V. MARKETING U.S. PRODUCTS AND SERVICES Marketing Channels The Spanish market is a series of regional markets joined to two major hubs--Madrid and Barcelona. The vast majority of agents, distributors, foreign subsidiaries, and government-controlled entities that make up the economic power block of the country operate in these two hubs. Dealers, branch offices, or government offices located outside of these two hubs will almost invariably obtain their supplies from their Madrid and Barcelona contacts rather than engage in direct importation. The key to a foreign firm's sales success in Spain is to appoint a competent agent or distributor or to establish an effective subsidiary in either Madrid or Barcelona. However, investment incentives which reward investors for establishing manufacturing operations in the poorer regions of the country have resulted in some dispersal of U.S. investment in recent years. The major competitors of U.S. exporters and investors in Spain are Western European firms, but Japanese companies are swiftly becoming formidable competitors in Spain. Cost, financing terms, and after-sales servicing play important roles in marketability of a firm in Spain. Since Spain acceded to the EU, member states' exports to Spain have benefited from lower tariffs than U.S. exports. The dutiable rate for almost all EU goods entering Spain is zero since January 1, 1993, while U.S. goods are subject to the EU's Common External Tariff. American products retain competitiveness, in comparison to other exporters to the EU, because of lower production costs achieved through economies of scale. European exporters provide generous financing and engage in extensive cooperative advertising. Their governments also support exporters efforts by assisting with trade promotion events. Although U.S. products are well respected for their high level of technology and overall quality, U.S. firms often fall short of their competitors in terms of flexibility on financing, adaptation of product design to local market needs, assistance with marketing, and after-sales service. Spanish procedures follow those of the rest of Western Europe, where price remains paramount. However, credit terms, after-sales service, and marketing assistance are key factors in any successful transaction. Use of credit to purchase consumer goods is now widely accepted in Spain, particularly in the cities, and banks compete aggressively to offer coverage. All major U.S. credit cards, including Visa, Master Card, American Express, and Diners Club, are used. Department stores and some upscale retailers sometimes offer their own credit, particularly for purchases of large ticket items. Consumer credit is commonly used for the purchase of cars and homes. Housing developers, automobile dealers, and some manufacturers offer consumer financing directly. The Madrid hub principally serves the central, southern, and western parts of Spain, while Barcelona serves the north and east. Some overlapping occurs in Zaragoza, Bilbao, Valencia, and the Canary Islands. Barcelona usually encompasses the Balearic Islands and the enclave cities of Ceuta and Melilla in North Africa. Regional characteristics influence buying patterns. A competent agent or distributor takes this into account when marketing his products. The Basque Country, part of Spain's north coast, and Catalonia, which includes Barcelona, have long traditions as autonomous regions with their own official languages and customs. There are 15 other autonomous communities (similar to U.S. states) with varying but lesser degrees of autonomy and cultural identity. Madrid is Spain's center for banking, administration, and transportation, and it serves as the headquarters of many large international companies. Barcelona is the capital of Catalonia which boasts a strong industrial tradition. The primary industries have historically been textiles, paints, chemicals, printing, plastics, fertilizers, electrical engineering, and machinery manufacture. Barcelona, and Bilbao the seat of the Basque Country's industry, are Spain's leading ports. As an important container port, the Bilbao region has extensive shipyards, steel-works, iron-ore mines, chemical and cement works, pulp and paper mills, and oil refineries. In eastern Spain, Valencia is the center of the Spanish furniture and ceramics industries, as well as a major center for citrus fruits and vegetables. Seville, the center of Andalucia with its river port, is a major source of olive oil, cork, wines, and other agricultural products. The free port city of Vigo, in the far northwest, is Spain's most important fishing and fish-canning center. Agents/Distributors - Finding a Partner Most U.S. exporters sell their products in Spain through distributors. Agents and distributors are generally exclusive, covering the entire country. Although a majority of Spanish distributors have their head offices in Madrid or Barcelona, many are located in Bilbao, Valencia, and other Spanish industrial cities where a particular industry may be concentrated. Distributors normally have sub-offices, enabling them to cover other parts of the country. In general, a distributorship is governed by the conditions agreed upon between the