Business Opportunities in MexicoBusiness Opportunities in Mexico

OSAC/CS SeminarJuly 12, 2011

Ann BacherSenior Commercial Officer, U.S. Embassy, Mexico City

U.S and Foreign Commercial Service/International Trade Administration/USDOC

Over 75 Countries – Commercial Section of Embassy or Consulate US Export Assistance Centers – 110 offices Represent Smaller Export Affairs Agencies – USDA, EXIM Bank, OPIC,

SBA Last year – 12,000 international buyers to 36 certified trade shows in the

US resulting in $800billion of trade

U.S. Commercial Service in Mexico

The U.S. Commercial Service is an agency of the U.S. Department of Commerce

Our mission is primarily to help small and medium size, export-ready companies to enter Mexico and to protect U.S. business interests abroad

In Mexico we have four offices. Globally, we have a network of 100+ offices in the U.S. and 150 world-wide

Tijuana

Guadalajara

Monterrey

MexicoCity

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Regional Opportunities: Mexico City

Mexico City, with a population of 20 million, is one of the largest cities in the hemisphere and the world. 

It is both the Political Capital and Financial Center of Mexico.

It is also a manufacturing and distribution powerhouse.

Centrally located near other major industrial areas including Toluca, Puebla, and Queretaro.

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Regional Opportunities: Guadalajara “Mexico’s Silicon Valley”

Size: Second largest market in Mexico Business Culture: Bilingual, open to U.S. goods and services Multinational Investors: GE, IBM, Intel, HP, Flextronics, Jabil, Oracle Logistics: Major distribution center Major Industries: Electronics, industrial process controls, packaging,

agribusiness and food processing equipment Largest Exposition Center in Latin America: Regional shows Other Activities: Host of Pan-American Games, October 2011

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Regional Opportunities: Monterrey Mexico’s Industrial Heartland

Strategic location in NAFTA corridor

11% of Mexico’s total manufacturing output Over 1800 foreign companies Key industries: automotive, household appliances, electronic equipment, packaging, software, specialized medical services, and biotechnology.

Pro business environment with stable workforce

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Regional Opportunities: Tijuana, Baja California

Main manufacturing industries in Tijuana: Medical, Electronics and Automotive. Sub sectors: Plastics (injection molding, blow molding, thermal molding, extrusion), Metal-Mechanic and Packaging. Manufacturing companies in the city: more than 500 in Tijuana (State hasapproximately 900+)Tijuana Manufacturing workforce: 160,000 employees.

Other areas of opportunity for U.S. Exporters: food and beverage, IT, telecomm, construction, medical tourism, energy. Business culture: ease of doing business and affinity to working with Americansuppliers- bicultural and bilingual businesspeople.

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Why Mexico?

Location / Access to Goods/Services/Market in U.S.

Size, Diversify, and Vast Market

Shared Culture: Western, Hispanic

Manufacturing base in various sectors

Stronger legal protections

Politically stable

Macroeconomic stability

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U.S. – Mexico Relationship

The North American Leaders Summit

•“A new era of cooperation and partnership”

•“Shared responsibility” in the drug wars

Narco Violence Immigration Environmental Issues Commercial

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Safety & Security in Mexico:A Changing Environment

The changing security environment in Mexico presents challenges for U.S. companies

Border cities are particularly vulnerable, such as Nuevo Laredo, Juarez, Reynosa, Matamoros, and Tijuana

Businesses in Mexico are investing more in security for their personnel, facilities Visitors need to use common sense and be aware State Department Website for Travel Advisories:

http://travel.state.gov/travel American Chamber Survey , The Impact of Security in

Mexico on the Private Sectorhttp://www.amcham.org.mx/CWT/EXTERNAL/WCPAGES/Committees/Security.aspx

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Mexico is the United States’ 3rd largest trading partner

Mexico is the 2nd destination of all U.S. exports

Mexico accounts for roughly 1/8 of all U.S. exports

26 American states depend on Mexico as their first or second destination for exports

One billion/day in two way trade

Mexico - U.S. Trade

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The Impact of NAFTA

World’s largest free trade area: 455.4 million people; $16.9 trillion GDP

No tariffs on U.S. exports to Mexico (except current dispute)

