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									07/11/2008   Opportunies in Mexico - John Franck
Doing Business in Mexico

  Ivan Ramirez
  UK Trade and Investment

  November 2008   Doing Business in Mexico 2008

    Map of Mexico
    Brief economic overview
    What do we do?
    Opportunities and Success stories
    Business Culture in Mexico
    So, why Mexico ....?
Projected Growth

                                                                                       Projected 2040 GDP
 $25000                                                                                  (billions of USD)
                                                         5th largest
 $15000                                                  economy?














                                                                                                   The new Titans, a survey of the world economy, 16 September 2006 The economist
Stable Public Finances

    Low inflation rates
    Interest rates of 8.25%
    Healthy public finances: disciplined
    fiscal and monetary policies
    Lowest ever country risk levels
    recorded in 2007
Mexico’s Natural Advantages

  Size of Western Europe
  Key geo-strategic position
  2000-mile land border with
  the USA
  11,000 km of coast line
  One of the most bio-diverse
  countries in the world
  Petroleum and mineral
Attractive Business Environment

    Free-market liberal policies

    Largest trading nation in Latin
    America: Mexico trades about as
    much as Brazil, Argentina, Venezuela
    and Chile put together

    Member of the OECD and only
    member from Latin America
Attractive Business Environment

    GDP per capita = $12,780 USD

   (one of the highest in Latin America
     and higher than in most emerging
     markets) fuelled by growing middle

    Political and economic maturity
Free Trade

   Preferential market access thanks
   to Free Trade Agreements network
   (negotiated with 44 countries so

   Includes NAFTA and EUFTA

   UK industrial goods: zero rated
Commercial Relationship

   Bilateral trade = $3.9 billion USD (2007)

   British investment in Mexico = nearly $2000
   million USD (2004-2007)

   UK ranked 4th for FDI in Mexico (2006)

   Major investors: HSBC, British American
   Tobacco, Glaxo Smithkline, Unilever.
Commercial Relationship

   Steadily increasing number of British
   firms wanting information on Mexico:

   UK Trade & Investment helped 43%
   more companies so far during this FY
   than during the whole FY 07/08.
What do we do?

   Strategic Advise
   Knowledge of Local Business Culture
   Management Consultancy Services
   – Programme Arrangement
   – Market Research
   – High Level Introductory Meetings
   – Access to Key Players via the Embassy
Team at the Embassy
   Commercial team: 31 people, based in Mexico City,
   Monterrey, Guadalajara, Villahermosa and Tijuana

   Main sectors:
   Agriculture      Environment       Energy
   Advanced         Financial Services Healthcare

   Security         Food and Drink    Consumer Goods
   ICT              Creative          Infrastructure
   Leisure and      Education         Sports
Business Opportunities
  Mexico is the largest military
  and    commercial     aircraft
  market in Latin America.

  It has the second largest
  business aircraft fleet in the

  Over 150 investments. In
  2007, exports of aeronautical
  components and engineering
  designs from Mexico totaled
  over US$600 million.
Business Opportunities
                Engine    components,    components     for
                landing systems, plastic injection, heat
                exchangers, precision machining, airfoil
                repairs,   audio    and   video   systems,
                electronic components, fuselage, insulation
                and interior parts.

                Machining parts, vacuum heat treatment
                and chemical processing.

                Need of aerospace grade materials for
                structural     welding and   material
                distribution hubs.

                Sheet metal fabricators of super alloys,
                major sub-assembly companies, structure
                manufacturers,   tooling  and    casting

                Environmental    solutions  for   reducing
                emissions including noise emissions.
Business Opportunities…
   Aerospace – Business Success Stories
   One of the leading low cost airlines, Interjet, put in orders
   for 20 Airbus at the end of 2006 to add to their current
   fleet of 11 planes.

   E2V, a UK company, set up an operation in Tijuana earlier
   this year and Bodycote, another UK company, has opened
   a new operation in Monterrey.

