Asia: Opportunities and risks for Spanish companies

To mark its 25th anniversary, Empresa Exterior analyzes the evolution of Spanish internationalization in Asia, a continent that has transformed from a low-cost production hub into a complex landscape of consumer markets, innovation, and diversified opportunities. This new paradigm, however, is not without significant challenges. Álvaro de Luis Andrés, managing partner of the law firm Net Craman, outlines the geopolitical and regulatory risks that companies must face and emphasizes the need to adopt long-term strategies based on diversification and a deep understanding of the local context.

About Net Craman Asia

Net Craman Asia It is a renowned legal and corporate advisory firm with a solid track record of supporting companies in their international expansion. With an established office for 15 years in Guangzhou, ChinaThe firm stands out for its close relationship and direct communication with local authorities, and is currently expanding its practice to other key markets such as Singapur and the Sudeste Asiático.

About the interviewee: Álvaro De Luis Andrés

Álvaro De Luis Andrés is a managing partner of Net Craman AsiaHe holds a law degree from the Universidad San Pablo CEU de Madrid and holds a Master's degree in Business Administration from the Universidad de BarcelonaHe has extensive experience in commercial and corporate law, renewable energy, and international contracts. Throughout his career, he has led the international expansion of Spanish companies and is a member of the Colegios de Abogados de Madrid y Palencia.

Exclusive interview: 25 years of the Spanish company in Asia

Question: In Empresa Exterior We celebrate our 25th Anniversary by analyzing this first quarter of a century. ÁlvaroYou have personally experienced much of this period on the ground. What is your assessment of these last 25 years for Spanish companies in [the region/country]? AsiaHow has the profile of our companies evolved from that initial "landing" to today's reality?

Álvaro De Luis Andrés: The balance is decidedly positive, since España It is a newcomer to Asian markets, which by definition are numerous and highly diverse. Twenty-five years ago, Spanish companies were almost exclusively familiar with the Chinese market, and it wasn't so much the market itself, but rather the opportunities that this country offered in terms of very low and attractive labor costs.

Therefore, China It was of particular interest as a location for the supply chain. Currently, the Spanish company has a presence not only in China but in the rest of the Asian markets and countries. In fact, throughout Southeast Asia. We are talking about 10 member states in the Asociación de Naciones del Sudeste Asiático, in own China and in other countries like Corea del Sur y Japón.

The Spanish company is there not only manufacturing, since those labor costs in China Prices are no longer so low. Supply chains have been relocated to other countries in the region due to the risks that consumer markets have become. They have moved to other countries where innovation and technology are at the forefront. Spanish companies have adapted in what we consider a perfect situation: discovering new opportunities, exploring new countries, and adapting to the very different needs in all these countries in order to survive, consolidate, and succeed.

Question: Are you also celebrating the 15th anniversary of your office in GuangzhouIn a market as complex and ever-changing as Asia, what is the main role it plays today? Net Craman For the Spanish company? What added value does having its own consolidated structure there bring compared to managing it remotely?

ADLA: I would say that our main added value is our proximity, our direct knowledge of many of the Asian markets I mentioned earlier. The difference is enormous. Our advice isn't merely legal, academic, or armchair advice. We're there.

We have been working on the ground for fifteen years, we have been in a country as complex and which has evolved so intensely as it is ChinaWe are authorized by the regulator to provide advice at the headquarters of ChinaBut the fact that we have been living there for fifteen years, the fact that we have a real understanding of the difficulties our clients face, the fact that we have the ability to communicate directly with the administration, that we can also maintain close, direct communication with clients, suppliers, and our clients' partners in Chinese, in their language, directly in China and not from España…That proximity, that closeness, is what I believe differentiates us and has allowed us to progress in the quality of our advice during these years, and what guarantees the continuity of our practice there.

