February 12th 2019

Adiex advises "preparing" to face "complicated" scenarios Venezuela and the United Kingdom

We echo the extensive information published by the newspaper The Tribune of Albacete (in its edition of Sunday, February 10), on exporting companies, due to the interest that this journalistic chronicle has for ADIEX companies. In addition, it includes an assessment of the president of the AssociationIvan Torres.

The Provincial Association of Importers and Exporters believes that if the UK opts for a 'hard' Brexit, it will be "a serious problem"

The situation of the United Kingdom and that of Venezuela are the two that "dominate" the current economic situation, although they are two "very different" cases and with a "very different" impact for companies from Albacete that operate abroad. This is how they consider it from the Provincial Association of Importers and Exporters (Adiex). Its president, Iván Torres, mentions, as an example, that, while the first is the fifth market for this region and the province, the second is "many places behind", although yes, "the trade balance with Venezuela is much more favorable for us."

Torres proposes that exporting companies "prepare contingency plans to act in the face of the two possible scenarios" that arise in the United Kingdom. If a 'soft' Brexit is finally chosen, the president of Adiex considers "that the transition will be done quickly and without too many inconveniences" for the parties, however, if the 'hard' Brexit option wins, "yes, We are going to have a serious problem." In this case, exporters from Albacete (especially from the area
agri-food, wines and automobiles) would have to face substantial barriers such as "tariffs, customs, travel inconveniences and the consequent increase in the cost of procedures and products" in which the situation would probably lead.

MORE FAVORABLE
From Adiex they report that the United Kingdom is one of the main export destinations in this region and this province, compared to Venezuela, where there is practically no foreign business. Of course, they admit that the trade balance with the country
Latin America is "much more favorable for us".

Nor does it seem very likely, he considers, that the Irish border will be left as a more agile step, which could be a kind of back door to avoid so many obstacles. "There is the possibility that an exit agreement will not be reached by the end of March and the date will be delayed, but that would only mean delaying the same problem for a few months," with the grievance that it would be combined with the elections set in our country. for May 26 and "probably England would participate in the elections."

In the case of Venezuela, where tractors are mainly exported "and I don't know if many are second-hand", the recommendation made by Adiex, until the internal situation in the country calms down, is to "reduce, as far as possible possible, operations with this country.

The possibility is that, if Guaidó remains, "surely there will be an injection of investment" from the countries that have aligned themselves with his support, but if the conflict escalates, "the best thing is to consider breaking operations there."

Meanwhile, warns Torres, we must not lose sight of China and the United States, which "measure their power" and have promoted an international scenario where tariff levels, especially in sectors such as steel and aluminum derivatives, "have generated a situation complex economics.

Uncertainty influences the answers to the doubts that exporters have

The United Kingdom and the options for leaving the EU are the focus of the queries that reach the FEDA International Area

FEDA has an International area from which those who want to do business abroad are served, they are informed and doubts about regulations, procedures and others are cleared up. And they also try to respond to the fears they raise when they already work with markets that are now immersed in a situation of instability, such as the United Kingdom. However, as the head of the Department of Associations and Technical Areas, and of the International Area, Évelin Molano, explains, «the problem we are facing is the uncertainty of the Brexit model that will be applied>>.

Evelin Molano, International FEDA

Molano mentions that "we do not know if the labeling regulations are going to be changed, if there are going to be tariffs or if the free movement of people is going to be allowed."

For this reason, he points out, "the main advice for companies is to have an immediate reaction plan", which prepares them to know how to act in the possible scenarios that are open. "You have to analyze what is happening with my market, what is going to happen with the exchange rate with the pound or how I am going to have the capacity to react" because, he considers, "this is where it is failing."

To do this, they will have "our advice and information, as always, which we will also have to update", but Molano urges companies to go "one step ahead".

The United Kingdom is the fifth destination for exports from our country -and community-, and the United States the sixth, but that market, although it is pulling the strings internationally, "is an already complicated country to export, with different regulations in the states, and with rigorous processes to sell there, although obviously it influences if it promotes new tariffs”, the same thing that happens with China, which “is the tenth destination” of our exports.

Venezuela, on the other hand, barely has an impact on the provincial export sector. So much so that, says Molano, "we have not received any inquiries from this destination."

Iván Torres President of ADIEXIVÁNTORRES. PRESIDENT ADIEX
"Delaying the date of leaving the EU would only mean delaying the problem for months"

The main concerns for exporters.
When exporting, there are many procedures that companies have to take into account for the business to be fruitful.
Knowing the situation of destination countries is key to avoiding mistakes and minimizing economic losses.

DUTY It is the main fear of businessmen in view of the upcoming exit of the United Kingdom from the European Union. Taxing exports, and seeing to what degree of taxation, may be a burden that many companies cannot afford.

LABELED
It is another of the keys to change to which we must be attentive, given the possibility that its regulations may vary, which would also influence the final price.

BARRIERS TO TARIFFS
They are the ones that cannot be controlled. A tariff itself is not set, but measures with similar effects are promoted.

FREE MOVEMENT
of people, who could be restricted if he wins a 'hard' Brexit.
Exports from the province are attentive to Venezuela and the United Kingdom.

