Why is Mexico the Perfect Destination For Investors and Businesses

Overview: 

Mexico, with a population of around 119 million, is the second biggest nation in Latin America and the third biggest in community in the whole landmass followed by Brazil and the U.S. Of the trade partners within the United States. It is on the main four with Canada, China, and Japan. A significant number of Fortune 500 organisations and other worldwide companies have turned to Mexico trying to cut assembling costs while looking after U.S. principles of value and productivity with efficiency. In 2014 the FDI speculation came to $22.6 billion including the applicable deal exchange of Comex, the most prominent Mexican paint organisation, on $2.6 Billion to the US Company PPG Industries. In 2013, Mexico drew a record achieving $35.2 billion in FDI, almost twofold the level seen in 2012. The record high observed in 2013 was for the most part because of Belgian brewer Anheuser-Busch InBev’s obtaining giant of Mexican beer Grupo Modelo, the “Corona” makers, which realised in $13 billion. Content is curated in the complete analysis of “Why is Mexico the Perfect Destination For Investors and Businesses in 2020″.

Mexico and the United States share about 2,000 miles of borderland, and the nation itself is fastened with more than 80,000 miles of highways and dotted with 76 airport terminals. It delivers its load or cargo to any point in the continent of U.S. inside 24 hours, supported by vicinity to the U.S’s Foundation framework. Almost 81% of Mexico’s exports—30% of its GDP is involved in produced products or comprised of manufacturing goods. Presently, 60% of the populace is under 35, while just 6.5 per cent is more than 65. The nation is additionally receiving the rewards of a statistic reward, in which working-age individuals include the best lump of the aggregate population. But it’s not merely shabby work. Mexican colleges graduate exactly 111,000 designing and tech understudies each year, and the society and large is genuinely sound, with futures near those in the United States.

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According to the International Monetary Fund (IMF), Mexico is the 11th largest economy in the world. Uncommonly gifted, bilingual, and profoundly talented work drive with high strength and stability with more than 44 Free Trade Agreements. A tremendous amount of investment from OEM’s from the recent ten years with a gigantic development from Automobile, Aerospace, Electronics, Home Appliances, Steel and Food enterprises.

It is an open economy, steady, aggressive, competitive and full of opportunities. There’s not the smallest uncertainty that Mexico is a nation of extraordinary chances. The vicinity of Mexico to the United States, the exceptional relations between the two countries under the North American Free Trade Agreement (NAFTA), and its critical geological area make Mexico a very appealing goal for some areas, among them, assembling and administrations. Investments funds will rule the industrial markets will be governed by investments funds, and through real estate investments trust called FIBRA. The underlying strides of the new Federal government are heading precisely, and we see exceptional and outstanding points of view for the future of Mexico. Content is curated in the complete analysis of “Why is Mexico the Perfect Destination For Investors and Businesses in 2020″.

Mexican Economy is Export Oriented:

Mexico’s economy is export-oriented. Primary goods for exports are manufactured products which are 89% of total shipments. Oil and oil products are 6 %. In manufacturing goods; equipment and machinery are major categories to export which are around 69%. Automobile consist of 31 % of total sales.

Other relevant categories of export are electrical and electronic appliances which are 31%. Agricultural goods and mining products account for 4 % and 1% respectively. 

Mexico’s most prominent and leading export partner is the USA which accounts 80% alone. Further, it is followed by Canada, which accounts for 3 % and Germany and China 2% respectively. 

This page provides the latest reported value for – Mexico Exports – plus previous releases, historical high and low, short-term forecast and long-term prediction, economic calendar, survey consensus and news. 

Mexico Exports – actual data, historical chart and calendar of releases – is last updated in December of 2019.

Exports from Mexico declined 1.5% over a year earlier to $40731 million in October 2019, as oil exports fell 30.4%. Each day, the country exports 0.963 million barrels of crude oil, which is lower than 1.207 million barrels a year earlier while the price is $50.04 per barrel, $21.25 below the amount in October 2018. 

