According to the latest HMRC Trade Statistics neither Mexico (nor any other Latin American country) are in the top 25 UK exporting destinations. The only countries from the American continent are the US (#1) and Canada (#17), coincidentally native English-speaking countries. We believe that experienced exporters are overlooking and sometimes forgetting why Mexico is a great place to do business. Here are 5 reasons why exporters should be considering doing business in Mexico:
- Emerging Market
According to the World Bank statistics, Mexico is the 15th Largest Economy in the world in terms of GDP. In terms of purchasing power parity, Mexico ranks 11th worldwide and it is the 12th largest exporter. Mexico has more than 130 million habitants spread in a large and fertile territory and shares a 3,145 Km border with one of the largest economies in the world (USA).
Bloomberg rated Mexico and Turkey as the most attractive markets for 2018. The analysis was based in different parameters including economic growth and both countries scored the highest amongst the other 20 developing economies. Colombia was ranked in 8th place, Chile in 11th and Brazil in 14th. The Asian economies occupied the five lowest-scoring positions.
- Economy remains stable
According to OECD the Mexican economy will continue its growth. It will continue to growth at rates above 2% in 2018 and 2019. Encouraging factors include:
- Improvement on fiscal performance. The tax reform increased revenues of non-oil revenues.
- A solid monetary policy. Even when inflation is still high (around 7%) this is helping prices to stabilize.
- Growth in exports and foreign investment. Mexican exports are growing around 10% in 2017. Foreign investment increased around 9% compared to 2016 when expectations were a decrease of 5% in all Latin America.
- Exchange rates. Since the elections in July 2018 the MXN is gaining strength against the USD (appreciation of around 12%). This means that investors have backed-up the elected president economics vision.
- Business Friendly
Mexico understands now more than ever that it has an important role to play in the world’s economy. Mexico has signed 10 Free Trade Agreements with 45 countries, 9 trade agreements within the framework of the Latin American Integration Association (ALADI) and it is a member of the Trans-Pacific Partnership Agreement (TPP). In other words a dynamic and vibrant economy that breeds and transpires international business.
Now that the UK is facing the Brexit challenge the need to look for new markets is top priority and the UK Government is now lobbying a potential inclusion of the UK into the TPP. The message is clear and concise; UK companies must wake up and leave their comfort zone, dust-off and develop quickly new business in the Pacific more precisely in Mexico and Latin America.
- Current relationship with the US
Because of many historic, geographic and economic reasons Mexico still trades around 75% to 80% with the US. Since President Trump requested the NAFTA to be renegotiated and launched global policies to protect the US Economy; Mexico intensified its efforts to diversify trade with other global economies and to reduce the reliance on the US.
In 2017 the European Union exported only 5.6% of the total goods to Mexico however trade has tripled between both regions since the Free Trade Agreement with Europe was signed in 2000. The main European commercial trade partners of Mexico are Germany, Spain, France and Italy. According the Mexican Economy Ministry, in 2017 the trade between Mexico and the UK was around 4.7 billion USD and historically the trade balance shows that Mexico imports more from the UK (1.5:1). This means that opportunities for UK companies are interestingly increasing.
- Reliable partners that can help you
In Mexico personal relationships and networking are very important to develop a business successfully. It is highly recommended to have local people with business connections who can help to understand and develop the market properly. Fortunately for UK businesses, you have a wide network of Chambers of Commerce, Government entities as well as experienced individual who can help in your business venture.
Author: Ivan Ramirez
Experienced sales and business developer with a strong network of contacts who has helped for over 16 years dozens of British companies to succeed in Mexico including Accessorize, Clarks Shoes, Phase Eight, the Mibelle Group, NSPA Beauty and Lee Stafford Haircare.
If you are interested in learning more about the Mexican market or connecting with Ivan please email email@example.com