   Ketema (UK) is currently expanding its manufacturing
   operation in Saltillo. GKN acquired Teleflex earlier this

   Teleflex has various operations in Mexico tied to the
   advanced engineering sector.
Business Opportunities…
   Mexico is the tenth largest automotive
   producer in the world.

   2 million vehicles annually.

   Mexico exports to the USA in 2006 totaled
   US$14.8 billion.

   The automotive sector in Mexico has
   attracted    largest  Original Equipment
   Manufacturers (OEMs) from the USA and
   Japan (including Ford, General Motors,
   Chrysler, Nissan and Toyota).

   Automobile suppliers now see Mexico as a
   viable production centre for all of
   North America.
Business Opportunities
                Components required range widely from
                engineered parts to diagnostic and
                assembly equipment. Braking systems,
                electrical components, transmission and
                engine components, moulded plastic
                sections, stamped steel parts, steering
                assemblies, interior trims and
                lightweight alternative metals.

                High tech components and the
                mainstream application of motor sport
                technology and high-end
                manufacturing and design automotive

                Supplies to the automotive after
Business Opportunities…
   Automotive – Business Success
   Shades Technics entered the Mexican market
   in 2002 with the help of UK Trade &
   Investment teams in Monterrey and Mexico

   UK Trade & Investment helped with market
   research and with lobbying possible partners
   for Shades Technics. Since 2006, the company
   has had Mexican representation and is planning
   to open a dedicated facility in Mexico by 2008.

   Amongst other successes for 2007, Shades
   Technics launched two new mini-kitchens
   developed specifically for the Mexican market.
Business Opportunities…
   Creative Industries
   Creative and Media is growing sector in
   Mexico and currently contributes around 6
   per cent of GDP.

   British graphic, product and industrial
   design have also proved popular. Mexico’s
   sizeable wealthy population want high-end
   designer goods.

   Mexican exporters are keen for advice on
   product design, packaging and marketing
   for a European market as well as meeting
   EU import standards.

   Mexico is the largest cinema market in
   Latin America with box-office takings in
   2007 up 3.9 per cent on 2006.
Business Opportunities
             Design   consultancy     on    products   and
             packaging. Including branding and marketing.

             Mexican department stores are looking
             increasingly to import designer fashion
             merchandise (apparel,shoes and accessories).

             Mexican television companies   are demanding

             Demanding marketing and interactive content
             for websites.

             There is a growing cinematographic industry
             which    is  demanding      consultancy on
             development and production financing.
Business Opportunities…
  Creative Industries –
  Business Success Stories

  Games Workshop defined Mexico as an
  emerging and strategic market in 2007.

  UK Trade & Investment helped with
  market research and provided a verified
  list of distributors. In 2008 they signed
  with Novedades Montecarlo and they are
  planning launched the brand in October

  Again UKTI will help them to produce a
  press release which will be sent to
  business and specialized media in Mexico.
Business Opportunities…
  Education and training is a high priority for
  the Mexican Government. It currently
  spends 6.9 per cent of its GDP in this

  President Calderon’s plan on education
  focuses on five pillars: upgrading of the
  education infrastructure; continuing to
  incorporate        Information         and
  Communication Technologies (ICT) in
  classrooms; vocational training; permanent
  evaluation; and educational reform.

  The    Federal  Education     Ministry    is
  committed to reducing the urban-rural gap
  by investment and technological training.
Business Opportunities
             Specialised subject software.
             English language training courses
             and materials.
             ICT for education e.g. digital
             Engineering teaching equipment for
             laboratories and workshops.
             Teacher training aids.
             Software and didactic materials for
             special needs.
             Vocational training in engineering
             and industrial areas.
             Distance learning.
Business Opportunities…
Education– Business Success
Promethean, a UK company specialising in
interactive learning technology, has been working
closely with the Mexican Government and has
become a major supplier for an interactive

In 2004 the Mexican Minister of Education visited
the UK (BETT). After negotiations, the company
was awarded 50 per cent of an international
tender process to equip 10,000 classrooms with
their electronic whiteboards –“ActivBoard”. Each
classroom represents approximately US$4,000
worth of investment.