Vis-a-vis, the export of non-oil is increased 0.4% which is driven by higher sales of Agricultural products; around 6.9%, led by Citrus; 47.5%, Avocado; 31.9%, Fresh Vegetables; 29.7%, Comestible Fruits; 24.8% and Pepper; 5.3%. Also, extractive exports jump by 28.7%.

Another side, the manufacturing sale drops with .01%. In particular, paper & printing; -6.7%, automotive products; -6.2%, textiles;-4.1% and plastic & rubber; -1.7%. Exports in Mexico averaged 14509.78 USD Million from 1980 until 2019, reaching an all-time high of 41825.44 USD Million in May of 2019 and a record low of 1225.59 USD Million in February of 1980.

 

Export goods	Manufactured Goods,  Electronics,  Vehicles and auto parts,  Oil and oil products,  Silver, plastics,  Fruits, vegetables, coffee,  Cotton
Main export partners	The United States 80%  Canada 3%  China 2%  Germany 3% Spain 1.5%  Brazil 1.2% (2019 est.)

Why is Mexico the Perfect Destination for Investors:

Mexico’s trade agreements allow its manufacturers duty-free access to 60% of the world. That benefit attracts foreign factories. International Trade, which is exports plus imports, equals 77% of the country’s GDP. That’s much higher than Brazil’s 23% or even China’s 48%. Mexican companies have access to the U.S. market. They also share a common language with the rest of Latin America. Content is curated in the complete analysis of “Why is Mexico the Perfect Destination For Investors and Businesses in 2020″.

Mexico is one of the most competitive countries for productive investments worldwide due to many factors, such as:

• Geographical edge with a strategic advantages 
• Young and healthy population
• Huge Internet Market
• Political Stability
• Economic growth and prosperous development
• Equipped with high technology and ability to manufacturing high-quality products
• An open economy and free trade agreements in a very conducive environment

World Bank Report for doing business
Latin America	Ranking
Chile	59
Mexico	60
Colombia	67
Peru	76
Panama	86
Uruguay	101
Brazil	124
Paraguay	125
Argentina	126
Ecuador	129
Venezuela	188

According to the World Investment Report 2017 published by the United Nations Conference on Trade and Development (UNCTAD), in 2016, Mexico ranked 16th place as foreign direct investment recipient and 7th among developing economies. This report includes a survey applied to significant corporations worldwide that place Mexico as the 9th destination within their investment perspectives for the period 2017 – 2019.

World Bank Report for doing business
BRICS	Ranking
Russia	28
China	31
Mexico	60
India	63
South Africa	84
Brazil	124

According to figures of the Ministry of Economy, in 2018 Mexico received a foreign direct investment of more than USD 31  billion, most of it invested in the manufacturing industry. Even more, foreign direct investment flows have performed favourably during the last ten years, with a total amount of USD 330 billion in the period 2008 – 2018, destined primarily to the manufacturing, financial, mining, commercial, construction, real estate, tourism, media, professional services and transport sectors.

World Bank Report for doing business
MIST	Ranking
Koria	5
Turkey	33
Mexico	60
Indonesia	73

Commitment to Invest in Infrastructure:

Mexico’s government is committed to promote the development of infrastructure, as well as to maintain and improve the existing one to encourage:

• To balance regional development
• For sustainable urban development 
• and the logistic integration of the country and an improvement in its interconnectivity.

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In respect of that, Mexico is building a national road network of 423185 km. Breakups are; 49954 km for federal roads; 10168 km toll highways; 169078 km paved roads; 201,812 non-paved roads; 52295 km urban streets connecting infrastructures.

To execute this giant protect; The Mexican Government has diversified sources of funds in local and foreign currencies, that provides financial soundness to infrastructure projects. They have federation expenditure budget, development banks, national infrastructure funds, commercial banks, infrastructure financial market and private investors.

Solid and Open Economy:

The Mexican economy is the 2nd largest in Latin America and the 15th worldwide and has grown steadily as a consequence of the application of long term economic policies.

