Tourism and technology: the driving forces behind the City of Malaga

Malaga is the second most populated city of Andalusia, a region of southern Spain. It is a coastal city, and the gateway to the famous “Costa del Sol,” and is situated only about 80 miles north of North Africa – hence its favourable climate. This is a city that produced Pablo Picasso and Antonio Banderas; and it is a city that takes heritage, culture and tourism very seriously. Jo Murray speaks to Marc Sanderson, Director of International Economic Development for the City of Malaga.

“Tourism is big in Malaga and the Costa del Sol,” says Mr Sanderson emphatically, pointing to the resorts, hotels, tourism, golf courses, museums and all the investment undertaken to make sure the city is, and remains, attractive. “This all helps to attract investors to the city.”

He continues: “Cruise ship and port development investors have been welcomed. And a technology park was built 25 years ago. Companies here focus on telecoms, software development, RFID, wireless testing and certification for wireless devices. There is lots of software development for smart-phone apps taking place here.”

He says that the city’s participation in growing its credentials has really helped: “We got into smart cities early on. We won awards. We were recognised as developing smart city solutions.” But he adds that the city and its lifestyle have also really helped to build a technology eco-system: “We try to create a full package, ie software companies plus a pipeline of talent from local universities and a good lifestyle.” The lifestyle the city offers is a theme that constantly comes up.

Over 600 technology companies have already located in “Malaga Valley.” Headline names include Fujitsu, TDK – both of which have factories here – and Ericsson, Oracle, Accenture and IBM. Google bought a Malaga-based start-up in 2012; so there is very much a sense of an established technology eco-system in Malaga. “Lots of UK, Nordic and German companies are also coming,” adds Mr Sanderson. “We offer them all a comprehensive FDI service.”

He attributes the success Malaga has seen in attracting these companies, partly, to Malaga’s self-promotion as a tourist destination. “People have heard about the tourism in Malaga, they come here, and then they think about the business opportunities,” he says, adding that a political bump in some of the larger Spanish cities has helped to put Malaga on some companies’ radars.

And technology companies are much more nimble and flexible than traditional industrial companies. They do not need a supply chain nearby; technology companies are much more knowledge and talent oriented, all of which is easier to shift than widgets. This also helps them to choose Malaga as a business location.

Mr Sanderson also points out that most companies today are really technology companies, regardless of their sector – just look at Airbnb (technology not just hospitality), Tesla (technology not just automotive) and Amazon (technology and not just retail). He says this is resulting in a new business model: “People now have little teams across the world but they still need the support of an eco-system around them.”

This is where the City of Malaga comes into play – he calls it a sweet spot, ie a location which is cost-effective but well connected. “The low operating costs, tremendous quality of life and low living costs,” as he puts it, are what put the City of Malaga on the FDI map. “We also have an urban laboratory,” says Mr Sanderson, “and we undertake testing and pilot projects for all sort of new technologies being developed in the City of Malaga.”

Then Mr Sanderson turns to “nearshoring”, ie bringing shared services, outsourced services and call centres back to Europe from developing countries. “For some companies, big cities can be too expensive and overwhelming, but Malaga is a real alternative,” he says.

Of course Malaga is a highly connected city with an international airport that handles 16 million passengers per annum and serves 102 direct destinations in 31 countries through 180 active routes. It has a large seaport visited by more than 250 ships per annum, carrying 440,000 passengers. Imports and exports from the port comprise olive oil, vehicles, cereals and cement. High speed trains, highways and a comprehensive bus network complete the picture.

And then there is the question of Brexit, and certainly there is a desire for UK and international companies requiring an EU base to choose the City of Malaga, but Mr Sanderson is realistic. “Certainly we are lobbying for companies needing an EU location to choose Malaga, but there is also a large British population along our coast and they are concerned about the impact of Brexit on their investments and residence.” He is mindful that business opportunities have to be balanced against personal expectations.

He concludes: “Brexit is just another event – something we have to deal with.”