parties. Spain applies the "freedom of contract" theory, by which the contracting parties may establish any stipulation, condition, or undertaking provided that it does not violate Spanish law, morals, or public policy. The principal-agent relationship is governed by Spanish Civil and Commercial Codes and Spanish labor laws. On May 4, 1982, the Spanish Government amended Royal Decree 203381, regulating the "special labor relationship" between a principal and its agent. An amendment (R.D. 11951982) was published in the Boletin Oficial del Estado (Official State Bulletin, published daily as in the U.S. Federal Register) on June 14, 1982. This decree requires a principal and agent to execute a written contract in which they stipulate the agreed terms, including provisions for cancellation of the agreement. A copy of the contract should be filed with the sales representative's local Office of Employment. A fixed-term, written contract normally does not raise any relevant issue with respect to its termination. By contrast, termination of an indefinite duration agreement may raise a number of legal issues. Successive renewals of a fixed-term contract may be interpreted by the courts as an indefinite-duration contract. It also provides that, in the case of a definite term appointment, the term will be automatically renewed upon expiration for an identical term, unless either party objects to the renewal in writing at least one month before the end of the initial term. The amendment limits all definite term appointments to a year, which can be automatically renewed only once. However, upon the expiration of the renewal term, the appointment will be automatically converted into an indefinite-term appointment, unless either party objects to the conversion in writing at least one month before the end of the renewal term. Unwritten agreements for all legal purposes are enforceable contracts, but require burden of proof. Under Spanish law, no one is bound in perpetuity. Should a party grant indefinite, exclusive rights, it is not bound forever by the initial commitment to the point that it cannot revoke the original, exclusive mandate. Nevertheless, an ongoing, indefinite relationship cannot be terminated without a reasonable cause. If it is terminated, damage compensation may apply, particularly if the termination is viewed by the court as being without reasonable notice or abusive. Historically, the Spanish courts have been extremely conservative in awards. U.S. firms seeking foreign distributors may contact the nearest U.S. Department of Commerce district office for an Agent Distributor Service or for assistance in requesting "Gold Key" service. The Gold Key service is tailored to the needs of a visiting U.S. businessman, and assists in reaching potential agents and/or distributors. Participation in trade events often leads to contracting with an agent or distributor. Franchising There are 213 franchises in Spain, with over 22,000 outlets opened. They make 4 percent of total retailing. It is forecast that they will grow to 5 percent of all retail stores by 1997. Around 62 percent of franchises are Spanish, followed by French, American, British and Italian. Around 73 percent of all franchises are in the commercial retail sector. Within commercial retail, consumer apparel is the highest with 44 percent of total. Franchised food stores are next in terms of numbers. Franchising is a great tool for traditional small retail stores to face the stiff competition posed by larger retailing stores. In large urban areas, small retailers are faced with few traditional options; specialize, associate with other retailers or close down. Franchising offers them a safe and most promising new option. Domestic statistics show that four out of five new independent retail operations opened each year; three or four either change business, ownership or close down before their first anniversary. The same survey shows quite a different outlook for franchised outlets. Four out of five remain open and working with the same brand and promoter after their first anniversary. Several reasons have allowed franchising to maintain a non-stop sustained growth since the mid-1970's. The most important ones are a continued improvement in the living standards of Spaniards and better training and education of professionals in the retail trade. Franchising will remain popular in Spain. Although its present growth rate has been slowed by the current recession, all analysts believe that demand will be sustained in the future. As the market becomes more segmented and requires further specialization in retailing, demand for franchising will continue. Direct Marketing In the past, companies started to switch from massive media advertising campaigns to more cost effective and "measurable" promotional campaigns offered by direct marketing. This change helped boost direct marketing demand in recent years. Companies are finding out that in many cases, some of the marketing strategies used by direct marketing are more effective and less costly than a TV ad. This trend will continue in the future. Under current economic conditions, companies look for solutions that are less expensive. The direct marketing sub-sector