Promethean is now one of only seven distributors
for the Mexican Ministry of Education and more
business in Mexico is foreseen.
Business Opportunities…
  Mexico’s environmental market has been
  rapidly growing at an annual average of
  6% since 2004. It is the second most
  important environmental market in Latin
  America after Brazil.

  Mexico imports 80 per cent of its
  environmental equipment and services to
  fill the rising demand.

  The UK is participating in 73 of the 90
  Mexican   registered    carbon   trading
Business Opportunities
             Waste management and
             Water and Air pollution control
             Contaminated land
             Environmental monitoring
             Environmental consultancy
             Clean Development
             Mechanism (CDM)
Business Opportunities…
Environment – Business
Success Stories
EcoSecurities, a British company in the business
of sourcing, developing and trading emission
reductions, has been awarded a project of
methane capture and utilisation in landfills in
Northern Mexico.

EcoSecurities first discovered the Mexican
market and CDM opportunities thanks to a
commercial mission organised by UK Trade &
Investment. Since then EcoSecurities has
received promotional and networking support
and assistance with identifying useful contacts
and information from the UK Trade &
Investment team in Mexico City. EcoSecurities
has also won three other contracts for Mexican
landfill projects.
Business Opportunities…
  Financial Services

  With the help of UK advisors, the Mexican
  Government        introduced    a     PPP
  programme based on the UK model. Four
  pilot projects have been implemented.

  Mexican companies are keen to form
  associations with British firms with
  proven PPP experience.

  Second and third generation projects in
  the same sectors are currently coming to
  tender. Currently, there are 19 Mexican
  PPP projects worth over US$5,400
Business Opportunities
              PPP advisors/consultants
              Consortium managers
              Contract management
              Infrastructure operators
              London Stock Exchange and
              AIM: UK Nominated Advisors
              to explore the Mexican
              marketplace for companies
              with listing potential
Business Opportunities…
  Financial Services – Business
  Success Stories

  All the Mexican PPP pilot projects have
  involved UK advisors.

  Between them, Currie and Brown, Mayer
  Brown Rowe and Maw, Turner and
  Townsend, Cameron McKenna, Mobsby
  Associates and Scott Wilson have won in
  excess of US$6 million in technical,
  financial and legal advisory contracts.
Business Opportunities…
  Food & Drink
  The lifestyle of many Mexicans has
  changed dramatically over the last
  decade. This change in lifestyle is clearly
  visible in the food and drink Mexicans
  consume today.

  Rising living standards and the spread of
  large USA style supermarkets have led to
  an increase in the import of foreign

  Mexico is the world’s second biggest
  consumer of soft drinks. It is estimated
  that the average daily consumption per
  person is three soft drinks!
Business Opportunities
             Niche products such as
             delicatessen, gourmet and
             organic foods.
             Ready to drink beverages and
             Food and drink products that
             reflect health concerns,
             weight loss and a healthy
             way of life.
             Specialised food and
             packaging machinery.
Business Opportunities…
Food & Drink – Business
Success Stories
A number of British gourmet food and
drinks   companies    have    recently
experienced unprecedented success in
Mexico by supplying their products to
the Mexican supermarket, Superama, a
part of the Walmart group thanks to

These companies’ products can now be
found in 64 Superama stores in Mexico.

With almost 200 SKU’s this is the
biggest wave of UK food products
imported into Mexico in the last eight
Business Opportunities…

  Mexican government’s objective: to
  be among the 30 most competitive
  economies in the world by 2012.

