Jose Maria Aznar, prime minister of Spain

Our commitment to Japan is strong, solid and long-term, based on our confidence that the prosperity of one of the world's strongest economies can overcome any temporary crisis. For this reason, the Spanish Ministry of Economic Affairs decided to organize Spain Month in Japan at the beginning of 1998. It included a Spanish products fair - Expoconsumo - that was designed to demonstrate our belief in Japan's capacity to recuperate from its current problems, as well as our determination to be a part of its future. In my visit to Japan at the end of 1997, I was able to see for myself the dynamism of Japanese society and the extraordinary richness of its culture and traditions. I thought then, and still think now, that in spite of the geographic distance between us, Spain and Japan should come closer together, get to know each other better and strengthen the ties that bind our people to each other.

Spain gets it right

HRH Prince Felipe of Asturias

The scene is typically Spanish. Under a luminous blue sky, a shepherd guides his flock through a grassy and landscape dotted with olive trees, while in the distance the whitewashed shapes of a village seem to glow in the incandescent sunlight. This is the land of passionate men and women that we all know from the movies and the tourist brochures - poor but proud and whit a rich history of castles and empires. Suddenly out of nowhere there's a rushing noise as a sleek white train speeds past and disappears in an instant. This is a regular occurrence, and the shepherd is unperturbed. Viewed from inside the high-speed train, the landscape is familiar but the speed isn't stereotypically Spanish at all; nor is the high-tech comfort, nor the immaculate business suits all the passengers are wearing, nor the babble of conversation.

In fact, depending on where you look, Spain may have nothing at all to do with the usual mix of flamenco, castles and bullfighters that has been the country's prevailing image abroad for so long. Spain has everything to do with multiethnic diversity, creativity and a new-found confidence in its ability to perform on a par with Europe's top economic powers. The superexpress line whisking passengers from Madrid down to Seville and back will be extended to Barcelona and the French border by 2004, connecting with the rest of Europe's high-speed train network. To some this is already a symbol of the economic performance that has brought Spain to the forefront of the continent's Economic and Monetary Union.

Rodrigo Rato, minister of economic affairs

The latest economic figures show growth at 3.8 percent for last quarter, significantly higher than the growth of the larger European economies. "The fundamentals of our country are excellent," stated Rodrigo Rato, Spain's minister of economic affairs. "All indicators show a continuing trend at least for the short term." Consumer confidence is at an all-time high, and it's easy to catch the upbeat feeling on the city streets of Madrid, Barcelona or Bilbao.

Last year's inauguration of the Guggenheim Museum in Bilbao, the northern industrial city in Euskadi, has helped set the tone for the new Spanish image. Its fantastic titanium shapes - all movement and subtly shifting color - are rooted in the city's smokestack history but also bridging the gap to a new incarnation of the city for the new millennium. The museum undoubtedly become a symbol for the fresh aspirations and bold style that characterize this time and this city.

The dynamic new Guggenheim Museum has sparked a rebirth of Bilbao.

To the east, prosperous and dynamic Catalonia hopes to parlay its market performance into further autonomy and fiscal control within the Spanish state. From Barcelona, its beautiful and vibrant capital, it looks out over a Mediterranean area holding out the promise of profitable relationships among many autonomous regions in an increasingly unified Europe. Madrid is of course the geographic, political and financial heart of Spain and has never been more confident. Now the capital is almost giddy at the prospect of the new common currency, the euro.

Spain's economic relationship with Japan Without a doubt, the economic relationship between Spain and Japan will always play a significant role in the growth of both countries. Prince Felipe of Asturias, an autonomous region of Spain, explained this close bilateral bond during his inauguration of Spain Month last year in Japan when he said, "Economic relations based on the spirit of cooperation and complementary interests are increasingly recognized as the best basis for meetings and dialogue between countries. We Spanish hope that our relations with Japan are on a par with your country's importance and world role, and we are ready to make the necessary efforts to amplify and consolidate these relations."

