Reina Sofia Modern Art Museum

Despite the distance between the Americas and Europe, Madrid is providing the means and magnetism to bring them closer together. Madrid has always been the powerful pulse behind Spain’s commercial and monetary flows, but now the Madrid Region (location of the capital city of the same name) has gone international.

Promotion and investment
Some years ago Madrid may not have been first choice for those considering investing in Spain, but now, due in part to some recent promotional and communications innovations, plus Madrid’s impressive modernization process and vast improvements, such as PromoMadrid. Madrid is now being described as an international attraction sensation. Of the approximately 600 U.S. firms operating in Spain, over 400 are located in the Madrid Region.

PromoMadrid
2004 marked the founding of PromoMadrid, which was designed to promote international commercial relations, economic activity, and to strengthen the city’s international image. Part of the organization’s activities include serving as Madrid’s official information source and consulting bureau, and providing, along with many other things, advice on the economy, legislation, real estate, operational costs, and investment opportunities. In the last two years, PromoMadrid’s investment promotion department has advised 300 companies, almost a third of them from the United States. Two of the most prominent, IBM and HR Access, subsequently decided to invest in the Madrid Region.

Strategic industries have been identified in which U.S. companies can take particular advantage of Madrid’s economic attributes. ICT Life Sciences, R&D (research & development) Renewable Energy and Aerospace are key investment sectors and over recent years Madrid has seen the likes of Boeing, Motorola, IBM, Oracle, MSD and Procter and Gamble investing and reinvesting in the region. Indeed, U.S. firms are increasingly seeing the outstanding benefits of Madrid to access the European market across all sectors.

Surprising perks
Doing business in Madrid has brought some surprising fringe benefits. U.S. firms see their entrance to other European markets being facilitated through Madrid at more competitive costs than other European regions, and they are also finding that a Madrid base gives them an advantage in accessing Latin American markets. This is holding true even though Madrid is further away. Madrid offers Latin American cultural ties and a common language. In July 2007, U.S. law firm Jones Day moved its Latin American headquarters from New York City to Madrid. “Given the business links that exist between Spain and Latin America, with so many Spanish companies investing in Latin America, it was a natural move,” says Luis Riesgo, chair of the Latin American practice for Jones Day. Aside from the cultural similarities, there was a clear shift in the type of business deals we are doing in Latin America.” Advantages like this have led a lot of multinationals to set up their European headquarters for Latin America. Both BT Global, Germany’s Software AG and the U.S. wireless technology firm Qualcomm have decided to manage their Latin American services from their Madrid offices. And unlike some international trade, there are benefits coming and going. The Mexican firms Cemex and Pemex also use Madrid as their European headquarters.

A center for international arbitration
Madrid’s institutional efforts to position Madrid as a center for international arbitration are already producing results, making great strides with those in favor or an arbitration culture in Spain. Taking a further step into the legal world, Madrid’s stellar growth and international orientation is bringing with it a spot in the world of extrajudicial measures for dispute resolution. The Campus of Justice, which upon its completion will be the largest judicial complex in Europe, will also have an area for the exclusive use of arbitration matters. Indeed, with the developments made to date, it seems it will not be long before Madrid is competing with the big boys of London and New York. It is, “increasingly being viewed on a par with other leading arbitration seats,” commented Alfredo Prada, Madrid’s regional minister for justice and public administration. For the present moment, Madrid can “take advantage of historical, geographic and geo-political factors and establish itself...as a “neutral” and convenient seat of choice for disputes involving European, Latin and North African parties,’ says Cliff Hendel, an American lawyer at the Spanish law firm Araoz y Rueda.

Madrid is already doing just this, and not only in terms of arbitration. Madrid is utilizing its cultural, geographic and economic attributes to their full potential, confidently becoming an ideal gateway for North American as well as Latin American companies entering Europe and a powerful economic center to strengthen inter-continental commercial relations.