Furthermore, we are extending this practice to other countries, to places other than our own. China ´most iconic neighborhoods, Singapur, how is he Sudeste Asiático And once again, our focus is on presence. This means being close to decision-making centers, the headquarters of the companies our clients work with, the local authorities we interact with, and providing constant, personalized, and professional support, while remaining approachable and friendly with our clients. in situ and not only from España.

Question: Looking to the medium term and in the current geopolitical context, what are the biggest legal and operational challenges you identify for Spanish companies that operate or want to operate in China and the Sudeste Asiático in the next years?

ADLA: Well, there are always challenges, and they evolve according to the whims of the geopolitical context itself, which I would say is one of the main risks we have to face, against which we have to protect ourselves, or against which we have to hedge. As you know, the geopolitical landscape in recent months—I would say in recent years, but really it's in recent months, and sometimes in recent weeks and days—changes drastically overnight. We have to be very aware that there is a latent tension between the two great superpowers, between Estados Unidos y China.

We know that the Unión Europea It has a debatable position in the trade relations it maintains with ChinaBut at the same time, there are the political commitments it has made to its partners, as is the case here. Estados UnidosGeopolitical tension exists and will evolve, and we must be prepared to navigate its turbulent waters as changes occur. The relationship of China with Taiwán It is also one of the most complex circumstances any company may have to face in the future. In this regard, strategies such as the famous China plus one, China plus one, that is, companies have sought ways to not depend exclusively on supply chains located in China or from this single market, diversification is fundamental and as a consequence I would say that this is the second main risk.

In other words, geopolitical tension forces companies to diversify, to seek ways to diversify risk, and this leads them to approach new countries, new markets, and in the Asian context it must be understood that each and every one of the countries I mentioned earlier, answering the first question, belong to very different legal traditions.

We are talking about countries with continental legal traditions, of European influence, their own ChinaWe are talking about countries with a direct Anglo-Saxon legal heritage, all those countries that were British colonies in the past, countries where the shariaIslamic law also has a significant influence, although constitutional law still holds decisive sway. In other words, legal fragmentation in these countries is absolute, and this represents a regulatory risk that must be acknowledged and understood by the company. Asia It's not a country, China It is already a very complex geographical and political reality, but Asia Taken as a whole, it's a multitude of countries with a multitude of legal systems and regulatory requirements, and understanding these contexts and preparing to comply with the relevant sectoral and regulatory regulations is fundamental. Therefore, a geopolitical risk exists, a regulatory risk exists, but this can be mitigated with preparation, and the third main risk is compliance.

Compliance with the various existing regulations, which are also highly diverse in nature, is crucial. Issues such as sustainability, export restrictions, data protection, and cybersecurity evolve as geopolitical risks evolve. Staying abreast of all these matters is absolutely essential for any business owner, for any Spanish company that wants to establish a presence on the ground without compromising its legal security.

Question: To navigate this scenario of greater regulation and complexity, what type of legal services or solutions are clients demanding most right now?

ADLA: Our clients primarily ask us to support them in managing the regulatory risk I mentioned earlier and, ultimately, in regulatory compliance.

This implies two things. Obviously, we must be familiar with the current regulatory framework applicable to each circumstance, each specific case. However, distance, regulatory complexity, and the existing language barrier, along with the fact that our clients often require a reasonable amount of time to make the necessary investment in having a reliable, established team in each of the countries where they operate, lead them to request our assistance. We are always ready and constantly working to offer them a range of resources, from our expertise in the regulations to providing them with the necessary tools to assess the risks they may be incurring in the implementation and development of their respective businesses.

We also support them with seemingly simpler matters, such as the mere incorporation of their companies, and we ensure that these companies—which may be one or several, depending on their operational needs—are up-to-date with their legal obligations, or that they comply with all applicable legal and statutory requirements. Our clients request this very direct, very personalized support, and we become practically not only their legal advisors, but also their managers and even their board members. Many companies have entrusted us with advising them from within their own boards of directors at their local subsidiaries.

