Traditional Mexican Food. Automotive and aerospace

1
Trade Commission of Mexico for Western Canada
and the Pacific Northwest of USA

• SECURITY PROSPERITY PARTNERSHIP OF NORTH
  AMERICA
• NAFTA moving forward
• Hispanic Metropolitan Chamber of Commerce
• Portland, Oregon October 25th 2005

2
The North American Free Trade Agreement (NAFTA)
is an outstanding demonstration of the rewards to
outward looking countries that implement
policies of trade liberalization as a way to
increase wealth and improve competitiveness.
3
NAFTA 10 years later
4
Strengthening trilateral trade investment

• US
• Exports to Mexico and Canada grew from 147.7
  billion to 260.2 billion (176)
• Mexico
• Exports to US and Canada grew from 61.06 billion
  to 144.9 billion (237)
• Canada
• Exports to US and Mexico grew from 113.6 billion
  to 215.5 billion (52)

5
NAFTA 10 years later

• NAFTA North America the most active trading
  region in the world
• NAFTA countries account
• Trade. 19 of global exports and 25 of imports
• Investment. 24 of global inward FDI and 25 of
  outward FDI

6
SECURITY AND PROSPERITY PARTNERSHIP OF NORTH
AMERICA (SPPNA)
7
SPPNA New areas of cooperation

• Practical and achievable measures are being
  explored that could build and enhance NAFTA
  cooperation
• Improved Dispute Settlement Mechanism
• Rules of Origin
• Harmonization of Regulations
• Government Procurement
• Investment
• Services
• Border Security / Continental Perimeter
• Business Travel

8
SPPNA New areas of cooperation

• Security
• Improved border infrastructure
• US Mexico Border Partnership
• F.A.ST and Smart Borders
• Cooperation
• Bioterrorism Act

9
M E X I C O NAFTAA decade of strengthening
10
Mexico A Snap Shot

• Population 106 million
• GDP per capita 6.000
• 74 urban
• Under 20 44
• Wealthy 5
• Upper Middle 18
• Middle Class 37
• Poor 40

11
Mexico Commercial policy

• 1983 Mexico a commercial strategy policy based
  on market economy.
• Deregulation commercial opening.
• Improvement of the export performance EXPORTS
  EXPORTERS
• THE CHALLENGE TO BE MORE COMPETITIVE GLOBALLY.

12
Mexico International agreements
FTA Island Liechtenstein Norway Switzerland
FTA Colombia Venezuela
PFTA Uruguay
NAFTA USA Canada
FTA Bolivia
FTA Israel
FTA Guatemala Honduras El Salvador
GATT (OMC)
FTA Chile
APEC
OCDE
FTA Costa Rica
FTA Nicaragua
FTA European Union
FTA Japan
1995
1994
1993
1992
1986
1998
2000
2001
2005
13
Mexico in the world

• GNP 2002-2004
• (Billions US dollars)
• 1. United States 10,082
• 2. Japan 4,146
• 3. Germany 1,870
• 4. United Kingdom 1,422
• 5. France 1,330
• 6. China 1,155
• 7. Italy 1,090
• 8. Canada 700
• 9. Mexico 618
• 10. Brazil 605

• 8th export country worldwide
• 1st export country in Latin America
• 34 exports to GNP ratio
• Export companies pay wages 37 higher than
  non-export
• Manufactured goods are 85 of total exports in
  2004

14
GATT- NAFTA
NAFTA
GATT
Source Banco de México
15
Main export industries
Electric and electronic goods, appliances and
components.
26.1
Three industries integrate the 60 of the total
exports
Automotive auto-parts
17.6
Machinery and equipment components.
16.3
16
Export companies
Share in the non-oil exports
Export Companies
5.0
75
95.0
25
17
Exports distribution by region
18
States with highest foreign trade flows
Chihuahua

• Baja California

Coahuila
Nuevo León
Veracruz
Guanajuato
Jalisco
Puebla
Estado de Mexico
Mexico City
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Export supply

• MEXICAN COMPANIES
• Quality
• Price
• Commitment
• Just in time
• International standards

• MAIN INDUSTRIES
• Fresh products
• Food and beverage
• Textiles and garments
• Leather goods
• Furniture
• Decorative items
• Plastic (subcontracting)
• Electric-electronic goods
• Autoparts
• Do it yourself

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The Hispanic market

• HISPANIC COMPANIES IN THE USA
• Total more than one million.
• Manufacturing food 2,500.
• Selling food 31,000.
• Restaurant 34,000.

• In 2002 2004 the Hispanic population in USA was
  around 40.6 millions with purchasing power of 500
  thousand millions of dollars.
• In Canada, the Hispanic population is around
  250,000 which 13 are Mexicans.