The Mexican banking system is composed of 51 banks, all of which comply with international regulation standards, and are supervised by the National Banking Commission (CNBV) under a prudential framework.

The monetary policy implemented by Banxico has created favourable conditions for sustained economic growth, reaching stable and significantly low inflation levels. According to INEGI, at the end of October 2019, the inflation rate was 3.02%. According to the Central Bank estimates, it is foreseen that during 2019 and 2020, inflation will maintain its downward trend, to annual levels of 3.4% and 2.7%, respectively.

Mexico’s economy is especially strong in the service sector. In 2018, this sector represented 66% of GDP and employed 62% of the labour force, while the industrial sector represented 31% of GDP and employed 23.8% of the labour force, and the primary sector represented 2.8% of GDP and employed 13.6% of the labour force. The Mexican economy has grown at an average annual rate of 2.2% in the last ten years, in spite of the adverse global environment. It is foreseen that it will continue growing during 2019 and 2020. Content is curated in the complete analysis of “Why is Mexico the Perfect Destination For Investors and Businesses in 2020″.

Top 10 Companies Invested in Mexico:

1. America Movil: 

América Móvil, founded by Carlos Slim; is a Mexican telecommunications corporation. It is headquartered in Mexico City, Mexico. It is the seventh-largest mobile network operator in terms of equity subscribers and one of the largest corporations in the world. As per the report of Forbes, the company ranks 142 out of 2000 global companies. The current CEO is Daniel Hajj Aboumrad. The market evaluation of America Movil is $51.9 Billion.

2. FEMSA:

The largest beverage company in Monterrey, Mexico; Fomento Económico Mexicano, S.A.B. de C.V. is operating as FEMSA.  It is a Mexican multinational beverage and retail company. It works the largest independent Coca-Cola bottling group in the world. FEMSA’s market evaluation is $33.6 billion.

3. Grupo México: 

German Larrea Mota-Velasco and Raul-Velasco found Grupo México. It is the largest mining corporation in Mexico and the third-largest copper producer in the world through ASARCO. The rail transport division of Ferrocarril Mexicano operates the nation’s largest rail fleet. The market valuation is $18.5 Billion.

4. El Puerto de Liverpool: 

El Puerto de Liverpool S.A.B. de C.V. is operating as Liverpool; is a mid-to-high end retailer in Mexico. It is the largest chain of departmental stores in Mexico and 136 shopping malls; including Perisur and Galerías Monterrey.

It has two divisions; one is Commercial and other is Real Estate. The commercial wing is responsible for selling and promoting products in its department and duty-free stores. The real estate arm builds, operates and leases retail space. The company’s market value is $15.9.Billion.

5. Grupo Televisa: 

Grupo Televisa, founded by Emilio Azcarraga Milmo, is headquartered in Mexico City. It is a Mexican multimedia mass media company. It is the largest media company in Latin America and the Spanish-speaking world. It is a significant international entertainment business, with much of its programming airing in the United States on Univision.

The majority of the programming airs in the US on Univision, and Grupo Televisa has an exclusive contract with this broadcasting station. The market value is $15.6 billion.

6. GFNorte: 

GFNorte is founded in 1899 in Monterrey, Mexico.  It is a banking and financial services holding company with the employee size of 27,000. It is one of the four largest commercial banks of Mexico by assets and loans and the largest retirement fund administrator. The market valuation of GFNorte is $15.2 Billion.

7. Grupo Bimbo:

Grupo Bimbo is a multinational bakery product manufacturing company. It is headquartered in Mexico City, Mexico. It has more than 138,000 employees, 165 manufacturing plants and 2.5 million sales centres located in 32 countries in America, Europe and Asia. We are the largest baking Company in the

World #1 and a relevant participant in snacks, generating US$15.0 billion in net sales in 2018. Diversified product lines are buns, fresh and frozen sliced bread, cookies, snack cakes, English muffins, bagels, prepackaged foods, tortillas, salty snacks, and confectionery products, which has established its presence in 32 countries throughout the Americas, Europe, Asia and Africa. Grupo Bimbo’s shares trade on the Mexican Stock Exchange with the sign “BIMBO”, and in the over-the-counter market in the United States with a Level 1 ADR, under the ticker symbol BMBOY. The market valuation is $13.5 Billion.

