When the pandemic broke out around the world, Portugal became one of the most important countries in attracting investments. To do so, it used nearshoring, a business strategy with which the country becomes a place with low labor and logistics costs that attracts foreign companies to produce their products in that country and distribute them to nearby markets. This plan by Portugal to attract companies using nearshoring and competitiveness was one of those that catapulted the country to success.
For this, Portugal has designed a series of tax incentives with improvements in infrastructure and a competitive business environment This has made the country one of the most attractive places for foreign investment and promoting the development of sectors. This has made Portugal a business destination that many choose for its competitiveness and the opportunities it offers.
What is nearshoring?
As we have explained before, nearshoring is a strategy whereby a country decides to reduce labour and logistics costs to benefit companies. In this way, companies can save costs in exchange for producing their products and services in the country and distributing them to other nearby markets, in this case Europe.
Among the main advantages offered by this strategy is the reduction of costs such as delivery times and logistical risks. In addition, there are a number of benefits for Portugal that increase its attractiveness.
One of them is the own geographic location, Since it is located in the southwestern corner of Europe, it can easily reach Europe, Africa and Latin America. This allows for a great connection with markets in different countries.
It also has a solid educational system and a qualified and competitive workforce. Combined with low labour costs, which have increased in recent years, they remain quite competitive compared to other European countries.
The same is true for transport and technology infrastructure, as well as advanced digital infrastructure, with 5G networks and technology centres.
Finally, we must not forget the country's political and economic stability, which gives foreign investors a certain confidence.
Which sectors are the most important for nearshoring in Portugal?
As we told you at the beginning of this article, near shooting is not something that has been established in Portugal recently. In fact, it has been around for a long time. being applied since the global pandemic broke out due to covid in 2019. Therefore, we can have some data showing what type of companies have benefited from these advantages in the country.
Among them, the main ones are those related to technology and digital services. Cities such as Lisbon and Porto are known to be highly attractive destinations for software, artificial intelligence and digital services companies, becoming technological hubs.
Alongside technology companies, other companies related to automotive, electronics and renewable energy They have also opted for Portugal to establish the industry and use the country as the producer of their products or services to distribute them to other countries.
Finally, thanks to the multilingual workforce and proximity to Europe, companies and service centres related to outsourcing and shared services businesses are also among the main companies that have benefited.
How Portugal improves competitiveness
The use of the nearshoring strategy has been a very important step forward for the country. But it has not stopped there, but has carried out a series of strategies to attract these foreign companies with the aim of becoming a strategic country at a business level.
In that sense, there are some tax and financial incentives This can include reduced tax rates in certain areas or investment in research and development, which can be deducted from corporate taxes and represents significant financial savings. In other words, less tax is paid.
At the level of infrastructure and technology, Portugal has also invested in the country improving the road network, railways and ports, as well as digital infrastructure and the adoption of renewable energy. This allows companies to reduce costs and makes it cheaper to establish themselves there rather than in another country.
There are other measures that have allowed Portugal to become one of the most popular destinations for foreign companies. We are talking, for example, about the simplification of procedures and the ease of doing business in the country, the promotion of innovation and talent with training and education programs and even research and development initiatives, as well as sustainability and social responsibility policies.
All of this allows us to say that Portugal is one of the most economical countries in terms of business, because producing products there is much cheaper than doing so in countries such as Spain, Germany or even France.