Mexico Country Profile

Map of Mexico: Central Intelligence Agency. The World Fact Book. June 26 th 2014. https://www.cia.gov/library/publications/the-world-factbook/graphics/maps/mx-map.gif

Mexican flag: Central Intelligence Agency. The World Fact Book. June 27 th 2014.https://www.cia.gov/library/publications/the-world-factbook/graphics/flags/large/mx-lgflag.gif

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Mexico’s Background

• Mexico is located in North America, bordering the Caribbean Sea and the Gulf of Mexico, between Belize and the United States; and bordering the North Pacific Ocean, between Guatemala and the United States.

• The climate varies from tropical to desert and its terrain consists in high rugged mountains, low coastal plains, high plateaus and desert.

• Mexico’s current population is 120,286,655 habitants.

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• Life expectancy at birth for the Mexican population is 75.43 years on average.– For males: 72.67 years

– For females: 78.32 years

Language and cultural activitiesSpanish is the official language and it is spoken by 92.7% of its population, while 5.7% speaks Spanish and indigenous languages, 0.8% indigenous only and 0.8% speaks other language.Mexico’s cultural activities vary from very antique ones reflecting its historic heritage, to the most modern concerts and shows. The major show activity is concentrated in Mexico’s big cities. In places such as Guadalajara, Monterrey or Mexico City, there are big theaters, forums, arenas, auditoriums and even stadiums. The best in sports, concerts and culture come together in them to entertain local audiences and/or visitors.

• Literacy which is defined as any individual with an age of 15 and over who can read an write is of 93.5% in Mexico.

– For males: 94.8%

– For females: 92.3%

Sources:The World Fact Book. https://www.cia.gov/library/publications/the-world-factbook/geos/mx.htmlVisit Mexico. https://www.visitmexico.com/en/entertainment-in-mexico

Mexico City. National Palace, Mexico City. June 27 th 2014.http://www.mexicocity.gob.mx/media/galerias/centro-historico/POSTALpalacionacional.jpg

Why Mexico?

I have had the pleasure of visiting Mexico on 20+ occasions. During my many visits, I have fallen in love with the country, its culture, and its people. Given its geographic location to the US, logistical planning tends to be not only easy but very cost effective. In addition, not only is labor readily available, the level of productivity is high. Currency movements tend to be stable, resulting in lower financial risks. Political risks to commercial investments are favorable as well.

Visit Mexico. Xochimilco, Mexico City. June 27 th 2014.https://www.visitmexico.com/work/models/VisitMexico30/WebPage/Ciudad_de_Mexico_Ciudad_Patrimonio/photoEscudo_Ciudad_de_Mexico_Ciudad_Patrimonio_Xochimilco_HEADER.jpg.jpg

Visit Mexico. Archeology. June 27 th 2014.https://www.visitmexico.com/work/models/VisitMexico30/WebPage/Arqueologia/photoEscudo_Arqueologia_arqueologia.jpg

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Economic Environment

• Mexico’s economy distribution:– Agriculture: 3.6%

– Industry: 36.6%

– Services: 59.8%

• Labor force by occupation:– Agriculture: 13.4%

– Industry: 24.1%

– Services: 61.9%

• Major agriculture products:– Corn, wheat, soybeans, rice, beans, cotton, coffee, fruit, tomatoes; beef, poultry, dairy products; wood products

• Major industries:– Food and beverages, tobacco, chemicals, iron and steel, petroleum, mining, textiles, clothing, motor vehicles, consumer durables,

tourism

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Source:The World Fact Book. Mexico. July 8 th 2014. https://www.cia.gov/library/publications/the-world-factbook/geos/mx.html

Mexico City. Mexico city aerial view. July 1 st 2014.http://www.mexicocity.gob.mx/media/galerias/reforma-zonarosa/POSTALtorremayortop.jpg

Economic Environment

• Mexico is a leading exporter of high-tech advanced manufacturing.

• Mexico is Latin America's leading exporter.

• It accounts for 35% of the region's total trade

• In 2012, close to 81% of exports were manufactured goods.

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Sources:ProMexico. Why Mexico?. July 8 th 2014. http://www.promexico.gob.mx/en_us/promexico/Por_que_Mexico The World Fact Book. Mexico. July 8 th 2014. https://www.cia.gov/library/publications/the-world-factbook/geos/mx.html

• Mexico’s Major Exports:– Manufactured goods– Oil and oil products– Silver– Fruits– Vegetables– Coffee– Cotton

• Mexico’s Major Imports:– Metalworking machines– Steel mill products– Agricultural machinery– Electrical equipment– Car parts for assembly– Repair parts for motor vehicles– Aircraft, and aircraft parts

Manzanillo Harbor. July 8th 2014.http://www.puertomanzanillo.com.mx/upl/sec/puerto.JPG

Business Conditions

• Mexico's economy has become increasingly oriented toward manufacturing in the 20 years since the North American Free Trade Agreement (NAFTA) entered into force.

• Mexico has become the United States' second-largest export market and third-largest source of imports. – In 2013, two-way merchandise trade reached nearly

$507 billion.

• Mexico has free trade agreements with over 50 countries, putting more than 90% of trade under free trade agreements.

