INVEST IN October 2017 The Region of Madrid A BUSINESS-FRIENDLY ECONOMY

2 5 REASONS TO INVEST AND OPERATE IN MADRID

1 ECONOMIC DRIVER OF GEOSTRATEGIC LOCATION 2 AND WORLD CLASS INFRASTRUCTURE

3 EXCEPTIONAL HUMAN CAPITAL

4 LEADERS IN INNOVATION

5 UNIQUE QUALITY OF LIFE

3 1

ECONOMIC DRIVER OF SPAIN

4 1 Economic driver of Spain Key figures

SIZE 8,030 km2 (1.6% of Spain)

POPULATION (2016) 6.47 million (13.9% of Spain)

GDP (2016) €210,813 million (18.9% of Spain)

GDP PER CAPITA (2016) • €32,723 - 1st region in Spain • 36.5% higher than the national average

GDP BY SECTOR 2016

5 1 Economic driver of Spain

Madrid, an economic powerhouse, is the main financial hub and decision-making centre in Spain.

MADRID LEADS SPANISH GROWTH

Source: INE 6 1 Economic driver of Spain

MAIN FINANCIAL HUB OF SPAIN

 Madrid is home to the operational head offices of the main Spanish banks (Santander, BBVA, Popular, Bankinter, ) and foreign banks, as well as the head offices of the leading investment funds in Spain.

 All the main national and international financial institutions in Spain are located in Madrid: Madrid Stock Exchange, IBEX, Latibex, The National Securities Market Commission, Spain Financial Center, Inter-American Development Bank, European Investment Bank, IOSCO, etc.

 Financial centre operating on a global level: Santander and BBVA are among the top banks in the Eurozone in terms of market capitalisation (1st and 3rd respectively).

 6th European market in terms of market capitalisation (after the London Stock Exchange, Euronext, Deutsche Börse, SIX Swiss Exchange and NASDAQ OMX Nordic Exchange).

7 1 Economic driver of Spain

LEGISLATIVE & REGULATORY DECISION-MAKING CENTRE

 The vast majority of Spain’s governmental and regulatory institutions and organisations are based in Madrid: Office of the Head of State, Central Government, Congress of Deputies, Senate, statewide ministries and public companies, Constitutional Court, Supreme Court, National Markets and Competition Commission, etc. BUSINESS DECISION-MAKING CENTRE  There are over 561,000 businesses registered in Madrid, accounting for almost 16% of all businesses in Spain in 2016.

 There are 4,045 foreign businesses in Madrid, accounting for 39.1% of all foreign businesses in Spain.

 The Spanish head offices of all the large law firms, engineering companies, international consultancy firms and estate agencies are based in Madrid: PricewaterhouseCoopers, Deloitte, Accenture, KPMG, EY, Garrigues, Cuatrecasas, JLL, Aguirre Newman, etc.

8 1 Economic driver of Spain

BUSINESS DECISION-MAKING CENTRE  3rd city in the European Union (after London and Paris) with the most operational head offices of multinational companies, according to the 2015 FORTUNE 500 list (Santander, Telefónica, , ACS and ).

 Madrid is home to the head offices of the majority of the leading Spanish companies: almost 3 out of every 4 Spanish companies on the Forbes 2000 Global companies list are based in Madrid (19 of 26). 73% of the largest companies in Spain are in Madrid

Source: Forbes 2016 9 1 Economic driver of Spain Leader in securing Foreign Direct Investment (FDI). For investments in Spain, Madrid is the 1st choice. 6 OF EVERY 10 € INVESTED IN SPAIN ARRIVE IN MADRID

10 1 Economic driver of Spain

Solid base in industry and exports. Excellent services provision.

INDUSTRY WITH HIGH ADDED VALUE

 The Region of Madrid is the second region in Spain in terms of industrial production and the third in terms of exports volume.

 Production with a high technological content:  The Region of Madrid is the centre of the aerospace sector in Spain: EADS-AIRBUS, BOEING, BOMBARDIER and others.  30% of the national ICT market and 45% of the head offices of all ICT companies in Spain.  Science and biopharmaceutical companies: the Region of Madrid is home to 35% of all scientific production in Spain.  It also has a number of powerful clusters in the automotive sector, the publishing industry and in renewable energy, among others.

 Madrid is the national leader in engineering:  39% of companies  75% of revenue  47% of total employment in this sector. 11 1 Economic driver of Spain

THE LARGEST SERVICES PLATFORM IN SPAIN  Nearly 80% of all people living in Madrid work in the service sector.

