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CASE STUDIES:

Barcelona – The Mobile World Capital!?

Background and facts

   Barcelona has the reputation of being the centre of the mobile industry at the moment. It has hosted the Mobile World Congress (MWC) for the past five years, and this was recently extended for another five. In addition, the organisation Mobile World Capital was founded in 2013 in Barcelona. The area has strong regional policies to help boost the mobile services industry.

   Barcelona and the region of Catalonia are interesting for another reason: Despite the fact that Spain has been badly hit by the financial crisis, being one of the PIIGS countries (Portugal, Italy, Ireland, Greece and Spain), Catalonia has remained strong. Although Barcelona has just 16 % of the total population of Spain, the region accounts for 30 % of the exports of the whole country.

Innovation climate

   There is a strong tradition of starting and running family owned compa­nies in Catalonia, and the trend is continuing. Very favourable incentives for foreign companies to relocate to the region have created a big community of international SMEs in the city.

   Throughout the interviews, it became clear that there is a high entrepreneurial feeling in the city. The high number of start-ups and SMEs is probably due to Barcelona having among the highest educated entrepreneurs in the world. The city has top tier universities, especially, when it comes to business schools, the universities have good entrepreneurial education and incubators related to them. But the majority of the companies tend to stay local, and rarely expand outside of the region.

   Compared to other major cities in Spain, Barcelona is said to be younger and more innovative. It is faster, more things are happening here, which drives the innovative and entrepreneurial feeling of the city. The industrial revolution in Spain started in the northern parts - Catalonia and the Basque regions. These parts are still better at adapting to trends and react faster to what is happening in the world, creating a more dynamic and creative environment.

Access to capital

   In previous years, focus has been mainly on public funding of companies, from regional as well national sources. It has been rather generous, but a lot has changed since the start of the financial crisis. While the public funds are running out of money, private initiatives are beginning to emerge. For example, most Spanish banks have set up funds that companies can app-ly for. There are also different initiatives to help companies recruit people, like helping pay the salary for interns. This is something that big companies offer for smaller companies to apply for. The interns come from one of the major universities in Barcelona, which have top tier education, especially in business, thus providing the companies with a highly educated, but cheap workforce.

The ICO (Instituto de Crédito Oficial), runs an EU financed loans program, that help companies to buy IT equipment, company cars or with investments. However, the process for applying for these loans is complex and usually requires the help of consultants to manage the applications, which makes it impossible for small companies to even consider starting the process.

Public infrastructure

   The city of Barcelona has done a lot to help companies and the community. There is public free Wi-Fi accessible all over the city, enabling tourists and visitors to use their smartphones everywhere. There is good public communication within the city and to other parts of the region as well as to the air-port. The airport has great connections to the rest of the Europe and beyond.

Catalonian Technology and innovation support mechanisms

   22@ in Barcelona is an area in the central business district. The project started about 10 years ago to convert the former industrial area to a technology and innovation district. It includes almost 85,000 business premises, test beds, R&D centres, and incubators in addition to residential buildings.

   The industry in Catalonia benefits from having the MWC in Barcelona. It attracts all major players within the mobile industry to the city once a year. To enable the local players to benefit from this, smaller companies are invited to be part of the Catalonian pavilion during the congress, getting exposure to all the visitors. An opportunity that is invaluable for an SME or a start-up.

   The region consists of several different public initiatives that support the industry, ACC10 being one of them. They have 35 offices around the world and help companies with export. Through different programmes they can help with financing for attending fairs, missions, and pay for transportation costs.

   If you recruit someone younger than 25 or older than 50 you will get an automatic discount on the employment tax.

Key elements for growth

   Spain has one of the highest penetrations of smartphones in the world; about 80 % of the population has a smartphone. The reason for this is that households usually only have one computer with internet connection; therefore the smartphone is a means for young people to be online in their own room rather than where their parents can watch over their shoulder. This creates a huge internal market for companies to test their mobile solutions as long as the products are in Spanish; which can be a limitation later on when going for an international market. South America is a predominantly Spanish-speaking continent where Spain has excellent relationships. Being Spanish, or based in Spain, gives companies access to a huge global market - a major reason for non-Spanish companies to set up in Barcelona/Catalonia.