• In 2012 Mexico joined the Trans-Pacific Partnership negotiations and formed the Pacific Alliance with Peru, Colombia and Chile.

• Mexico's current government, led by President Enrique PENA NIETO, emphasized economic reforms during its first year in office, passing education, energy, financial, fiscal and telecommunications reform legislation.

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Source:The World Fact Book. Mexico. July 8 th 2014. https://www.cia.gov/library/publications/the-world-factbook/geos/mx.html

Fundidora Park. July 8th 2014.http://www.parquefundidora.org/sites/default/files/queesparquefundidora1.jpg?1304351919

Business Conditions

• Foreign and domestic private entities are permitted to establish and own business enterprises and engage in all forms of remunerative activity in Mexico, except those reserved for the State and for Mexican nationals.

• Private enterprises are able to freely establish, acquire and dispose of interests in business enterprises.

• Banco de Mexico operates as the central bank of the country.

• Mexico’s financial system consist of six types of banking institutions: “public development banks, public credit institutions, private commercial banks, private investment banks, savings and loan associations, and mortgage banks”.

• Mexico has:– 76 open airports (12 for domestic traffic and 64 for

international and domestic transportation).

– 117 sea ports (49 cabotage ports and 68 grand cargo and cabotage ports).

– 27 thousand kilometers of railroads.

– 133 thousand kilometers of paved roads (120 thousand kilometers of two lane roads and 13 thousand kilometers of highways of four lanes or more).

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Sources:American Society of Business and Behavioral Sciences. June 30 th 2014. http://asbbs.org/files/ASBBS2013/PDF/D/DoyranM(P500-509).pdf U.S. Commercial Service. Doing Business in Mexico. July 1 st 2014. http://www.buyusainfo.net/docs/x_7553099.pdf Bancomext. Basic Guide for Foreign Investors. July 1 st 2014. http://embamex.sre.gob.mx/singapur/images/BasicGuideForForeignInvestors.pdf

Mexico City. Independence Angel, Mexico City. June 27 th 2014.http://www.mexicocity.gob.mx/media/galerias/reforma-zonarosa/angel_piso02.JPG

Business Conditions

• Mexico offers modern and world-class infrastructure.– 100 billion dollars will be invested by the federal

government during 2013-2018. This important investment is outlined in the Transport and Communications Infrastructure Investment Program 2013-2018.

– 45% of this investment will be used to modernize and upgrade transport infrastructure, while 55% will be used for telecommunications.

• Mexico offers competitive costs in North America.– AlixPartner's Manufacturing Cost Index 2013 places

Mexico as a highly competitive country in terms of costs, surpassing China or the United States for products like manufactured and assembled parts, as well as consumer products.

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• Mexico has a favorable business environment.– Mexico is one of the best places for doing business in

Latin America.

– Ranked 48th in the World Bank's Doing Business 2013 report.

– Investors only need nine days and six procedures to open a business.

• Mexico has a young, talented and skilled population.– According to the 2010 Census, Mexico has 112.3

million inhabitants and a median age of 26.

– Economically Active Population (EAP): 50.2 million people (INEGI, I-2013).

Sources:ProMexico. Why Mexico?. July 8 th 2014. http://www.promexico.gob.mx/en_us/promexico/Por_que_Mexico

Recommendations for International Business

• Mexico is the gateway to the world's most important market– It is part of the largest economic block in the world (NAFTA).

– NAFTA Market = almost 18.7 trillion dollars (FMI).

– Mexico has a network of free trade agreements which grants preferential access to 45 countries?(almost 1.2 billion people).

• Mexico is an important attraction pole for investment.– In 2013, Foreign Direct Investment (FDI) is expected to reach 35 billion dollars, higher than the levels registered in 2012.

• Mexico is a competitive destination.– Mexico holds vast amounts of productive knowledge. The country manufactures and exports a large number of

sophisticated goods

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Sources:ProMexico. Why Mexico?. July 8 th 2014. http://www.promexico.gob.mx/en_us/promexico/Por_que_Mexico ProMexico. Mexico’s Free Trade Agreements. July 8 th 2014. http://www.promexico.gob.mx/work/models/inversion1/Resource/93/1/images/freetradeagreements2.jpg

• Mexico is a good option to invest, considering its proximity to the world’s largest market.

• The labor market is very stable and highly skilled, and it is concentrated in the largest cities of the country, such as Mexico City, Guadalajara and Monterrey.

• Under Mexico’s current government there have been several reforms to its laws to make it more competitive and attract more foreign direct investment by providing new facilities to the companies that are interested in establishing a new venture in the country.

• Currently there are very large investments on its physical infrastructure, to provide better roads and create new entry ports to the country.

• It has several free trade agreements with more than 50 countries, which give to their products competitive advantages when trying to enter new markets.

• There are some insecurity problems in some areas of the country because of the drug cartels which at times have violent actions, however the is already a plan set up by the government to control all these situations.

• Mexico is a great option to consider for a company that wants to enter to a new market, and depending of the level of risk and the amount of the investment they would like to put in, that would define which strategy is better for them, either to export/import or to establish a new venture in the country.

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Recommendations for International Business