  Launched a National Infrastructure
  Programme, with plans to spend
  $242-320 billion USD mainly in
  Highways, Railways, Ports, Airports,
  Telecoms,   Water     supply    and
  sanitation, Irrigation and flood
  control, Electricity, Oil & Gas
  Production, Refinery, Gas and
Business Opportunities
              Consulting engineers
              Facilities managers (roads,
              ports, airports and railways)
              Public Private Partnership
              (PPP) specialists
              Equipment and machinery
              Roads, ports, airports and
              railways security consultants
Business Opportunities…
  Infrastructure – Business
  Success Stories
  Currie & Brown Mexico leads a
  successful PPP project in Ciudad
  Victoria. The new hospital was built
  with an estimated investment of
  US$74 million and a US$418 million
  contract over 25 years. This hospital
  will provide highly specialised medical
  services for the North Eastern States
  of Mexico.

  With more than 100 beds, this hospital
  is the second of the PPP wave of new
  hospitals procured by the Mexican
  Private Finance Initiative scheme
  (Proyectos    para    Prestación   de
Business Opportunities…
  Oil & Gas

  Mexico ranks globally 6th in oil and 13th in
  gas production. In 2008 PEMEX (Mexico’s
  national oil company) will invest US$18
  billion in capital expenditure.
  Whilst the oil and gas industry is in the
  hands of the nationalised oil company
  PEMEX (ninth largest in sales), there are
  opportunities    for   UK     companies,
  particularly for equipment and service
  UK firms are already participating in
  Mexico’s shallow waters, but there is more
  potential    to  make    Mexico's    future
  deepwater production a safe, clean and
  efficient one.
Business Opportunities
              Platform design and construction
              Design, construction, installation
              and commissioning of pipelines
              Exploration and appraisal drilling
              Production operations
              Environmental control
              Regional geological studies
              (including 3D and 2D seismic)
              Reservoir appraisal and exploration
              Training and education
              Deep water technologies
Business Opportunities…
  Oil & Gas – Business
  Success Stories
  Mexican oil giant PEMEX awarded a
  US$150 million contract to the Mexican
  engineering company Techint and its
  technology supplier, Manchester based
  Costain Oil, Gas & Processes Ltd.

  The UK Trade & Investment team in
  Mexico City has provided Costain with
  support and advice throughout the
  project bidding process, which started
  in 2000. UK Trade & Investment has
  provided information about decision
  makers in the market, as well as local
  market knowledge and advice on local
  business etiquette.
Business Opportunities…
  Power & Energy
  Mexico's power sector is controlled by
  two     state-owned   companies.     The
  largest of these is Comision Federal de
  Electricidad (CFE), which generates and
  sells electricity across the whole
  country. The second is Luz y Fuerza del
  Centro (LYFC) which is responsible for
  producing and selling electricity only in
  Mexico City‘s metropolitan area.

  There are about 30 million electricity
  contracts in Mexico covering 97 per
  cent of the population. Mexico had a
  total power generation of 203,555 GWh
  during 2006.
Business Opportunities
              Plant modernisation and maintenance
              Hydroplants reconfiguration
              Interconnection projects
              Transmission lines and substations
              Co-generation projects with the
              national oil company, PEMEX
              Renewable and cleaner technologies
              Energy efficiency systems
              Mini hydro technologies
              Solar energy technologies
              Wind energy projects
              Clean Development Mechanism
Business Opportunities…
   Power & Energy – Business
   Success Stories
   S    M     Seals,    a    Somerset-based
   engineering was awarded the contract to
   design and supply the auxiliary turbine
   shaft seal for the new El Cajon project.

   SM Seals’ contact with CFE engineers
   began when the company participated in
   a UK Trade & Investment trade mission
   in 2003.

