The Case For Doing Business In Mexico
Thanks to geographic ties to the USA, a network of trade agreements with the EU, and a major trade push from the UK government, Mexico is fast emerging as a major export target for UK businesses. Breakthrough Business Editor Dan Matthews explains the appeal
Mexico is a country on the up, and although it has a bundle of free trade agreements and welcomes imports, only 15% of UK businesses surveyed by the British Chambers of Commerce actually export there. But things are looking set to change.
After the emerging markets of the BRIC countries (Brazil, Russia, India and China) have matured to become world economic leaders, now come the MINT countries (Mexico, Indonesia, Nigeria and Turkey): four markets identified by economists as possessing growing clout on the world stage. But what gives Mexico the right to head up this ambitious new cluster of economic pacesetters? For one thing, geography. It sits on the US’ doorstep and as such has unparalleled access to the world’s top economy.
Of the MINT countries, Mexico also has the largest economy, with a gross domestic product approaching £1.2 trillion in 2012, according to the World Bank. That year, while the UK sat in the economic doldrums, growth in Mexico roared ahead at a (comparatively blistering) 4.1%. And, though it is still commonly identified as an ‘emerging economy’, it already sits atop its fellow MINT countries as the 53rd easiest place to do business in the world (up from the 51st in 2012), according to annual figures produced by the World Bank.
“Invariably there is a great opportunity for businesses to go to Mexico and from there expand into other parts of the world,” explains Rachel Nash, Breakthrough Head of Operations and Delivery at Santander. “Mexico’s trade agreements are much better than, say, Brazil, which is a BRIC country. They are up and coming, the infrastructure is growing and there is generally a huge amount of opportunity for businesses in this area alone.”
“Santander has a massive representation [in Mexico]. So we can offer a home-from-home to any business that sets up or starts exporting to this part of the world.” Rachel Nash, Head of Breakthrough Delivery and Operations at Santander
Granted, there is some catching up to do with established giants such as the US in fourth place on the World Bank’s list, the UK in tenth place and Germany in 21st, but it seems time alone stands between Mexico and a much higher position in the league table.
Mexico’s whopping population of more than 120 million people is likely to fuel major growth in years to come and the country is expected to overtake Japan as the world’s tenth most populous country by 2020, according to WorldPopulationStatistics.com Big news indeed.
Meanwhile, friendly neighbours, a welcoming political environment and sophisticated legal system will provide a solid platform for this to happen. It’s a positive sign, for example, that Mexican President Enrique Peña Nieto is welcoming foreign business investment in areas such as green technology. Mexico also became the first developing country to establish an absolute emission reduction target when it passed its General Law on Climate Change in April 2012. The law requires Mexico to reduce emissions by 30% below business as usual by 2020 and by 50% below 2000 levels by 2050. Good news for UK exporters in the green tech market.
But there’s more: “Santander has a massive representation there,” says Rachel. “So we can offer a home-from-home to any business that sets up or starts exporting to this part of the world.” And more still: a free trade agreement between the EU and Mexico supports UK exporters by protecting intellectual property and opening up public procurement markets. It brings not only opportunity but also peace of mind.
In the UK, there is a strong political will to form a partnership with Mexico. In January 2014, the Home Office announced the introduction of a priority visa service for Mexicans wishing to travel to the UK, and that February Deputy Prime Minister Nick Clegg visited the country to help forge better ties, following on from the government’s announcement that 2015 will be ‘The Year of the UK in Mexico and The Year of Mexico in the UK’. In March, the Foreign and Commonwealth Office invited concept bids for proposals to boost UK-Mexico commercial collaboration through its Prosperity Fund.
“Nick Clegg worked hard with the Mexico authorities to boost collaboration between the two countries,” adds Rachel. “UK Trade and Investment is now very heavily involved in that, so we should see plenty of progress in this area over the next few years.”