purpose of this program is to provide financial support to cover part of costs arising in the establishment, expansion and diversification of a Spanish company in the exterior.Este program also supports any initiative internationalization of production that involves other than cash contributions (technology, knowledge, etc.).. Its scope focuses on the stages of preparation and implementation of investment projects or business cooperation abroad, mainly by financing partial pre-investment studies and technical assistance in the initial period of the project.