Jordi Pujol, president of the generalitat of Catalunya

Kiyohiko Arafune, Japanese Ambassador to Spain

Kiyohiko Arafune, Japanese ambassador to Spain, agrees with Prince Felipe. "There is a great opportunity for Spanish companies to enter the Japanese market now, and also for Japanese companies to come to Spain," he said. In fact, Japanese companies have thrived in Spain since the 1970s, and they greatly increased their presence during the 1980s, when the economy was finally opened up and trade restrictions relaxed. One the Asian economic crisis is past, Spain's patience and perseverance with its investments in Southeast Asia, China and Japan will certainly show significant results. Both internationally and domestically, Spanish companies have remade themselves in the image of competitiveness.

Acting locally in the big picture

Nowadays one often hears the saying, "Think globally, act locally." Epson Iberica SA has helped take this mantra a step further. As a fixture in the Spanish computer sector for many years, this image-processing company has not only successfully implemented Epson's worldwide strategic policies, but also aided in researching and developing the technology used by the company everywhere. Consider the position of Epson in the world market and the innovative technologies that have helped put it there. It's no small wonder that this subsidiary enjoys a 42 percent market share in Spain. Ramon Olle, president and managing director of Epson Iberica, is quick to point out that this is due to a number of economic factors as well. He gives credit to the growth of the Spanish economy, and also to the successful control of two major factors: interest rates and inflation.

Ramon Olle, president-director general, Epson, Iberica Espa�a SA

"Many people think our market is saturated, but the reality is just the opposite," Olle said. "When we compare Spain's computer industry with the consumer-electronics sectors, like televisions or hi-fi equipment, we see that this is a country with 2.8 televisions per family and 0.3 computers per family. It's obvious we have a lot of space to grow." To put this potential growth in perspective, Olle continued, "Five years ago, the total Spanish market share in our sector for all Japanese companies was just 5 percent, and today Epson alone holds 42 percent. I would say that's quite impressive for us."

Epson's dominant position, particularly in the color inkjet printer division, is also a result of a unique company philosophy. Olle explained that although Epson Iberica's headquarters is 14 hours form Tokyo by plane, it still plays an important part in the development of new products. This is because Epson regularly holds conferences around the world, enabling the leaders in every subsidiary to put their heads together and help develop new technologies and global strategies.

"Everywhere, from Spain and Portugal to Brazil or the U.S., we all take an active role in the development of these technologies. This is because an important concept at Epson is globalization with localization," he added. "When you talk about corporation, we all stand for globalization. But the subsidiary is the local representative implementing the global policy."

Olle also notes that there are currently no Japanese people employed by Epson Iberica, making the firm a fully integrated and entirely Spanish subsidiary. When asked about the importance of Epson Iberica to the worldwide operation, Olle is modest, as his company produces only a fraction of the total turnover of Epson. But he is quick to say that this is not what is most important. Epson Iberica is one of the 500 largest companies in Spain and is currently No.12 in the computer market. It's easy to see the importance of this company to headquarters in Japan as the local representative in a fast-growing market.

And why is the computer industry growing so fast? "The total demand for computer engineers over the next 10 years in Spain is estimated to be 22,000 - so many that right now we cannot train all of them in our own country! This means that the influence of electronics is very much in our daily lives," Olle explained. "In addition, every telecommunications student here has found employment. One important aspect of Spain and here in Calatonia is that there are a lot of young people deeply involved in learning, studying and making good careers. That means we have a lot of critical raw material in Spain, which is brains. At this moment, this is one of our biggest assets."

Another one of those assets is Epson Iberica's location. It's no secret that Catalonia is home to many successful Japanese companies, all of whom have developed a fruitful working relationship with their Catalan counterparts. Once again, according to Olle, there is no single reason. For one, interpersonal relations are very important.

"Japanese people are accustomed to doing things on a dialogue basis, making an effort to really understand one another. This common level of understanding is very important to the Catalan, also. For centuries, Catalonia has grown from small business. All of us were born in the back office of a shop." Olle laughed.

