MADRID Jan 15 As a provider of financial
security systems, Spanish tech company Realsec might easily have
fallen victim to the country's banking crisis and economic
slump. Yet Realsec is currently enjoying double-digit growth in
revenues thanks to new clients in Latin America.
Eighty percent of its revenues now come from overseas,
compared with 20 percent in 2009. Staff numbers are up from 15
in 2007 to 32 now, and CEO Jesus Rodriguez is searching for new
premises: his offices overlooking Real Madrid's football stadium
are getting too small.
"In 2007, Spain was our primary market, but that froze in
2009," he said. "If it hadn't been for our presence abroad, it
just wouldn't have been possible to keep going."
Realsec points to a glimmer of hope for the euro zone's
fourth largest economy, even though the International Monetary
Fund expects Spain to remain in recession through much of 2013.
As domestic demand has slumped, some companies have converted
themselves into exporters.
Latin American markets have been a prime target for Spanish
companies because of their language advantage, and giants such
as Telefonica and Banco Santander have
increased their exposure there to compensate for problems in
their domestic market.
Spanish exports have shot up around 40 percent since 2009;
and in the first 10 months of 2012 Spanish exports to Latin
America rose 18.5 percent over 2011, more than for any other
In July last year Spain registered its first current account
surplus - net money inflows from trade and other sources - since
August 1998, and it posted another current account surplus in
October. Net exports were forecast by the European Union to
contribute 2.7 percentage points to GDP growth in 2012, compared
with minus 4.4 percentage points for domestic demand.
Spain's export success is one of a few green shoots around
Europe. In Ireland, some businesses are benefiting from falls in
wage levels, while the country's plunge in land prices has
encouraged a new wave of foreign direct investment.
In Italy, businesses have applauded the way the
government loosened rigid employment rules in the hope that it
will lead to more investment and hiring.
None of these things mean Europe's economic crisis is over.
Governments are still grappling with how to encourage growth
while paying down debt. But taken together, they offer some hope
that the past few years of pain may be having some positive
"Better exports reflect to a large extent an improvement in
competitiveness - falling labour costs, better productivity,
lower wages," said Pier Carlo Padoan, chief economist at the
Organisation for Economic Co-operation and Development, the
Paris-based think-tank. Nevertheless, the OECD says the
short-term outlook for the euro zone's weaker economies remains
poor. "The euro area will be in recession till the end of the
year, and unemployment is rising still," Padoan said.
Realsec's domestic business was doing fine until 2007. Cheap
credit fuelled a ballooning housing market, and the Spanish
economy was growing faster than the rest of Europe.
That boosted business for financial institutions, which
needed Realsec's encryption systems for secure credit card
payments and ATM transactions. More business came from the
Spanish government, which wanted to secure online pension
payments and benefit applications against hackers and would-be
But exposure to the banking sector made the company
vulnerable to changes in the property market. So when talk began
to circulate in 2007 that Spain's housing boom might soon end,
CEO Rodriguez started looking for new customers.
He got advice and financial help from a government agency,
PromoMadrid, and paid for a study into the feasibility of doing
business in 22 Latin American countries. For the next two years,
as the financial crisis accelerated, Rodriguez and three
associates travelled to make contact with potential finance
clients in Mexico, Chile, Colombia, Peru, Venezuela and Brazil.
"I realised we couldn't have all our eggs in one basket," he
said. "We spent two years travelling in these countries. I'd
visit a potential partner, talk to him, see if the information
we'd been provided was really the situation on the ground.
During this time we were investing everything we could."
Investing in a region experiencing rising use of credit
cards and internet banking paid off. Realsec has been growing at
around 20 percent annually in recent years: it had total
revenues of 4.2 million euros in 2010 and 5.5 million euros in
2011, and is expecting 6.7 million euros for 2012. Rodriguez is
targeting annual revenues of 9 million euros by 2015, with 90
percent from outside Spain.
Other companies are starting to realise the potential, he
said. "Just a couple of years ago, there was no one in Mexico.
The other day I went in to a bank in Mexico and there were three
Spanish companies there, all of which had been working there for
more than three months."
Impulsa, a small Andalusia-based construction firm, has
diversified into Mexico and Colombia, as well as Algeria. "We
now survive just because of our foreign business," said founder
and CEO Ismael Mora Avila.
New investment could provide a further boost, as Spain's 26
percent unemployment rate puts downward pressure on wages and
adds to its allure as a low-cost production base. In the World
Economic Forum's Global Competitiveness Index, Spain has risen
to rank 36 in 2012-2013, up from 42 in 2010-2011.
In November, French carmaker Renault said it would
increase production and create 1,300 jobs in Spain, where
average hourly labour costs are two-thirds of those in France,
according to Eurostat. The deal would "benefit
from the competitive performance reached through the recent
workforce negotiations", Renault said at the time.
The previous month, Ford Motor Co said it would close a
factory in Genk, Belgium - where average hourly labour costs are
nearly twice Spain's - and transfer its production to Valencia
in Spain. "Costs are definitely playing a role" in the
investment decisions, said Greg Fuzesi, euro area economist at
To be sure, Spain still has the worst short-term growth
prospects among big European economies. Even if the export
uplift lasts, economists caution that it won't fix the country's
economic problems on its own. Unemployment is painfully high. An
estimated 1 million homes remain unsold after the property
market crashed. Solving such problems will require a recovery in
domestic spending, something that looks several years away.
"Export growth is sustainable," said Adrian van den Hoven,
director of international relations at Business Europe, a
Brussels-based lobby group. "But it doesn't resolve unemployment
quickly, so there are social problems that could remain."
Nor will many other firms be getting assistance from
PromoMadrid, the state agency that helped Realsec expand
overseas. It's been told it will be closed as part of the
government's austerity measures.