Large multinationals

   Several multinational companies are located in the city of Barcelona. The Spanish operator, Telefonica has their digital R&D facilities in Barcelona, and you can also find companies like Cisco here. There is good collaboration between the global companies located in the region and the smaller companies through different financial programs, competence activities etc. Wayra the incubator at Telefonica has a location in the Telefoncia building in Barcelona. About 20 start-ups can take part in the incubation programme. Cisco has a range of programmes with the universities. They pay researchers for doing R&D and if Cisco likes the outcome, they will buy it and implement it in the company.

Mobile World Capital

Since 2009 Barcelona has hosted the Mobile World Congress, the biggest event in the mobile industry. Being the host of the congress gives Barcelona a lot of attention and the notion that Barcelona is the centre for the mobile industry in the world. In 2011 Mobile World Capital was founded, an initiative from GSMA, the organisation behind Mobile World Congress. It was started in collaboration with the City of Barcelona, the region of Catalonia and the government of Spain. The project will run until the end of the current agreement to host the Mobile World Congress in 2018. Being the Mobile World Capital is giving Barcelona the opportunity to transform into the global mobile flagship. However, the mission is not only to revolutionise the mobi­le industry in Barcelona, but in the whole world. The organisation puts the citizen and the user as the focus and encourages industry to adapt to these. However, in addition to the annual Mobile World Congress, there should be cross-sectoral events going on throughout the year.

Strengths and weaknesses

Talking to the persons interviewed, they all mentioned more or less the same strengths and weaknesses:

Strengths

• Location, weather and quality of life
• Low bureaucracy to start up a company
• Easy and cheap to hire employees
• Top universities to collaborate (R&D) with and recruit from (students)
• People from the city help out others once they have succeeded

Weaknesses

• Language barriers for accessing an international market
• Regional support only to local start-ups, not international entrepreneurs starting up their business in Barcelona
• Companies remain small and family owned
• Many of the small companies never leave the garage

Challenges

   One of the major challenges for the region is the language. Companies are developed in Spanish, which will be a limitation when wanting to go for an international market. However, there is still all of South America to conquer, which is a significant market. Companies from Barcelona have two ma­jor advantages in the South America market: a common language and the openness to Spanish companies in South America. Since most Spanish global companies, such as Telefonica have a strong presence in South America as well, gaining them as a customer will open up amazing opportunities.

   The fact that the companies do not grow considerably is a limitation and a challenge that needs to be overcome. For the region to be able to really compete with the stars, such as Silicon Valley it is not only important that companies are started, but also that they grow and reach an internati­nal market. There are lots of support mechanisms to help companies with exports, they seem to be aware of the challenge, and ready to tackle it to make a change happen.

   Barcelona derives great benefits from having the Mobile World Congress in the city. It is not certain what will happen if the congress is moved to another location. Over the coming years it is important to grow the mobile services industry so that Barcelona's reputation is not wholly dependent on the MWC.

Sustainability and the future

   The spirit and innovation climate in Barcelona is very positive and will play an important role for the future of the city. They have managed to fight the financial crisis and are standing strong for the future. Thanks to the MWC, Barcelona has a strong profile in the sector, and most of the major compa­nies are familiar with the city. The advantage that local companies get from being able to be part of the exhibition is invaluable and needs to be exploited to its full potential.

   Barcelona has a great location on the Mediterranean Sea, an international airport, a good business environment, the most extensive public support system in Europe, and great weather, and so there is no problem in getting people to move to the city. This applies to both entrepreneurs and the work-force. Being able to have a good work/life balance with low salaries makes Barcelona a great spot for being a booming spot for the mobile services industry.

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