 7 groups with head offices in Madrid are among the 50 top international building companies (Top 225 International Contractors): FCC, ACS, Sacyr, Técnicas Reunidas, , Isolux and OHL.

 The Region of Madrid is an international benchmark for the granting of administrative concessions and Public-Private Partnership (PPP) funding projects. SPAIN LEADS THE GLOBAL TOURISM SECTOR  In 2017, Spain has been said to have again the most competitive tourism sector in the world, according to the World Economic Forum.

 3rd global market in terms of revenue from tourism (just after the USA and China). 3rd country in the world in terms of number of tourists (after France and the USA), with 75,6 million visitors in 2016. 83 million tourists are expected for 2017.

12 1 Economic driver of Spain

MADRID: AN INTERNATIONAL TOURISM CENTRE

 The Region of Madrid had 11.45 million visitors in 2016 (+2.6% yoy).

 Madrid is the world's 7th most popular conference destination, with 144 meetings in 2016, according to the prestigious rankings of the International Congress and Convention Association (ICCA).

13 2 GEOSTRATEGIC LOCATION AND INFRASTRUCTURE

14 2 Geostrategic location and infrastructure 2 Geostrategic location and infrastructure

Prime location between Europe, Africa and Latin America

MADRID: LEADING AIRPORT IN THE SOUTH OF EUROPE

 1st Spanish airport and 5th in Europe for passenger and cargo traffic.  Named best airport in the south of Europe and the 7th in the world. The T4 terminal is the 3rd best terminal in the world (behind T5 at Heathrow and T3 at Singapore).(1)  Capacity for 70 million passengers a year. Large margin for additional traffic with no risk of congestion.  Exceptional intermodal connectivity: the airport is 12 km from the city centre (20 mins). The Metro and Cercanías trains and the bus network connect the airport to the city of Madrid and the surrounding metropolitan area.

Source: (1) AirHelp 2017 & Skytrax 2015 2 Geostrategic location and infrastructure

MADRID: LEADING AIRPORT IN THE SOUTH OF EUROPE  Barajas is the leading European airport for flights to Latin America: 1/5 of all connections between Europe and Latin America.  5 direct destinations from Madrid to China. 209 DIRECT FLIGHT DESTINATIONS FROM MADRID 132 (Europe)

8(Asia) (US & Canada) Beijing 13 Shanghai 9(Middle East) Hong Kong Chengdu Hangzhou 16 (Africa) 31 (Latam) 2 Geostrategic location and infrastructure

MADRID: NERVE CENTRE OF THE SPANISH MARKET

 Madrid is the origin and centre of the national transport network. Madrid is a maximum of 6 hours by road from all other major cities and towns in Spain. Two high-capacity roads cross the border with France and there are high- speed rail connections with the rest of Europe.

NATIONAL RAIL NETWORK  Madrid is the main hub of the More high-speed lines now available 2nd most extensive high-speed New high-speed lines in 2015 rail system in the world (covering 3,000 km), second only to China.

 An extensive regional network of motorways connects the towns in the Region of Madrid to the national network, forming the backbone of the territory and ensuring access to the rest of the peninsula from anywhere in the Region. 2 Geostrategic location and infrastructure MADRID, PENINSULAR LOGISTICS CENTRE

 Logistics in Madrid cover an area of 38 million m2, the largest area dedicated to this sector in Spain.

 75% of logistics companies operating in Spain (both Spanish and international) have their head offices in Madrid.

 The Dry Port in Coslada (bonded warehouse) is 10 minutes from the airport. It connects Madrid in just a few hours with the country's leading ports (Algeciras, Valencia, Barcelona, Bilbao) and is a very cost-effective system.

 The main logistics corridors in the Region are located around the A-2 and the A-4 motorways. The main attraction of these areas is their close proximity to Madrid and the availability of sites that are suitable for almost any type of activity. EXCEPTIONAL HUMAN CAPITAL

20 3 Exceptional human capital

An open, diverse and talented society

HIGHLY QUALIFIED PEOPLE

 Workforce of over 3.33 million people.

 1st region in Spain in terms of activity (62.7% compared to 58.9% average across Spain).

 48.5% of the workforce has a university degree (32.6% in the EU-28, according to Eurostat in 2016). CULTURAL DIVERSITY

 26% of all people living in the Region of Madrid come from other areas of Spain.