has maintained high growth in recent years. Specifically, this market grew 10 percent to US$1.5 billion last year (1993), and growth estimates for 1994 are 6 percent. It is forecast to increase at a compound annual average growth rate of 15 percent through 1997. One of the fastest growing segments in direct marketing is mail-order. Total mail-order market for 1993 was US$ 667 million, close to 12 percent increase over the previous year. Marketing by mail-order represents only 0.4 percent of Spain's total distribution sales, lagging far behind European Union's average of 3-5 percent. It is estimated that Spaniards spend an average of fifteen US dollars in mail-order purchases compared to EU's average of US$ 150. Sector analysts forecast that Spain will catch-up with the EU's average mail-order spending in 15 years time. Tele-marketing is the fastest growing segment within the direct marketing activity. Tele-marketing receipts amounted to US$83 million in 1993, about 20 percent of total Direct Marketing billings. Sales estimates for 1994 are a 15 percent growth. These two segments spearhead this sub-sector's growth. They make up 44 percent of total direct marketing billings at present, but it is forecasted that they will have a bigger share of total revenue in the near future. Large and better known distribution companies are entering the mail-order activity while growing sophistication in the telephone services offered by the public telephone company, Telefonica, brighten tele-marketing's future. There are no specific regulations on distributing products through direct marketing. There is a law called LORTAD that regulates data privacy. Companies interested in developing a direct marketing operation in Spain should contact and join the Spanish Direct Marketing Association (AEMD - Asociacion Espa ola de Marketing Directo). Asociacion Espa ola de Marketing Directo Avda. Diagonal 437 08036 Barcelona tel: (34-1) 414-0538 fax: (34-1) 201-2988 Joint Ventures/Licensing Joint ventures in Spain can operate under different forms. A group of companies can form temporary associations (uniones temporales de empresas - UTE), designed to exist for only a limited time, to undertake specific projects. This type of association does not have separate legal personality, rather companies maintain their legal status while allowing common operations under a set of regulations. Foreign companies can enter this type of arrangement. An Economic Interest Group (agrupacion de interes economico -AIE) is a vehicle for a joint venture between Spanish participants. It is similar in concept to a partnership, its participants having joint and separate liability for its debts. To form an AIE, the participants must execute a public deed, incorporating bylaws, and record it at the commercial register. The internal operation of an AIE is similar to that of a corporation, and an AIE can be transformed at any time into any other type of commercial entity. There is also a European version of the AIE, the European Economic Interest Group (agrupacion europea de interes economico -AEIE). This is a cross-border version of the Spanish AIE, introduced by EU's Regulation 2137 of 1985. A local AEIE is a separate legal entity and must be incorporated in Spain. It must be recorded in the commercial register, and in almost all respects it is similar in constitution and operation to an AIE. These three models of joint venture are tax transparent; that is, their income is apportioned among their members. In all of these cases losses as well as profits can be attributed to the members. Licensing agreements are similar to those in the United States and the rest of Europe, and are contemplated under local business law. Licensing agreements are reviewed by the General Directorate of Foreign Transactions (DGTE) in the Ministry of Economy. Payments for licensing fees, technical assistance, consultants' fees, trademarks, patents, technology transfers, and other non- patented matters, are freely transferable abroad. In most cases such payments are subject to Spanish taxation and normally taxes will be withheld at the time of payment. The procedure to recover amounts withheld are established in the double taxation agreement between the United States, implemented on January 1, 1991. This treaty follows the OECD Draft Convention on Double Taxation. Steps to Establishing an Office The first decision a foreign investor in Spain must make is whether to incorporate a subsidiary (i.e. a separate corporation) or a branch. Both have full legal status for any kind of operation, and their profits are taxable in Spain. If the investor decides to incorporate a subsidiary, the next decision is whether to incorporate a public limited-liability company (sociedad anonima, or SA) or a private limited company (sociedad de responsabilidad limitada or SL or SRL). The SA is structured for larger operations; the SL for smaller. In both of these companies the shareholders are not liable for the company's debts. The main differences are in their capital (10 million pesetas versus half a million), the number of founding members (3 versus 2), flexibility permitted at general meetings, transfer of shares and management of an SL. Companies