8. Grupo Inbursa:

Inbursa is founded in 1992, which is headquartered in Mexico City, Mexico. It is a financial company which, through its subsidiaries, provides banking and related services in Mexico. Grupo Unbursa’s business operational lines are commercial banking, investment funds, general insurance, mortgages, health insurance, retirement funds and automobile insurance.

The Grupo Inbursa’s market valuation is $13.3 billion. 

9. Arca Continental: 

Arca Continental is headquartered in Monterrey, Mexico. It is a Mexican beverage manufacturing and distribution company headquartered in Monterrey, Mexico.

Arca Continental bottles and distributes Coca-Cola products throughout Mexico, Central America and the United States. It’s the second-largest Coca-Cola distributor in South America and the third-largest in the world. Area Continental’s market valuation is of $11.3 Billion.

10. Grupo Carso: 

Grupo Carso is a Mexican global conglomerate company owned by the world’s 7th richest person  Carlos Slim. It is founded in 1990 after the merger of Corporacion Industrial Carso and Grupo Inbursa. This company deals in diversified sector such as energy, automotive,  mining, department stores, civil construction and housing. The net worth of Carlos Slim in 2019 is $59.5 Billion. The market valuation of Grupo Carso is $10.5 Billion.

Why is Mexico Ideal Destination for Business:

Mexico is the 5th largest country in the Americas and the 14th largest country in the world, with a total area of almost 2 million square kilometres.

Blocks and Integrations: 

Mexico has a privileged location as the heart of the Americas:  geographically, it is part of North America, but its language, historical roots and culture make it part of Latin America. Moreover, its long coastline makes Mexico a natural bridge between the Atlantic and the Asia-Pacific region. The country is characterised by the richness of its natural resources, necessary for the productive development of any state. Politically, Mexico is a representative, democratic and federal republic with territory divided into 32 governmental, federal entities and 2,456 municipalities

Territory Locations And Borders:

Mexico is geographically located in North America, one of the major economic blocs in the world; however, its language, historical roots and culture similarities with Latin America, represent an access gate to one of the most important economic regions of the world.

Natural Resources:

Geographic location, topography and weather diversity make Mexico the 4th biodiverse country, with 9 of the 11 different types of ecosystems, around 200,000 different species, and home to approximately 12% of worldwide biodiversity

As a consequence, Mexico has essential natural resources that contribute to the development of productive and industrial activities.

12th Oil Producer
Country	Barrels/Day
Rusia	10,550,000
Soudi Arabia	10,460,000
United States	8,853,000
Iraq	4,452,000
Iran	4,068,000
China	3,981,000
Canada	3,679,000
UAE	3,106,000
Kuwait	2,924,000
Brazil	2,515,000
Venezuela	2,277,000
Mexico	2,187,000

Mexico is 12 Oil Producer, 15 oil exporter, 19th Oil reserves, 21st natural gas producer in 190 countries. 

Top 10 Small Business Ideas in Mexico For Becoming Entrepreneurs: 

• Fast Food:

• Farming Business:

• Blogging:

• Themed Coffee Shop:

• Import & Export:

• Tour & Travel:

• E-commerce:

• Bakery:

• Event Organizer:

• Oil Factory:

• Healthcare:

• Themed Restaurant:

• Manufacturing Business:

• SEO Consulting:

• Social Media Consulting:

• Marketing Influencer

Also Read: Best Business to Start in Mexico

Things an Entrepreneur Should Know Before Investment in Mexico:

Major Reforms in Mexico Since 2013:
   

• Antitrust Reform

• Energy Reform

• Telecommunications and Broadcasting Reform

• Tax Reform

• Financial Reform

• Labor Reform

• Education Reform

• New Injunction Law

• National Criminal Procedure

• Political Electoral Reform

• Transparency Reform

With the open border concept, regular macroeconomic reforms, infrastructural development, and innovation, the Mexican economy is benefitted and is expected to help even more. There is an increase in foreign direct investment inflows and an integration in global value chains through multiple trade agreements. 

