We interviewed Víctor Cortizo, Founding Partner of Cortizo Legal, one of the biggest experts in our country in Spain-China bilateral relations. Specialized in the development of business in the Chinese market, Victor is director of the “Diego de Pantoja” Hispanic-Chinese Center of the Francisco de Vitoria University of Madrid (UFV), Vice President of Cátedra China and coordinator of his working group on the new Silk Road, as well as member of the BRNSC organization (Belt and Road Services Connection). Throughout his career he has advised various public bodies on matters related to Chinese presence and investment in our country, and for nearly a year he has been the representative of M.I.A. (Madrid Investment Attraction), the investment promotion agency of the Madrid City Council, in China.
M.I.A.: Since mid-2018, the City Council of Madrid has an antenna of its foreign investor service office (M.I.A., Madrid Investment Attraction) in China. Could you tell us what are the objectives of the antenna and the main services it offers?
V.C.: The antenna of M.I.A. is represented by the team that Cortizo Legal has had in Beijing for many years and that throughout this time has worked in various areas, ranging from legal advice in the Chinese market to consulting for Spanish companies wanting to set up in China. One of the most interesting things we began to perceive a few years ago was Chinese companies have started to request information about our country and, since we have the antenna, about our city.
Our services range from the preparation of an agenda and market studies to negotiations; and in general cover the wide range of needs that arise in the relations between China and Spain. It is a very diverse subject, and a very customized solution is almost always necessary.
From the antenna we provide services throughout the People’s Republic of China, although it is in Beijing that we have our greatest activity. In any case, we also offer our services in other cities in China such as Shanghai, Chengdu, Hangzhou, Xi’an, etc. We have also made some presentations of Madrid in smaller cities of China where there is an important economic development and many opportunities.
We approach companies that have already made international decisions and who actively promote their presence abroad in a medium high business environment, that have already had some experience in the international market and are aware of the European business environment. In this way we can be sure of the vocation of the company to have a presence abroad and of the real possibilities of them having a presence in Madrid. In any case, we also maintain important relationships with Chinese funds interested in learning about investment possibilities in Madrid.
The activity of the antenna is focused on very diverse sectors, due to the very nature of Chinese companies that usually have different divisions in different businesses.
M.I.A.: Spain and Madrid have not traditionally been priority destinations for Chinese investment abroad, but since the beginning of the last decade their investment activity here has increased notably, exceeding 3 million of the annual investment received in the last 4 years, according to the Registry of Investments, and with a stock in the country above 10,000 million. In your opinion, what has changed so that Madrid is increasingly seen as an attractive destination for China?
V.C.: Of course, Madrid has become very aware of the role of China. For many years they have lived with their backs to all this, and today Madrid’s interest in China is clearly manifested at times such as the celebration of the Chinese New Year or the very existence of the antenna. Madrid’s rapprochement to China helps us a lot to position ourselves in the Chinese market. The visit of President Xi at the end of last year has also been very interesting, due to the wide diffusion that the Chinese media made of the State visit and the city of Madrid. That trip has aroused the interest of many investors in Madrid and Spain.
In my opinion, there is no such thing as a typical Chinese investor. We can say that these are companies that have consolidated their growth in China and that seek to increase their growth in the Chinese market through, in many cases, their investments abroad. The Chinese investor seeks investments that are strategically interesting to him and almost always with a long-term vision. He is not a speculative investor but wants to his interest in the broad Chinese market and almost always adapts a long term and strategic vision of his investment.
Access to means of transport and in the environment in general are important in any location. They really look at the location in detail and usually know how to evaluate it. In any case, they like premium locations that will raise their status in China.
M.I.A.: What do you think is the current perception of Madrid in China? In what areas should a greater promotion effort be made?
V.C.: Madrid needs to make a lasting impression. It is not just about selling the city as an investment destination, but as the social and cultural reference that it is. Its history as a city and as a part of Spain help its positioning a lot. We have to insist that Madrid is not just any European city. The business climate, its strategic location and the ease with which one can move around from the business point of view are highly valued. Madrid is an open city and that is how it is perceived by them.
Obviously we face great competition from cities like Milan or London, but I think that they are gradually having less impact and leaving more and more free space to Madrid. Of course, Madrid is a brand with increasing value and we just have to continue working little by little to reinforce this idea and gain protagonism over other more apathetic European cities.
M.I.A.: Initiatives such as the new Silk Road seem to open new opportunities for collaboration and bilateral investment, but there are notable differences in how each of the European countries are approaching them. In what sectors or areas do you think Madrid and Spain should focus?
V.C.: One of the main lines of work of the Beijing antenna is to position Madrid as the Headquarters of Chinese companies for Europe, North Africa or Latin America. Without a doubt it is one of our greatest assets.
Naturally, we detect interest in certain areas of the real estate, agri-food, technology and logistics sectors and construction and infrastructure companies.
The preferred way to approach these opportunities from the Chinese perspective is usually direct entry (which is the one that best suits their investor profile), although sometimes it is sufficient to sign an initial collaboration agreement. When they opt for this second option they are simply beginning to explore the area more thoroughly and need more time, but it is always a good start to sign simple collaboration agreements that logically must be developed by both parties.
It is true that the Chinese government enforces some limitations that may hamper foreign investment, but in our opinion these are only limitations of certain investments that only increase the demands or the strategic justification of the investor. In any case, they are temporary decisions that will not be in place indefinitely.
On the other hand, there are some measures to encourage investors to come to Spain, such as the Golden Visa, which are interesting but not a decisive factor. I think it is something that needs fine-tuning, to be a little more practical, but above all we must be patient, because we know from the experience with similar issues that we need several years to see its effects.
M.I.A.: In your opinion, what can the Madrid City Council do to make the city more attractive for Chinese investors and attract more sustainable investments that provide local value?
V.C.: Of course, we should keep that open spirit that we are already developing, but also increase our efforts to leave a lasting impression and showcase all the opportunities we offer. It would also be appropriate to increase the presence of the Chinese language in institutional information or in some public spaces. I also believe that the development of high-level economic and business events between China and Spain would be important for Madrid so that it becomes the city of reference in this regard.
The future is in any case very promising. It is necessary to advance little by little, but when one perseveres in China, one will eventually succeed. A few days ago we were told that all Chinese funds and groups of investors in Beijing know about the existence of the antenna. That is for us a first step, and above all, a recognition that the daily work of the entire M.I.A. team in China and in Madrid is paying off.