Sharing More than Just a Border: U.S. Commercial Opportunities in Mexico

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• Sharing More than Just a Border U.S. Commercial
  Opportunities in Mexico

Asia Pacific Business Outlook Conference
University of Southern California March 26-27,
2007 Los Angeles, CA
Karen L. Zens Minister Counselor for Commercial
Affairs U.S. Embassy Mexico
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Mexico Just What Your Real Estate Agent Told
You

• NAFTA! Access to Goods/Services/Market in U.S.
• Proximity to Worlds Best Consumer Market.
• Shared Culture Western, Hispanic.
• Large installed base of manufacturing in various
  sectors.
• Perception of stronger legal protections (China,
  Russia..)
• Seen as politically stable.
• Macroeconomic stability.
• Location, Location, Location

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Mexico A Snap Shot

• Pop 104 million
• GDP per capita 8,135
• Adj for Purchasing Power 9,800
• 74 percent urban
• Under 20 44
• Wealthy/Upper Middle 23
• Middle Class 37
• Poor 40

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TOP U.S. TRADING PARTNERS in 2006 (Goods)
Source U.S. Bureau of Census
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U.S. Exports to Mexico
Source International Trade Administration, U.S.
Department of Commerce.
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Foreign Direct Investment in Mexico
Source Secretariat of Economy, General
Directorate of Foreign Investment.
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Foreign Direct Investment in Mexico by Country
Source Mexicos Secretariat of Economy, General
Directorate of Foreign Investment.
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Mexicos 2006 Bilateral Trade
Source Mexicos Secretariat of Economy.
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Mexico Outlook for 2007

• U.S. economy
• GDP growth 3.5 (4.8 in 2006)
• Inflation 4.1 (4.05 in 2005)
• Macroeconomic stability
• Remittances, oil and tourism
• New Calderon Administration 2040 goal - 5th
  largest economy in the world
• Economic reforms - Congressional split

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The Impact of NAFTA

• Almost no tariffs on U.S. exports to Mexico
• More than 85 of U.S. Goods enter duty-free
• By 2008, 100 will enter duty-free
• Elimination of Barriers
• Institution of Dispute Resolution Process
• U.S-Mexico trade increased 377 from 88 billion
  to 332 billion in 2006

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U.S. EXPORTS TO WESTERN HEMISPHEREEXCEEDING
THOSE TO OTHER REGIONS 2006
Western Hemisphere 43.8
Source U.S. Bureau of Census
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The Future of NAFTA

• Clearly not about cheap labor
• It is about integration of the North American
  marketplace
• It is about moving up the value-added chain
• It is about maintaining and increasing
  competitiveness and productivity
• Mexico, like the U.S., fears losing its
  manufacturing sector to other countries why?
  Over the last 5 years
• Chinas exports to the U.S. grew 300
• Mexicos exports to the U.S. grew 30

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Beyond NAFTA Security and Prosperity
Partnership

• Security and Prosperity Partnership of North
  America
• Trilateral Initiative
• Building on NAFTA
• Security Led by DHS
• Prosperity Led by Commerce
• North American Competitiveness Council
• Trilateral private sector representation
• WWW.SPP.GOV

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SPP Prosperity Working Groups

• Manufactured Goods
• Movement of Goods
• Energy
• Environment
• E-Commerce and ICT
• Financial Services
• Business Facilitation
• Food and Agriculture
• Transportation
• Health

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U.S. Commercial Service Mission

• Agency of the U.S. Department of Commerce.
• Helps small and medium size U.S. companies export
  goods and services.
• Protects U.S. business interests abroad.
• Network of 100 offices in the U.S. and 160
  worldwide.