   The UK Trade & Investment team in
   Mexico City has continued to support S M
   Seals during their negotiations in Mexico
   by providing market information and
   arranging meeting programmes.
Business Opportunities…
 President Calderon has allocated considerable
 financial and human resources to security in
 He has developed new Federal Security
 Programmes concentrating on civilian security,
 law enforcement and serious and organised
 crime.    These     programmes    include   the
 assessment of current assets and, where
 identified, restructuring and replacing current
 systems by renovating equipment. Innovative
 technologies will replace outdated systems in a
 number of areas.
 The Mexican Government has budgeted over
 US$2.6 billion for security expenditure in 2008.
Business Opportunities
              IT infrastructure
              Automatic number plate
              recognition systems
              Vehicle tagging
              Explosive detection equipment
              Sophisticated CCTV cameras
              X-ray systems
              Data management software
              Mobile phone jammers
Business Opportunities…
 Security – Business Success
 In 2004, the UK Trade & Investment team in
 Mexico City assisted the company by organizing
 meetings with Mexican City authorities and by
 matching Appian with a suitable agent in
 Mexico, Tasser Technologies.

 In the summer of 2005, Appian Technology and
 its agent in Mexico were awarded a
 US$700,000 and in 2007, they won new
 contracts worth over US$950,000 from
 authorities in the States of Tlaxcala and

 The UK Trade & Investment team in Mexico has
 helped on providing market intelligence has
 been lobbying on their behalf with relevant
Business Opportunities…
 Leisure & Tourism

 According to the World Economic
 Forum, Mexico is 55th overall in
 the travel & tourism
 competitiveness index. It also
 occupies 4th place in terms of
 biodiversity in the world and
 ranks 1st the Americas and 8th
 worldwide in terms of numbers
 of World Heritage Sites, with 26
 in total.

 According to the World Tourism
 Organization (WTO) Mexico , had
 21.4 million tourists in 2007
 which meant $12.4 Billion USD in
 tourist receipts for the Country.
Business Opportunities…
   By the year 2012, México will have 28.9 million
   international tourists which will amount to revenue of
   $17 billion USD as well as 165.8 million domestic
   tourists with a revenue of $918 Billion MXP.

   Some of the sub sectors/related businesses impacted
   by the Leisure and Tourism sector are:
    – Golf course designers, developers.
    – Marketing/PR.
    – Hotel/Resort investors.
    – Hospitality Technology.
    – Specialized and Niche products related to the
      Hospitality Sector.
    – Leisure Marine.
    – Sports and recreational products.
Business Opportunities…
 Leisure Marine

 The establishment of world
 class tourism resorts in the
 Baja California Peninsula and
 the Mayan Riviera has
 impacted on the Yachting and
 Sport Fishing Industry and we
 have seen an increase in
 Mexicans buying yachts;
 mostly successful
 businessmen and heads of
 medium-sized corporations,
 who enjoy a higher spending
Business Opportunities…

    Some of the sub sectors/related businesses impacted by
    the Leisure Marine Sector are:
    –   Repair Shops.
    –   Dry docks.
    –   Marine related shops.
    –   Importation of spare parts.
    –   Tourist resorts.
Business Culture
   In many ways like the US – but it isn’t.
   English is generally spoken – but don’t
   assume so. Bring brochures in Spanish.
   Mexicans attach some importance to titles.
   Business cards are important and are usually
   exchanged at the beginning of the meeting.
   Mexicans generally dress more formally than
   Europeans. It is important that you are well
   dressed for business meetings.
   "Mexicans make friends first, then do
Business Culture
    Beware of being told what you
    want to hear
    Strongly recommend to have local
    sales people to facilitate business
    Time keeping (Mexico City) /
    mobile phones
    Dollars are generally used for
So, Why Mexico….??

    Demand exists at all levels to fuel growth

    Mexico is committed towards diversifying
    its trade activities

    EU - Mexico FTA is fully in force

    UKTI has recognised Mexico as an
    emerging market – we can help, and
    we want to
                   For further information:

  John Franck   (Head of UK Trade and Investment Mexico)
                    +52 55 5242 8549

Ivan Ramirez (Head of Agriculture, Food & Drink, Consumer
           Goods, ICT and Creative Industries)
                    +52 33 3630 4357

07/11/2008   Opportunies in Mexico - John Franck

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