interested in setting up an operation in Spain must consider legal advice. Major consulting groups as well as law firms are available to carry out the necessary steps to incorporate in Spain. A summary of the steps needed to carry out such an operation follows. (A) To acquire legal status, an American firm must follow the following steps: - Registration of company name: promoters must acquire a certification that the name chosen for the future company is not already registered. Applications must be presented at the Central Mercantile Registry. The certification is valid for two months. - Public deed or incorporation charter: the founding partners proceed to sign the constitution deed for the business according to the company's charter. This is done at any of the public notaries that exist in Spain. The name certification is required as well as the company's charter. - Pay asset transfer tax and legal proceedings document tax: these are taxes paid up for new incorporation (they amount to roughly one percent of capital stock). These taxes have to be paid up at the provincial tax delegation where the company has incorporated. Needed documents are a completed form model 600, both a legalized and simple copy of the Public deed (provided by the public notary). This must be done within 30 working days from the date of public deed. - Acquire the Tax Identification Code (locally called CIF - Codigo de Identificacion Fiscal): this number becomes the company's identification and is required for all the transactions. The provincial tax delegation provides it. Needed documents are form model 036, a copy of the public deed and a photocopy of applicant's I.D. if it is a partner, or photocopy of the power of attorney authorizing the applicant. This must be done within 30 working days from the public deed. The CIF number must be withdrawn within 6 months of application. - Registering the company: the company must be registered at the Corporate registry corresponding to the incorporation address. Needed documents: first copy of the Public deed (provided by the public notary) and certificates that taxes (look above) have been paid up. There is a two month period for completing registration. (B) In order to start any economic activity the following are required: - A fiscal license: companies and individual businessmen must acquire a fiscal license. This is a local tax levied on fiscal year's activities. This can be acquired at the local tax administration. Needed documents: I.D. of individual person or C.I.F. (tax identification code) for companies, I.D. of legal representative and motor vehicle tax and technical inspection card if it is a transport enterprise. In some professional services the approved seal of the professional association or bar is required. This license must be requested 15 days before starting any economic activity. - Census declaration: companies and individual businessmen must register in the corporate census for value added tax purposes and to be included under personal tax declaration system. This is done at the local tax administration. Necessary documents: Photocopy of C.I.F. (tax identification code) and identity card. It must be done prior to the beginning of business activity. - Tax books: regulations establish that companies must reflect different internal operations in special books; (a) income and sales book; (b) expenses or purchase book and (c) inventory book. Books have to be legalized at the local tax administration. Necessary documents: fiscal license and photocopy of I.D. These books have to be legalized 30 natural days after fiscal license. (C) Social Security Registration - Registration of a company: once incorporated and ready to start operations, companies have to register at the Social Security. This registration is unique for each province where there is a work center. Self employed have to register as well. Documents are a copy of the deed of constitution of the company and photocopy of the applicant's ID or power of attorney. For individual businessmen, an ID is required. A contract with a Workers Compensation Fund is also needed for this procedure. These procedures are carried out at the local Social Security delegation. - Opening communication: communication of the opening of the work center or resumption of economic activity. Must be done within 30 days following the beginning of activity. Companies and individual businessmen must keep two logs; (a) visitor's log and (b) a personnel registration book. This is done at the Social Security provincial delegation. Necessary documents: details of the company and work center plus description of the activities to be carried out. (D) The following procedures may be required by the town council (it varies from town to town). - Municipal tax liability depending on the street category. - Construction licenses if there is going to be any work carried out in the premises to adapt it to the new economic activity. - Opening license that accredits that projects' installations conform with municipal regulations. - Town council is required to be notified every time there is a change in ownership. (E) Other specific requirements - Industry Property Registry for trademarks, patents, commercial