Trade Agreements:

Mexico is an export-oriented country, and its international trade is the backbone of the Mexican Economy. With the strategic move and tie-ups; Mexico has signed 32 reciprocal promotion and protection of investments agreements with 33 countries. Mexico also signed 12 free trade agreements along with the USA and Canada; spanning 46 countries. Nine partial scope and economic complementation agreements within the framework of the Latin-American Integration Association (ALADI). 

With the active participation in the organisations like World Trade Organization (WTO), the Asia-Pacific Economic Cooperation (APEC), Economic Cooperation and Development (OECD) and ALADI, Mexico can establish its positive image. Furthermore, with the trade agreements, Mexico can access to 6o per cent of the world’s GDP. Content is curated in the complete analysis of “Why is Mexico the Perfect Destination For Investors and Businesses in 2020″.

Other Aspects can be;

 Pros:

• Great Geographical Location and easy accessible

• Massive demand for goods and services

• Literate and talented workforce

• Business-friendly and cultural

Cons:

• Drug peddling and High Crime Rates

• High-interest rate; sometime around 40%

• Sanitation and Hazardous Waste

Types of Investments in Mexico:

Two types of significant investments can be done in Mexico.

• Green Field Investment:

It is a form of FDI where a parent company can start a new venture by constructing new operational units; which helps in the expansion of any existing business or opening in the original plant.

Point of Indication when you should invest in Green Field Investment;

• Existing and established brand in other country
• Established high valued logistics network
• Portfolio of well-established suppliers and customers
• Strong initial self-financing capacity

Advantage of Green Field Investment: 

• Maximum operational flexibility
• Establishment of new production facility as per future demand or needs
• Minimum maintenance cost across facility
• Ease of getting state incentives

Disadvantage of Green Field Investment: 

• Strategic locations like industrial parks are not yet equipped with the advanced infrastructure  
• It requires significant initial investment by the company, and 
• Sites should be legally available
• Longer construction time 
• The existence of barriers to entry into specific industrial sectors could complicate access

• Brown Field Investment:

When any investor or company wants mergers, acquisitions, partnerships, and Joint Venture; brown-field investment comes into the picture. Another type of investment strategy used in FDI. 

Though it needs a lot of compromises but it has some advantages as well.

Advantages and Disadvantage of Brown Field Investment:

Collaboration can be done in 3 schemes: 

1. A partial or total acquisition of an existing entity (Pure Brown Field). 

2. A joint venture agreement can be of two types: contractual or corporate. 

• The positioning of the company’s target brand
• The investment capacity between two legal entities to improve the competitive bid.
• Less time to start the operation 
• Cheaper project with less investment
• Flexibility constraints as regards the layout of machinery and the production process and logistics within the production plant. 
• Increase in logistics cost as the location of the production plant 
• More maintenance costs than a Green Field Investment

Author’s Closing Keynote:

The proximity of Mexico to the United States, the various trade agreements with many countries along with EU, Japan, Germany, Brazil, China; its strategic geographical location, infrastructure, make Mexico a highly-attractive destination for many sectors like manufacturing, agriculture and services. 

With better knowledge of the Mexican Policy, investments, intellectual property, any entrepreneur can invest in this country and become a business magnet. An entrepreneur can easily manage technology, skilled and talented workforce, logistics and many other essential things along with the government support and ease of doing business. After significant reforms by the Mexican Government with the open and macroeconomic concept, it has already taken the predominance position across the world in the fields of manufacturing telecommunications, agricultural product public utilities and petroleum. Content is curated in the complete analysis of “Why is Mexico the Perfect Destination For Investors and Businesses in 2020″.

Also Read: How to Start Restaurant in Mexico

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