Therefore, this is consistent with and perfectly aligns with our dual business model in these markets. AsiaWe provide both basic corporate services and comprehensive, in-depth legal advice. I reiterate, we are talking about very different countries. In other words, we want to assure our clients that they can rest easy knowing their companies, businesses, and operations are fully compliant and free from any potential legal issues in jurisdictions as diverse as... Malaya, such as the China or like the Surcoreana It requires a tremendous amount of work. That's why we've been doing it for 15 years, and we'll need another 15 years to fully complete our project, which is to become a resolving entity and be able to offer this advice in all relevant countries in the region.

Question: What emerging trend in Asian markets should we not lose sight of? And as an expert familiar with both cultures, what key advice would you give today to a Spanish CEO who wants their project to succeed in [the region/country]? Asia Will it last another 15 or 25 years?

ADLA: I believe the main trend corresponds to the political and economic evolution of this part of the world. That is to say, Asia It will continue to gain economic weight and, therefore, political weight. Consequently, if Spanish companies want to internationalize, diversify their investments abroad, and ultimately prosper by growing internationally, they cannot ignore the options and opportunities offered by the various Asian markets.

The trend, therefore, I believe will continue to be looking east, looking towards the Orient, identifying potential collaborations and opportunities there. I cannot ignore the fundamental recommendation that any manager of any Spanish company who has intended to carry out any kind of investment or specific operation in the region has always made: these opportunities never work out; they never materialize or are never capitalized on in the short term.

We have to travel 12.000 to 15.000 kilometers east, we have to make an investment, we have to have our own staff on the ground, we have to make a long-term commitment, be ambitious, and at the same time, be consistent with our capabilities. In other words, we cannot make an investment abroad, anywhere in the world, but even less so when we are so far away and in countries that, I reiterate, have legal traditions so different from our own, without first cataloging and inventorying our intangible assets, identifying our strengths and weaknesses, determining what those intangible assets are, and what investment is needed to protect them proactively before engaging in any kind of dialogue with a potential partner or client.

Once we have done this categorization, carried out a business plan, and decided what investment we are going to make to protect ourselves before starting operations, we have to understand that the results will never come in the short term and that they will force us to be there, to commit to our bet, to our business plan and to the corresponding market for a reasonable time, but enough to mature that project.

It is impossible to do all this without relying on both Spanish and foreign institutions. We cannot fail to mention here the fundamental work carried out by the economic and commercial offices of España Abroad, the network of consulates general and embassies, but mainly I would say the network of Ofecomes It is fundamental in this sense, and so are the professional, private or independent advisors who are working there.

If we're there and have thrived and survived for 15 years, we expect to do so for another 15 years. But we also expect our clients to be able to stay there for a long time, and for that, they have to make an investment—an investment of time and an investment of money. Ultimately, I'm convinced that more and more Spanish companies will move not only towards Chinabut also to countries like Vietnam, Indonesia, Malasia, TailandiaAs these possible options for Spanish entrepreneurs to approach new markets or identify partners with whom to work together on technology development projects, manufacturing, or directly for the sale of a product or service are interpreted, I hope we can accompany them on this path.

Key points and frequently asked questions about the Asian market for Spanish companies

Why is diversification essential in the Asian market today?

To mitigate the high geopolitical tension between major superpowers such as Estados Unidos y Chinaavoiding dependence on a single market and applying alternative strategies for supply and consumption.

What does the "China plus one" strategy consist of?

It consists of not exclusively centralizing logistics and manufacturing operations in Chinese territory, promoting the search for additional operating centers in other countries of the Sudeste Asiático to minimize the risks of supply chain disruption.

What is the main legal challenge companies face when expanding into Asia?

The immense legal fragmentation of the region, since regulations based on continental law, Anglo-Saxon common law and legislation influenced by Islamic law coexist, requiring very strict regulatory compliance.