It clarifies and simplifies rules of trade

Institution of Dispute Resolution Process-Trucking is Major Issue

Trade has grown faster than the infrastructure

U.S.-Mexico trade increased 347%: from $88 billion in 1993 to $393 billion in 2010

Mutual Recognition Agreements for testing and certification in some sectors

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Best Prospects for U.S. Exporters

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Automotive Parts and Supplies Market size in 2010: 71 Billion dollars

U.S. has 24 percent of the market share (16.9 Billion dollars)

General Motors has invested 4.1B in manufacturing facilities in Mexico in past four years Ford and Chrysler also investing heavily in Mexico

Mexico produces more than two million cars per year. (79 percent for export market, mostly to U.S.)

PAACE Automechanika Mexico, July 13-15, Mexico City, Dept. of Commerce certified trade show

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Aerospace & Aviation

Market size in 2010: Estimated imports over USD $3 billion, exports $4.5 billion

Mexico has become the fifth largest supplier of aerospace products in the European Union and the eighth largest supplier for the U.S. market

Currently over 200 manufacturing facilities and growing (80% manufacturing, 10% maintenance and repair, 10% engineering and design)

Industry clusters: Monterrey, Chihuahua, Queretaro, Mexicali, and Empalme All major aerospace OEM’s have presence in Mexico, but many are

increasing their presence within these manufacturing clusters

AeroExpo 2011, April 6-9, Toluca International Airport15

Energy Market size in 2010: 10.8 Billion dollars

Oil and gas 6.4 B Electric power and renewable: 4.4 B

Energy production/infrastructure huge priority of PEMEX, CFE state run energy companies (23 B budget in 2011 for new infrastructure projects/maintenance)

Several upcoming opportunities in natural gas, oil exploration, refineries, electric power generation, and renewable energy (See 2011 Country Commercial Guide for more information)

2011 Petroleum Exhibition and Conference of Mexico (PECOM) July 19-21 in Villahermosa, Dept. of Commerce certified trade show

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Renewable Energy The Government of Mexico’s Renewable Energy goal is, by Dec. 2013, to

develop and utilize 3.600 mW of renewable energy, mainly driven by the wind and mini-hydraulic sectors.

SENER plans to investment USD92 million to reach this goal.

The USG’s Renewable Energy and Energy Efficiency Export Initiative covers export in the following sectors:

Wind Solar

Geothermal Biomass

Hydropower Energy Efficiency

Packaging Market size in 2010: 664 million dollars

18 percent of market from United States

Opportunities include: Cardboard and paper, metal, glass, plastic and wood packaging sectors

Food processing, pharmaceutical, and cosmetics/personal care products are the primary sectors for packaging sector

Expo Pack 2011, June 21-24, Mexico City

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Security Market size in 2010: 23.7 Billion dollars

Imports from the United States: 6.7 Billion dollars

Govt procurement opportunities through Mexican Defense Dept. and Navy (local partner strongly recommended)

Opportunities in: Armored solutions , electronic devices for mobile phones, CCTV,

biometric solutions, access control, communication systems, tactical equipment, alarms, among others

2011 Expo Seguridad, April 12-14, Mexico City. Dept. of Commerce certified trade show

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Technology Market size in 2010: 37 Billion dollars

33 million people (29.4 percent of population) with internet access (20 percent increase from 2009), almost all of it broadband.

Telecom dominated by Telmex (90% of fixed lines) and Telcel (80% of cell phones). Both companies owned by Carlos Slim.

Areas of opportunity include: security solutions, software apps, wireless apps, social networking, cloud computing, business intelligence software, IT healthcare solutions, Green IT solutions

B 3 Forum, February 22-24, Mexico City. 20

Travel and Tourism Market size in 2010: 14.3 million visitors

Spent an estimated 9 billion dollars in 2010.

89 percent travel to U.S. via automobile, 11 percent via air.