Another major factor is the effort made by the Catalan government to welcome Japanese investors into their region, an effort that has positively affected many different areas. Olle thinks the government has taken all the right steps. "Our Catalan president, Jordi Pujol, is a man who has a great vision. He got his vision by identifying who could become the best partners for this region and then welcoming them wholeheartedly. This process begins with creating the proper business environment and infrastructure. And he understood all of this perfectly, because he too was born in the back office of a shop!"

If Olle seems optimistic about the computer industry and Epson Iberica's place in it, he can also be encouraged by the buoyant Spanish economy. Spain's economic indicators have been riding at very high levels, and the country is poised to make a confident first step into the 21st century. The only question that elicits differing responses among business leaders here is how long the growth will last.

"I think the socialist party began a good programs, and the right party has continued these policies. I think there are enough good signs that the economy will continue growing for the next three to four years," Olle said.

He also notes the effect of the euro on the different pricing and selling practices across Europe, claiming that it will "create the environment to harmonize these things." He continued jokingly: "One problem is that the Spanish are accustomed to dealing with larger numbers, but I think this will be a much bigger problem for the Italians."

Epson has had a great success operating in the local market and is a household name in the printing and image processing sectors. The latter is what Olle is most excited about: the ability of Epson technology to near-photographic quality, thus making its images much closer to real life.

Epson uses technologies researched and developed on its own. Olle sums up the vision of Epson: "I have said many times that the great advantage of Epson technology is that we provide a means for every home to have a system to develop their own images. And believe me, this will change the world!"

'Made in Sony'

If you look closely at any late model Sony television in Europe or even in Australia, chances are you will see it was produced not in distant Japan but in a state-of-the-art factory 20 minutes form Barcelona.

This factory in Catalonia is one of Sony Espana's key global manufacturing centers for color televisions and rear projection sets. "In terms of television sets, we are Sony's most important production base in Europe," said Domingo Jaumandreu, Sony Espana's managing director. "We export more than 90 percent of our production, mostly to the European markets, but also to places as far away as Australia, because they use the same video system as Europe."

Production in Spain is definitely cheaper than in Japan, but there are many even cheaper places to build television sets, so that alone has not been the determining factor for the company's importance within the worldwide group. "Our real competitive edge is our excellent production efficiency," Jaumandreu stated. "Our productivity in the factory is among the highest in the world for the type of products we make."

Locally trained Sony Espana engineers developed a flexible manufacturing system that now allows the factory to build a range of different models at the same time, 24 hours a day and seven days a week. "The key factor for this type of manufacturing strategy is the design of the software controlling the machinery," Jaumandreu explained. "We developed this software ourselves, right here, for the real-time control of automatic insertion machines." Sony Espana has been so successful, in fact, that it now sells this homegrown technology and software to other Sony subsidiaries worldwide.

Jaumandreu is a 16-year veteran of the company and has a background in aeronautical engineering. He came to Sony form the care components sector, but as he decided it: "I've always loved movies and music. It wasn't a hard decision for me to make the leap to consumer electronics." The increasingly personal nature of many consumer-electronics products provided a natural pool for him to jump into.

Production at Sony Espana grew over 20 percent in 1997 compared with the previous year, and it looks set to grow at least the same amount this year. The Spanish market is leading the way for most of European in sales growth. Until recently, most domestic television sales were the 21-inch to 25-inch models, but the past two years have seen a dramatic upgrading trend as consumers go for the 29-inch models. These are now growing the fastest in terms of volume.

The introduction of the Sony Wega televisions with their completely flat screens points to the technological path the company intends to follow in the years ahead. Wide-screen televisions are also capturing a growing share of the market. A new high-tech R&D center is a key factor in helping Sony Espana and Sony worldwide keep its leadership position in its sector.

Sony and the "Made in Spain" label seem to be the ideal partnership, following a global dedication to quality that makes the Catalonia base synonymous with "Made in Sony."

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