In 2018, the Albacete companies that sold to the Latin American market shot up from approximately ten years before to almost a hundred

The global influences the local. And what happens thousands of kilometers away can have a direct impact on our city. The interconnections of a world where money rules are more than evident. For this reason, when foreign conflicts become more acute, businessmen from Albacete worry. The question is to determine what the degree of impact is.

Obviously, not all instabilities are the same, nor do economic gazes fall equally on some countries (not to mention continents) as on others. When the use of resources is guaranteed, silence in the face of catastrophes, injustices or disputes is not even mentioned. Although it is barely ten kilometers below the oldest continent on the planet.

Worry about cash. Threats to a consolidated business or to lose economic position. Venezuela, on the one hand, and the United Kingdom, on the other, are the two clear examples. They cannot be more different. Almost further away, they cannot be either, not only physically, but also ideologically. But the eyes of Europe and North America are fixed on them.

Albacete also has its certain interests. The social ones, as is obvious, for the countrymen who live in these two countries and for those whom the province welcomed, coming from both. The intricacies are mainly focused on how a hard Brexit like the one that now seems to be getting closer can affect the English.

Companies exporting to Venezuela went from 12 to 98 in one year

IN DATA. A fear shared by exporters from Albacete. If the borders with the United Kingdom are closed, the tariff barriers could hinder a growing market for this province.

An economic report prepared by ICEX and the Ministry of Industry, Commerce and Tourism on the exports and imports of Castilla-La Mancha with the British market shows that in 2017 companies from Albacete exported a value of 49,4 million euros. One year later, although the data collected for 2018 only includes up to the month of July, the turnover stood at 31,7 million euros.

Of course, in imports of goods and services from the United Kingdom this province did increase because, although the data is from the first seven months of the year, last year, in that period, it had already practically been reached (11,4 million euros) the figure of the 11,5 million euros imported in all of 2017.

The English buy a lot of things from Albacete (17,4% of the regional business), they are not concentrated in just one, although exports of sugar and confectionery products stand out.

They are also sold drinks (mainly wine, although all kinds, with the exception of juices), legumes and vegetables, dairy products (cheese is what is most in demand), some paints and some electrical appliances.

ALMOST A HUNDRED. The United Kingdom is the fifth destination for exports that leave Castilla-La Mancha and our country is the ninth supplier of the islands, in a ranking conspicuously led by China-Hong Kong. That is why it is not surprising that there are many exporters in the province with their eyes set on this market, although it is true that in the last year, probably caused by the instability in which it has been installed for months, the figure has dropped slightly.

While in 2015 there were 86 Albacete companies that did business with the United Kingdom, and interest rose to 93 a year later and was close to one hundred (98) in 201, in 7 -until July- it was reduced to 2018 (88 least in a year).

On the other side of the pond, and with tremendous political instability, Venezuela reclaims its dominant position as the largest holder of oil reserves. This has allowed it to maintain a 'tug of war' mainly with the United States, but also with Europe. A country with resources, but without industry, which is why they have to resort to buying many goods abroad.

Albacete is not a great supplier for Venezuela, in fact, exports in 20 and 7 to the Latin American country were for an amount of 1,5 million euros, the same figure reached in 2018 between the months of January and November. The data comes from the report that has just been published this week (which is why the economic results for the last year are only in the absence of the last month, and not until July, like the one prepared with the United Kingdom) by ICEX and the Ministry of Industry, Commerce and Tourism on foreign business of this autonomous community with the Venezuelan market.

Now, almost 100% of Albacete's sales were from a single sector: motor vehicles or tractors. They also bought soaps and waxes from the region, most notably, but in the case of exports from this province, they limited themselves to motors.

MORE THAN A THIRD. Although the volume of foreign sales is not relevant, compared to other destinations, exports from Albacete to Venezuela represent 36% of those registered by Castilla-La Mancha.

Now, this should be put in its proper position to make a correct analysis: in 2017 Venezuela was ranked 87th in the ranking of exports made by Castilian-La Mancha companies.

The 49 million to the United Kingdom are 17,4% of total sales in the region

Little is, at the moment, the sales business, but almost non-existent is the purchasing business. Albacete's imports from Venezuela were, as reflected in the economic report, zero euros in 2017 and 100.000 euros in 2018 (with the last month to go). What we bought almost exclusively from the Latin American market were fish and crustaceans.

Even so, the indirect impact of the strong instability of one of the singing voices in the oil empire is undoubted. Fuel prices may be strongly affected and this would translate into damage both for the business fabric, on the one hand, and for family economies, on the other.

Among all this context, there is an indicator that powerfully attracts attention. One that has experienced a spectacular jump in relation to previous years: the number of exporting companies from Albacete to Venezuela.

The Market Report with Castilla-La Mancha indicates that the lack of interest shown by the province towards this destination since the middle of the decade changed radically last year. While in 2015 there were nine exporting companies in Albacete to Venezuela, the figure rose to 12 in 2016 to return again to nine in 2017. Until November 2018, that is, practically throughout last year, exporting companies from Albacete to Venezuela were 98.

The Tribune: E. Real Jiménez / Albacete

Download PDF

Other news of interest

Events Events

FEDA and EEN events and activities. You can also search the events of a specific day here.

Albacete Employers Confederation

FEDA International Events

Events and Activities. Events calendar

Albacete Employers Confederation

Enterprise Europe Network Events

Events and Activities. Events calendar

Share This
Go to content