 17.8% are foreign-born, representing over 180 different nationalities. 3 Exceptional human capital

AVAILABILITY OF TALENT

 Madrid has 15 universities.

 3 of the best business schools in the world are based in Madrid: IE Business SchooI, IESE and ESADE.

Availability of speakers of European languages 3 Exceptional human capital

COMPETITIVE AND COST-EFFECTIVE WORKFORCE

 The moderation of wages is making it possible for Spain to maintain its competitivity, while costs continue to increase significantly throughout the rest of the European Union. 3 Exceptional human capital

LEADER FOR SHARED SERVICE CENTRES  Madrid has been particularly successful in recent years in attracting and growing Shared Service Centres:

24 3 Exceptional human capital

LEADER FOR CUSTOMER SUPPORT AND BPO CENTRES  Also regarding captive Customer Support Centres and BPO Centres with a wide geographical and process scope.

25 LEADERS IN INNOVATION

26 4 Leaders in innovation

Madrid: national centre of innovation

DYNAMIC ENTREPRENEURIAL ECOSYSTEM  Madrid is home to 19.7% of all companies established in Spain in 2016 and 30.1% of the total capital subscribed by these new companies. More businesses are established each year in the city of Madrid than in Barcelona, Valencia, Seville and Zaragoza put together.

 Largest national concentration of high-growth, high-potential start-ups. 20% of total.

 Madrid is one of the European cities with the highest number of business accelerator and incubator schemes for entrepreneurs.

 Thanks to its innovation-friendly environment, Google has opened an Entrepreneur Campus in Madrid, the 2nd in Europe after the London Campus. 27 4 Leaders in innovation

ADVANCED BUSINESS ENVIRONMENT

 Leading Spanish region for technological exports. (1)  2nd region in the EU-28 for technology-related employment: 241,900 professionals working in high- tech industrial and services sectors in 2016 (36.8% of Spanish high-tech jobs). (2)

28 Source: (1) DATACOMEX 2016; (2) EUROSTAT 2017 4 Leaders in innovation

Madrid: Spain's leading R&D centre

R&D INVESTMENT DRIVE

 1st Spanish region for spending on R&D: 3,480 million euros, 1.71 % of GDP (Spain allocates 1.22%). (1)

 Madrid is home to 43 of the 135 National R&D Centres. (2)

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Madrid 23 43

11

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Sources: (1) INE 2017/EUROSTAT; (2) CSIC 4 Leaders in innovation

LEADER FOR PRIVATE CENTRES OF R&D EXCELLENCE  A large number of multinationals have located their centres of excellence in Madrid in order to carry out important research work:

30 UNIQUE QUALITY OF LIFE

31 5 Unique quality of life

Madrid: an exceptional place to live

WARM AND SUNNY CLIMATE  Madrid has 2,679 hours of sunlight a year. ONE OF THE SAFEST CAPITAL CITIES  Madrid is one of the safest cities in Europe, standing with a very low crime rate.

FIRST RATE EDUCATION AND HEALTHCARE

 Bilingual education in over 600 public schools and education centres. Wide range of private international schools.

 The healthcare system in Madrid is universal and highly advanced. Over 80 public and private hospitals across the Region, boasting some of the highest quality standards in Europe.

32 5 Unique quality of life

EXCELLENT URBAN INFRASTRUCTURE  Madrid has a highly sophisticated, competitive and efficient transport system. The Madrid Metro (300 km and 301 stations) is modern, safe, clean and efficient providing fast and cost-effective transport across the city and its metropolitan area.  Madrid is one of the capital cities with the least congestion in the world, with much less traffic than the majority of European cities.

Increase in overall travel times Versus free-flowing traffic

33 5 Unique quality of life

THE BEST GASTRONOMY & CULTURE

 Madrid has one of the best-preserved historic quarters in Europe, with extensive pedestrianised areas complemented by a broad range of tourist attractions, cafes, bars, restaurants and shops. One of Madrid's biggest attractions is its abundance of bars, restaurants and terraces, always very busy from mid-morning to nightfall. There are 9 UNESCO World Heritage Sites within two hours of Madrid: Aranjuez, Alcalá de Henares, San Lorenzo del Escorial, Toledo, Cuenca, Segovia, Ávila, Salamanca and Córdoba. Paseo del Arte: 3 of the most important museums in the world (Prado, Thyssen and Reina Sofía) are all within 10 minutes of each other in Madrid.  The Prado Museum has an exceptional collection of work by Velázquez, Goya and El Greco.  The Reina Sofía Museum is home to Guernica by Picasso and a wide selection of art from the 19th century to modern day (Miró, Kandinsky, Dalí)  The Thyssen Museum has a fascinating collection ranging from Gothic and Renaissance masterpieces to Modern Art by artists such as Hopper or Bacon.