names, distinguishing signs, industrial models, etc. - Industrial Registry for industrial activities, workshops, toxic or dangerous substance warehouses, as well as manufacturing operations of any product. - Company Qualification Certificate for construction, installations and/or electrical repairs, wood and cork sectors, and activities of engineering and consulting. - Identification papers or certificate for individual persons or companies involved in electrical installations, gas, air conditioning and compressors. - Special Registry for food industries and wholesale establishments (except supermarkets and hyper-markets). - Special Registry for industries involved in the transformation and storage of agricultural products. - Special registry for manufacturers, importers, retailers and distributors of gambling equipment. - Commencement authorization for bars, cafeterias, restaurants and hotels. - Application license for travel agencies. - Special registry for companies involved in the security sector. Selling Factors/Techniques Client satisfaction is not a big issue in Spain. Foreign distribution companies that have entered this market have introduced this concept. Only recently are consumer groups beginning to appear. A new product liability law was passed in July of this year (1994) which will effectively protect consumers. Relationships are still very important in selling U.S. products successfully in Spain. This factor is sometimes more important than price or quality, especially in large account sales. Decision making process within a company is different from the United States. It is usually centralized in the leading executive of the company. This person will take action after it is reviewed by different departments, making the sales process longer. An initial "yes" usually means that they will study the situation, and not necessarily that they will buy the product. New selling techniques are becoming very popular. Vending machines have sprouted all over Spain in the last decade. Direct marketing by mail order, telephone, TV or computer are growing considerably. Demand for logistics services is rising sharply. Otherwise, selling techniques, taking into consideration local tastes, are very similar to those in the Western World. Advertising There are approximately 15 million television sets in use in Spain. The average daily television audience is 23 million. The relative success of the private networks since 1990 has weakened the domain of TVE (TVE: 30%, Autonomous: 15%, Private: 55%). Until 1990, Television Espa ola (TVE) was the only national television network. It operates two channels, TVE1 which concentrates more on news and popular entertainment programs and TVE2 which more closely approximates the offerings of a U.S. PBS station. It also carries more sports coverage than TVE1. Catalonia, the Basque Country, Galicia, Andalucia, Valencia and Madrid regions operate regional (autonomous) government TV stations. In 1990, the Federation of Autonomous Radio and Television (FORTA) was formed to centralize film and sports rights acquisition for regional television stations and to coordinate their planning and programming processes. In 1989, the Government of Spain authorized the creation of commercial television and issued licenses to three new private commercial channels: Antena 3 TV, Canal Plus, and Telecinco. Antena 3 TV: This was the first private national network to begin broadcasting, in December 1989. Today it broadcasts 24 hours per day, reaches 82% of Spain and is the leader in audience. Telecinco: TV 5,the second private channel, began broadcasting in March 1990. It has a hold on children's programming. Canal Plus: Controlled by Prisa/El Pais, it broadcasts a mixed set of free and coded programs. For the latter, viewers pay a users fee. It has close to one million subscribers but its encoded programs are available to anyone with a television and a de-codifier supplied by Canal Plus. Cable is slowly growing in Spain. Legislation to regulate cable television has been expected for the past two years but has still not appeared. It is expected that by the end of 1994 there will be a cable TV regulation. The Mexican satellite service Galavision and the British Sky network are also widely available. In mid-1992 the first of two Spanish Hispasat satellites was launched in an effort to promote cable TV within Spain and send a signal to Latin America. Spain has a well-developed chain of radio stations. There are 35,000,000 (estimated) receivers in use and the estimated average daily audience is 16,000,000. The majority of Spaniards obtain their news from radio, not television, placing radio as the most important medium for the dissemination of information concerning the U.S. The principal radio networks are: AUDIENCE SER (private)...................... 6,735,000 Radio Nacional (Government)........ 3,245,000 COPE (Catholic Church)............. 2,492,000 Antena 3 (private)................. 1,305,000 Catalunya Radio.................... 422,000 In Madrid, five major daily newspapers and three economic/financial dailies receive international and national coverage from the major world wire services and three Spanish news agencies, one of which is the government-owned EFE service. Most also have U.S.