21
Mexico outlook 2006

• Speed of US recovery (85 Mexico exports)
• GDP growth 4
• Inflation between 3.8 4.4
• Peso to weaken slightly
• Macroeconomic stability
• Lead up to Presidential election July 2006

22
Business opportunities
23
Mexico A large complex market
24
The retail market in Mexico

• Around 30 billion
• Growing 9 per year
• Represents 17 of GDP
• More consumers credit available
• Private labeling and innovation
• Consolidation amongst main players

25
Export requirements

• Export promotion
• Infrastructure
• Financing
• Suppliers
• Know-how
• Transfer of technology
• Training
• Information
• Advising

• CLUSTERS
• Integration of the export production chain

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Main trade partners

• EXPORTS
• 1. United States
• 2. Canada
• 3. Spain
• 4. Germany
• 5. Switzerland
• 6. United Kingdom
• 7. China
• 8. Guatemala
• 9. India
• 10. Netherlands
• 11. Brazil
• 12. Aruba

• IMPORTS
• 1. United States
• 2. China
• 3. Japan
• 4. Germany
• 5. South Korea
• 6. Canada
• 7. Italy
• 8. Brazil
• 9. Taiwan
• 10. Malaysia
• 11. Spain
• 12. France

Source World Trade Atlas, 2004.
27
Main imports 2004
Intermediate goods 76 Consumer goods 13
Capital goods 11
Source INEGI, 2004.
28
Imports by origin
North America 64.2
Europe 11.8
Asia 18.7
Latin America 4.7
29
Foreign investment entry strategy
HIGH
Foreign Direct Investment
RISK
Joint - venture
Strategic alliance
Agent / representative office
Import / Export
LOW
HIGH
MARKET SHARE
30
NAFTA and the FDI into Mexico
Cumulative FDI 1994- 2003 115.3 tmd
Thousands million dollars
Source Secretaría de Economía. Dirección General
de Inversión Extranjera.
31
Main foreign investment partners

• 1. United States (NAFTA)
• 2. Spain
• 3. Netherlands
• 4. United Kingdom
• 5. Canada (NAFTA)
• 6. Switzerland
• 7. France
• 8. Germany

32
Investment possibilities

• Foreign Direct Investment (FDI)
• Joint-venture
• Strategic alliance

• Subcontracting processes
• Maquila (in-bond industry)

33
Mexico as manufacturing centre
NAFTA REGION
Finished Products Parts and Components
ASIA
EUROPE
Parts and Components
Parts and Components
Finished Products
CENTRAL SOUTH AMERICA
34
Incentives to do business in Mexico

• Location (Atlantic and Pacific Ocean).
• Internal market.
• External market (USA, Europe and Latin America).
• Competitive work force.
• Production flexibility (low volume high mix)

35
Best business prospects

• Auto Parts / Supplies
• Electronics components
• Airport ground support equipment
• Travel tourism services
• Plastic materials
• Telecommunication equipment
• Safety security equipment
• Hotel restaurant equipment
• Transportation equipment

36
Mexico - Oregon
37
Oregon - Mexico

• EXPORTS
• Apples
• Printing equipment
• Spare parts (automotive)
• Berries
• Forestry products
• Pulp and others

• IMPORTS
• Fresh fruits
• Vegetables
• Processed food
• Furniture
• Decorative items
• Printed material (books)
• Garments

38
Business possibilities

• Priority sectors to be promote during the
  business mission
• Agri-business seafood
• Traditional Mexican Food
• Automotive and aerospace
• Biotechnology
• Building materials
• Electric and electronic
• Environmental

39
Business possibilities

• Forestry
• Hi Tech
• Metal-mechanic
• Natural health products
• Pulp and paper
• Software development
• Tourism

40
Trade Commission of Mexico
41
Trade Commission

• Is the Mexican Trade Promotional Organisation
  (TPO) in charge of promoting Mexican exports from
  SMEs and attracting foreign investment, in order
  to make Mexican export supply more competitive.

42
Strategy
BY INDUSTRY Find Mexican industries with more
competitive advantages .
BY REGION Through our network of offices in
Mexico .
BY COMPANIES Focus in small and medium size
enterprises (SMEs).
BY MARKETS Consolidate the current markets and
find new ones .
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We work together
STATES GOVERMENT
MINISTRY OF ECONOMY
CHAMBERS OF COMMERCE
OTHER MINISTERIES
MEXICAN CONSULATE
TRADE COMMISSION OF MEXICO
44
Trade Commission of Mexico Western Canada and
Northwestern USA

• Region covered
• Alberta,
• British Columbia and
• Yukon in Canada
• Washington,
• Oregon and
• Alaska in USA.

45
Our services in Canada and USA

• Development and support of trade projects
• Trade directory
• Transportation and logistic information
• Market research
• Distribution channels
• Information and support on trade fair and
  exhibitions
• Opportunities available to potential foreign
  investors in Mexico
• Development of in-bond industry projects
• Industrial costs in Mexico

46
NAFTA achievements

• US-Mexico relations have expanded into a close
  political, social, and cultural partnership.
• The increased movement of goods, services, and
  individuals has created growing linkages
• The exchange of ideas and methods in addressing
  common challenges.
• NAFTA has fundamentally altered the North
  American economic space, and increased the global
  competitiveness of all three parties.

47
Doing business in Mexico

• Judicial System different to US or Canada
• Labor law is strict
• Protect yourself with a contract
• Be flexible stress personal relationship
• Multiple distributors complex market
• Pay attention to local politics
• Enjoy yourself in a different way of doing
  business

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Please contact us at

• CANADA
• Vancouver, Canadá
• SERGIO RIOS
• 200 Granville Street, suite 1365
• Vancouver, Canadá
• V6C 1S4
• Tel. [phone]
• Fax. [phone]
• E-mail bancomext_at_trademexbc.com

• EEUU
• Portland Oregon
• VERONICA PEREZ
• 1234 SW Morrison Street
• Portland Oregon 97205
• Tel. [phone]
• Fax. [phone]
• E-mail vperez_at_sre.gob.mx