34 5 Unique quality of life

MADRID: 2ND BEST SHOPPING DESTINATION IN EUROPE

35 5 Unique quality of life

UNBEATABLE SPORTS  Madrid is one of the most attractive destinations in the world for sports fans.

 The Region has 4 first-division teams in the Spanish football league "La Liga": Real Madrid, Atlético de Madrid, Rayo Vallecano and Getafe.

 The locals are also really passionate about basketball, thanks to the big first-division teams in the city such as Estudiantes or Real Madrid.

 The Region of Madrid offers ample opportunity to take part in any number of sports such as tennis, hiking, climbing, skiing, cycling and many more.

 Madrid offers golf courses catering to all preferences and levels, where you can both improve your golfing skills or simply get yourself started with this relaxing sport 36 A unique quality of living

Madrid has consistently shown, year after year, a strong performance in cost and quality of living rankings. Spain as a country places 2nd on the OECD WORK-LIFE BALANCE INDEX.

37 5 A unique quality of living

Monocle Quality of life Index

38 SUMMING UP: 5 REASONS FOR CHOOSING MADRID

ECONOMIC POWERHOUSE AND MAIN DECISSION CENTER IN SPAIN

INNOVATIVE AND ACCESS TO MARKETS: DYNAMIC BUSINESS STRATEGIC LOCATION ECOSYSTEM AND EXCELLENT INFRASTRUCTURE

HIGH QUALITY OF LIFE AND QUALIFIED AND COST-EFFICIENT AFFORDABLE COST OF LIVING LABOUR FORCE

39 What more could you want?

MORE INSTITUTIONAL SUPPORT: A regional government that is dedicated to improving the business climate and in tune with investor needs

LESS BUREAUCRACY : A government committed to removing red tape and administrative obstacles

LESS FISCAL BURDEN: Madrid has the lowest fiscal pressure among the Spanish regions

MORE ECONOMIC FREEDOM: Madrid is the only region in Spain that offers retailers the freedom to set their commercial opening hours according to their needs and preferences. Sales and discount periods are also de-regulated. The individual stores and shopping centers determine their own schedule, not the government.

40 Services provided by Invest in Madrid

invest in MADRID is the public agency for foreign investors, it serves as a one-stop shop offering the following services:

STRATEGIC CONSULTATION

ESTABLISHMENT OF COMPANIES

LOCALIZATION

INVESTMENT PROJECTS

RECRUITMENT

INTERMEDIATION WITH INSTITUTIONS

AFTER CARE AND EXPANSION SECTORS OF INTEREST

LAND-BASED BIOTECHNOLOGY ENERGY AEROSPACE WATER TRANSPORT AND PHARMACEUTICALS SPACE INDUSTRIAL ADVANCED HEALTH NANOSCIENCE TECHNOLOGY TECHNOLOGY MATERIALS

NETWORKS AUDIO-VISUAL SECURITY SOFTWARE GRAPHIC ARTS 41 SUCCESS STORIES ... a few examples ...

42 Recently announced investment projects

 Huawei grows 40% in the Spanish market and moves its headquarters in Madrid to a larger facility. Huawei expects to increase its workforce in Spain from the current 1000 workers to 1500 in 5 years.

 Lenovo ranks 2nd in the Spanish computers market, with 22% of the total market share. The Company expects to achieve the leadership of the market by expanding its structure in Spain. In 3 years the Company has grown from 37 to 200 employees and the forecast is to reach 400 workers in the short term.

 Grandall Law Firm chooses Madrid as an international hub in order to expand its business in Europe and Latin America.

 China Tianying (CNTY) acquires Urbaser by € 2,000 million to build a world leader in environmental services.

43 Success story: HUAWEI

44 Success story: HUAWEI

45 Success story: HUAWEI

46 Success story: HUAWEI

47 Success story: HUAWEI

48 THANK YOU

INVEST IN MADRID C/ General Díaz Porlier 35 - 1ª ● 28001 Madrid Email: [email protected] Tel: +34 91 310 5990

www.investinmadrid.com

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