march 11 th supply-chain disruptions, an opportunity for mexico-japan business collaboration
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March 11 th supply-chain disruptions, an opportunity for Mexico-Japan business collaboration. Raúl Urteaga Minister Office of Mexico-Japan Economic Partnership Agreement Embassy of Mexico Tokyo. April 2011. 1. March 11 th events exposed vulnerabilities of Japan’s supply-chain. - PowerPoint PPT PresentationTRANSCRIPT
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March 11March 11thth supply-chain disruptions, supply-chain disruptions, an opportunity for Mexico-Japan an opportunity for Mexico-Japan
business collaboration business collaboration
April 2011
Raúl UrteagaRaúl UrteagaMinisterMinister
Office of Mexico-Japan Economic Partnership Agreement
Embassy of MexicoTokyo
Raúl UrteagaRaúl UrteagaMinisterMinister
Office of Mexico-Japan Economic Partnership Agreement
Embassy of MexicoTokyo
March 11th events exposed vulnerabilities of Japan’s supply-chain
• Reduced input supply and inventories are affecting firms in Japan and elsewhere
• Infrastructure bottlenecks at ports and highways are serious concerns
• Planned electricity power cuts will greatly affect manufacturing and the supply-chain process. This is the biggest concern.
• Risks associated with relocation of production (technology transfer, IPR protection, labor quality, clients’ satisfaction, on-time delivery)
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Alternative plans for Japanese supply-chain companies
• Reduce outside contractors in Japan but
especially in low-labor countries with deficient infrastructure and legal uncertainties.
• To base supply operations in Mexico:1. Low cost manufacturing
2. Excellent labor skills
3. Legal protections guaranteed, including IPR, FD Investors
4. Enhanced export market access trough its FTA network
5. Hundreds of Japanese suppliers already in Mexico (automotive, electronics)
6. Mexico – Japan EPA
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JBIC Survey 2010 for overseas business operations
Ranking CountryNo. of companies
responses
2010 2009 2010 2009
1 1 China 399 353
2 2 India 312 278
3 3 Vietnam 166 149
4 4 Thailand 135 110
5 6 Brazil 127 95
10 11 Taiwan 29 21
12 12 Mexico 25 20
14 13 Philippines 14 14
15 17 Turkey 8 8
18 14 Germany 7 9
20 23 Poland 5 4
Source: 2010 JBIC Survey
JBIC Survey on Japanese Companies Overseas Investment
Auto Assembly Auto parts
1. Reducing costs for parts & raw materials
2. Achieving environmental energy savings
3. Reinforce brand dynamic
1. Reducing costs for parts & raw materials
2. Employing personnel capable of working in the international arena
3. Increasing overseas production
Source: 2010 JBIC Survey
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MEXICO TOTAL VEHICLE EXPORTS AND PRODUCTION
Last year, 81% of Mexico’s automotive production was exported to more than 50
countries, including Japan
Source: Mexican Automotive Industry Association (AMIA)
2007 2008 2009 2010 Jan-Mar2011
Exports
Total Production
2.02 2.10
1.51
2.26
0.63
1.61 1.66
1.22
1.86
0.510.00
0.50
1.00
1.50
2.00
2.50
Millions
Year
Vehicle production and exports
Mexico’s GDP
Source: Mexico’s Ministry of Finance, International Monetary Fund Note: 2011 and 2012 indicators are forecasts
Mexico's Economic PerformanceGDP Growth
2007 2008 2009 2010 2011 2012
1.5%
- 6.0%
5.5%4.6% 4.1%3.3%
1
88
Foreign Direct Investment registered in Mexico
Unit: Billion USDUnit: Billion USD
Strengths of the Mexican Market
Mexico’s internal demand growth:
• Recovery of employment and income
• Wider credit and financing availability
• Investment in infrastructure
• Structural measures to increase competitiveness
• Population growth and demographics:
• 112.6 million population (2010 Census)
• Almost 1 million young Mexicans become consumers every year
Mexico’s Macroeconomic Variables
EXPORT PERFORMANCE 2010
Exports: US$ 298 billion
Imports: US$ 301 billion
TOTAL US$ 599 billion
INFLATION
2010 4%
2011 3.9%- 4.3% (projected)
Mexico is the largest exporter in Latin America, even above Brazil
COUNTRY RISK
JP Morgan EMBI + Index Spread, Basis Points
April 1st 2011
Mexico 131
Argentina 517
Brazil 168
Mexico has an extensive network of free trade agreements (13 FTAs in three continents) with preferential tariff access to 45 countries, including Japan.
FTA EU
FTA Chile
FTANicaragua
FTACosta Rica
FTA Bolivia
FTAColombia
NAFTAFTA
HondurasEl Salvador & Guatemala
FTA Israel
MERCOSUR:- Brazil- Argentina- Uruguay- Paraguay
NAFTA
EPA Japan
Extensive FTA Network
On July 1st 2011, the Mexico-Peru FTA will enter into force
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Mexico-Japan Trade 2005-2011(Unit: Billion USD)
In February 2011, bilateral trade grew by 20.4% compared with the same period of 2010.Mexico's exports to Japan increased by 32% to US$634.6 million, while imports from
Japan increased by 17.6% to US$2,354 million.
Mexico-Japan Bilateral Trade
13.115.3 16.4 16.3 15.0
2.4
2.62.8
3.2 3.8
11.4
3.5
2.8
0.6
0
5
10
15
20
2005 2006 2007 2008 2009 2010 2011
Mexico's Exports to Japan
Mexico's Imports from Japan
15.6 18.1 19.5 20.1
Source: Mexico's Secretary of Economy and Japan's Ministry of Finance*Data is based on registered imports in both countries
Unit: US$ Billion
14.2 18.55.6
3.0
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THANK YOU!
Office of Mexico-Japan Economic Partnership Agreement
Tokyo, JapanTel: 03-3506-6681