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Mexico - A Large and Complex Market
Tijuana
Monterrey
Guadalajara
Mexico City
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Products Services

• Trade Counseling Advocacy.
• Qualified Appointments for U.S. Companies.
• Partner Searches and Background Checks.
• Market Research.
• Single U.S. Company Promotions.
• International Buyer Program (IBP) for Mexican
  Companies.
• Trade Missions for U.S. Companies.
• www.buyusa.gov/mexico/en

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CS Mexico Results Oct 2005 Sept 2006
We helped U.S. companies obtain 500 distinct
export sales worth over 360 million in sales for
American small and medium size firms

• 160 days of appointments arranged for U.S.
  companies.
• 103 trade events (trade missions, seminars,
  etc.).
• 20 Mexican delegations to U.S. trade shows.
• Interagency Representation
•  U.S. Export-Import Bank.
• U.S. Trade Development Agency (TDA).
• U.S. Overseas Private Investment Corporation
  (OPIC).

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Upcoming Trade Events in Mexico

• Tijuana Border Program
• April 16-19
• Tijuana, B.C.
• Expo Logistica 2007 - Customs and Logistics
• May 7-9
• Mexico City, Mexico
• Aeroexpo Aviation Trade Show
• May 24 26
• Mexico City and Toluca, Mexico
• World of Concrete Mexico
• June 19-21
• Mexico City, Mexico
• Enviropro / Power Mex - Environmental and
  Energy Industries
• September 26-29
• Mexico City, Mexico

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The Market for U.S. Exporters Best Prospects

• Automotive Parts and Supplies
• Electronic components
• Energy Sector
• Airport Ground Support Equipment
• Travel Tourism Services
• Plastic Materials/Resins
• Telecommunications Equipment

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More Best Prospects

• Environmental Sector
• Low-Income Housing Rapid/Prefab Construction
• Safety Security Equipment/Services
• Hotel Restaurant Equipment
• Intermodal Transportation Equipment
• Education Training Services

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Manufacturing Remains Strong in Mexico

• Mexicos Industrial GDP has grown over 5 last
  year .
• In 2005, Industrial GDP reached 176 billion.
• 87 billion was exported to the US .
• 7 billion exported to other countries.
• Leading manufacturing sectors autos/ auto parts
  computer hardwareelectronic components home
  appliances tool,die and moldings
• Maquiladoras U.S. and foreign firms

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The Manufacturing Sector

• Imports 87 billion of machinery, componants and
  inputs annually
• 56,000 companies in the U.S. supply this sector
• Competition is strong but opportunities are great

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U.S. Share of Maquila Imports
Source Banco Mexicano de Comercio Exterior
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Asian Share of Maquila Imports
Source Banco Mexicano de Comercio Exterior
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How Do You Sell to Mexican Manufacturers?

• Good local representation.
• Knowing where purchasing decisions are made.
• Identification of your customers 1st or 2nd
  tier?
• Finding out what your customers need.
• Understanding what financial tools are at your
  disposal to offer financing.
• Following up!

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How We Help US Suppliers

• Goal Increase US exports of goods/services to
  Mexican Manufacturers.
• Identify key sectors and market trends through
  company visits, association partnerships (AMT,
  NAM, MIT, etc.), and market research.
• Publicize opportunities to export to these
  companies through Trade Leads system.
• Locate qualified reps and customers through our
  services.
• Promote relevant trade shows like Expo
  Manufactura.
• Give updates on our findings through teams,
  USEACs, electronic newsletters, and
  web/videoconferences.

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Some Tips on Mexican Business Customs

• Mexico has its own customs.
• Importance of establishing personal relationships
  before business is done.
• Breakfast, Lunch and Dinner!
• Time is Flexible
• Patience pays off
• Physical contact un abrazo you can (air)kiss
  the ladies!

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Business CustomsSome Hazards

• Indirectness - difficulty in saying no
• Push for easy credit terms be careful
• Follow up quickly with your Mexican partner
  there is lots of competition not an American
  preserve
• Use a qualified interpreter if needed
• Keep in contact visit, phone not just e-mail

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A Sus Ordenes! Let us Help You