Popular destinations: Texas, California, New York, Florida, Las Vegas

Visit USA Week by Expo Vacaciones, Mexico City, Feb. 22-23

Feria Internacional de Turismo de las Americas (FITA), Mexico City, Sept. 22-25

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National Infrastructure Plan Created by President Calderon in 2007, to stimulate economic growth and

jobs creations – originally 300 projects valued at USD $250 billion

Of the 68 projects currently active, 38 have been identified by the Commercial Service as viable for U.S. companies.

Areas of opportunity include: Highways, telecommunications, water treatment and drainage control, power generation, airport and marine port expansions.

Local partners key to participating in bids and winning service contracts!

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Market Entry Strategies The best strategy to enter the Mexican market is to find a

local representative or distributor.– With this, buyers feel secure that initial training, spare

parts and service will be provided.

Due to regional concentration throughout Mexico, representation locally will yield better results than a single, nation-wide distributor.

Price is important, but not necessarily the deciding factor.

Be prepared to provide brochures, catalogs, and printed materials in Spanish. Keep websites international-user-friendly.

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Financing Expect to negotiate on payment terms. Consider full spectrum of options. Financing options important.

Export-Import Bank finances exports through various term loan, guarantee and insurance programs.

Small Business Administration

Overseas Private Investment Corp (OPIC)

Works through commercial banks in the U.S. and Mexico.

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Mexican Business Culture Indirectness - difficulty in saying “no”

Expect to negotiate on payment terms. Consider full spectrum of options. Financing options important

Follow up quickly with your Mexican partner – there is abundant international competition

Use a qualified interpreter if needed

Patience pays off

Personal relationships valued25

Outreach

Trade Missions– Green Week, Americas Business, Tampa FL, Vera Cruz Port Mission, COP

16 Green Solutions, Trade Winds 2011, Womens Mission, PAACE Automechanica Mexico 2011, PECOM 2011, Security Trade Mission, Aerospace Supplier Trade Mission

International Buyers Program – InfoComm 2011, The Cable Show, Offshore Technology Conference,

Waste Expo, Pow-Wow Show, NRA Restaurant, hoter-Motel Show, High Point Market-Spring, ISC West 20111, National Assn Broadcasters, Con EXPO-CON AGG, International CTIA Wireless Convention, International Hospitality Week, Internationla Home and Housewares, Graphics of the Americas, MAGIC Market Place – Winter, American International Toy Fair, AAIW 2011

Local Certified Shows – Plastimagen 2011, Expo Pack 2011, Expo Construccion 2011, MEXPORT

2011, AWS Weldmex-Fabtech-Metalform, Expo Seguridad 2011, AeroExpo 2011, Expo Finanzas 2011, TECMA Machine Tools and Equipment, Expo Manufactura, ExpoTech 2011, B3 Forum(ExpoComm 2011)

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In 2010, Commercial Service Mexico helped U.S. companies secure 416 distinct export sales worth over $1.6 billion in bookable business for American companies, including small and medium size firms, for the last fiscal year.

Export Successes

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Export SuccessesMaryland manufacturer of fasteners and hose clamps for industrial irrigation,

plumbing, agricultural and beverage industries Participated in Gold Key Service in Mexico CS assistance contributed to $6,000 sale.

Illinois manufacturers: Popcorn production and concession equipment Commercial Service led a delegation of 175 Mexican buyers to the NRA show in Chicago. As a result, $300,000 in popcorn machines and equipment was purchased by the largest movie theater company in Mexico.

AND, Industrial molds and Electrical Discharge Machining (EDM)Commercial Service helped company to collect a $60,000 payment, after a Mexican firm stopped payment on an industrial mold.

Export Successes Maryland manufacturer of evaporative cooling, thermal storage and heat transfer

equipment Commercial Service counseled Mexican company on product line. CS Trade Specialist provided information on the advantages of the U.S. product and

helped the company find a representative in Mexico. As a result, Mexican company bought cooling tower valued at $18,000.

Pennsylvania-based manufacturer of storage systems, wire shelving, and carts used in commercial, food service, consumer and healthcare applications.

Commercial Service led a delegation of 57 Mexican buyers to the National Restaurant Association (NRA) Show in 2008.

Mexico’s largest restaurant equipment company made a purchase $10,300.

You too can be successful in Mexico!Muchas gracias!

www.export.gov

http://www.buyusa.gov/mexico/en

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