-based correspondents. Madrid dailies: DAILY NEWSPAPER CIRCULATION EL PAIS (liberal-left) .............................. 407,000 ABC (conservative) ................................ 327,000 EL MUNDO (centrist).................................. 255,000 DIARIO 16 (centrist) .............................. 163,000 YA (center-right) ................................. 46,000 EXPANSION (economic)................................. 34,000 CINCO DIAS (economic). ......................... 21,000 LA GACETA DE LOS NEGOCIOS (economic),(est.) ..... 16,000 The three major Madrid-based news agencies are: EFE, Colpisa and Europa Press. Barcelona has five daily newspapers. They also receive international coverage from international wire services and the three news agencies headquartered in Madrid. Barcelona dailies: TITLE CIRCULATION EL PERIODICO (center-left).................... 181,000 LA VANGUARDIA (independent)...................... 206,000 EL OBSERVADOR ................................... 50,000 AVUI (Catalan/nationalist) .................... 35,000 DIARI DE BARCELONA (Catalan/nationalist) ...... 30,000 About 40 magazines are published in Spain. Some of the more important are: TITLE CIRCULATION HOLA (social)....................... 656,410 TIEMPO (left-independent)............. 179,017 CAMBIO 16 (centrist).................. 143,000 TRIBUNA (independent) ................. 95,000 EPOCA (conservative) .................. 78,203 ACTUALIDAD ECONOMICA (econ conservative). 31,479 EL SIGLO (centrist) .................. 25,000 MERCADO (economic conservative)........ 15,000 POLITICA EXTERIOR (foreign affairs)....... 12,000 U.S. non-government correspondents and media representatives: The Associated Press, Time, LA Times, The International Herald Tribune and The Wall Street Journal are represented in Madrid although only AP has a full-fledged correspondent in residence. Among broadcast media, CBS, ABC, and CNN are all represented by stringers. Broadcast Media Television is fast becoming the preeminent advertising medium, replacing newspapers in peseta volume of ads shown. With 300 television sets per 1,000 inhabitants, television reaches 96 percent of Spanish households. The standard TV commercial is 20 seconds, and 10 seconds is the minimum. Rates are reasonable. Radio advertisements last 10 to 30 seconds and are generally used by local merchants in urban areas. Printed Media Full color advertisements are offered in all the leading dailies and magazines, and rates are considered low by U.S. standards. Newspapers publish regular supplements on topics such as high technology, communications, education, and science, and these are often the media of choice for advertisements by leading multinationals in these fields. The technical press also has reasonable rates, but circulation is considerably smaller than in comparable magazines in the United States. Billboards are commonplace in urban areas. They are prohibited along main roads. Rates are reasonable. Ads may be placed directly in the media or through an ad agency. Commissions average 15 percent, and many agencies have creative staffs to develop ads likely to appeal to the Spanish population, including regional tastes. In general, U.S. multinational ads are successful, once adapted to Spanish tastes. There are no standard rates for ad placement or creative development, and competition is strong for multinational and foreign clientele. Ad agencies are located mainly in Madrid and Barcelona. A list of major dailies and business newspapers can be found in Appendix D. Management Consulting Firms National and multinational market research agencies offer their services mainly in Madrid and Barcelona, with expertise in key sectors such as footwear, textiles, processed foods, metallurgy, shipbuilding, and electronics. Most major American consulting and auditing firms are present in Spain, including KPGM Peat Marwick, Arthur Andersen, Price Waterhouse, Deloitte & Touche, Ernst & Young. Pricing Product Pricing a product in Spain is similar to that in the United States, although mark-ups tend to be slightly higher. Products and services in Spain are subject to Value Added Tax. At present it stands at 15 percent. A reduced rate of six percent is applied to sales and imports of human or animal foodstuffs, water, books, newspapers, magazines, pharmaceutical products, personal dwellings, and school supplies. Payments are based on 90 day terms. Large corporations (including large retailers) negotiate or impose larger payment terms that can go up to 6 months. The Government defers all payments. Depending on which department, payments can be deferred by as much as one year. So, financial charges must also be factored into product pricing. Sales Service/Customer Support Demand among Spanish consumers for sales service and customer is growing. All technical products as well as most consumer products have sales service/customer support. Regulations require that sales service is available for Government procurement. Customer support is not as developed as in the United States. Many shops have no return policies. Only large department stores and new retailers (usually foreign) have a liberal return policy as in the United States. Selling to the Government Even though Spain automatically acceded to the GATT Government Procurement Code when it joined the EU in 1986, it did not implement the code until late 1992. EU directives on the Procurement Code, particularly EU Directive 88295 of March 1988, provide the framework for Spanish legislation on government procurement. These directives outline procedures for awarding contracts for construction and supply of public works, as well as procurement for entities operating in the fields of telecommunications, water, transport, and services. A proposed directive will open up procurement of services such as insurance, architecture, and waste disposal. Although a law on consolidating and rationalizing public-sector purchases was passed in 1985, there is still no central purchasing agency within the Spanish Government or its controlled industries. Each government ministry, agency, or government-owned company procures supplies and services independently. Regional and local government agencies follow the same general procedures regarding foreign purchases as the central government. Various types of tenders are used in government procurement: a) the auction (subasta), in which the contract is awarded to the lowest bidder; b) the selective tender (concurso-subasta), in which the contract is awarded to the lowest of pre qualified bidders; c) the tender (concurso), in which the contract is awarded on the basis of most advantageous overall proposal in which price may not be the determining factor; and d) the private tender, in which the contract is awarded to whatever firm the government chooses. International tenders are announced at least 40 days prior to the submission date and domestic tenders 20 days before the submission date. Validating documentation may be requested at submission. All requirements are published in the Official State Bulletin. For major procurement, especially military systems, the Spanish Government generally asks vendors to offer substantial offsets. An offsets package may combine transfer of technology, investment, or additional Spanish export transactions. Typical offset commitments for military sales reportedly range from 100 to 130 percent of the purchase price. U.S. firms seeking contracts from Spanish Government-controlled entities must have an established agent, distributor, or subsidiary in Spain before bidding on contracts. Under Spanish law, foreign companies seeking contracts with the Spanish Government enjoy the same opportunities as do Spanish firms. The foreign enterprise must, however, be a legal entity (for example, corporation or partnership) in accordance with its own national laws. The foreign firm must also be prepared to accept jurisdiction of the Spanish courts in legal issues that may arise in implementing the contract. Supply and service contracts are approved by the ministry having jurisdiction. Approval of the Ministry of Economy and Finance is required for contracts resulting in payments in foreign currencies. Protecting your product from IPR infringement Spain is a signatory to the Paris Convention for the Protection of Industrial Property. The Spanish Patents Act of March 20, 1986 brought Spain into conformity with the European Patent Convention and the anticipated EU Patent Convention as a requirement for its entry into the EU. Both the Trademark Law of November 1988 (Law 32) and the Intellectual Property Law 1750/87 address protection for brand names and trademarks. Spain is also a party to the Madrid Agreement on Trademarks. These laws are in accordance with EU standards. The Intellectual Property Law of November 1987 offers copyright protection. a) Patents A non-renewable 20-year period for working patents is available, and the patent must be worked within three years of patenting. Spain is revising its patent laws pertaining to chemicals, pharmaceuticals, and biotechnology to conform with EU standards. b) Industrial Designs These are known by their form or external characteristics and are eligible for exclusive exploitation for renewable periods of 10 years. Although third parties may oppose registration on basis of similarity to already registered models, registration is not forfeited because of non-use. c) Trademarks The Industrial Property Registry provides protection of trademarks for a 10-year period from the date of application, although such protection may be renewed. Trademarks must be registered to be protected. Protection is not granted for generic names, geographic names, those violating Spanish customs, or other inappropriate trademarks. d) Copyrights Copyright protection is extended for all literary, artistic, or scientific creations, including computer software. Spain and the United States are members of the Universal Copyright Convention. To be accorded protection, U.S. authors must register with this organization. Need for a Local Attorney Foreign companies and individuals are advised to hire legal advice for any operation they intend to do in Spain. Either to set up a subsidiary or a branch, to carry out business transactions or to acquire residency in Spain. Regulations are complex and legal help is useful in many every day commercial life activities.