DEVELOPING YOUR INTERNATIONAL TRADE POTENTIAL Business opportunities in Mexico for UK Companies CONTENTS FOREWORD Foreword 3 Free Trade Agreements 4 Why Mexico? 5 SECTORS Aerospace 6 Automotive 8 Consumer Goods 10 Creative and Media 12 Education 14 Environment 16 Financial Services 18 Food and Drink 20 Healthcare 22 Infrastructure 24 Mining and Steel 26 Oil and Gas 28 Power and Energy 30 Security 32 OTHER OPPORTUNITY SECTORS ICT 34 Leisure, Tourism Sports, 36 and Leisure Marine Join the Most Successful Businesses Mexico is a country full of opportunity and there has never been a better time to consider Mexico as a place to do business. British perceptions of Mexico are frequently inaccurate. Mexico is a modern, dynamic place in which to do business. Mexican Government and business are committed to reducing their dependency on trade with the USA. With its impressive network of Free Trade Agreements (including North America and the EU) and its strategic location in-between the USA and Latin America, Mexico has the potential to act as a springboard into the region as well as being an attractive market in its own right. The past decade has seen sound management of public finances, with prolonged economic growth and stable inflation. Mexico regularly ranks in the top three emerging markets in which to do business and is a country ready and open for business. The UK exports less to Mexico than many of our major competitors. So, while the opportunity clearly exists, others are taking greater advantage of it. This guide is intended to provide a brief summary of the major opportunities for British companies in Mexico. It is not possible to list every opportunity here, and indeed opportunities change rapidly. But more information is available at www.ukti.gov.uk/ukti/mexico or direct from the UKTI Mexico team. UK Trade & Investment is the British Government organisation that helps UK based companies succeed in the global economy and assists overseas companies to bring their high quality investments to the UK. UK Trade & Investment has a team of 30 people in Mexico dedicated to helping British companies export. We can provide a variety of help – bespoke market reports, press and media services, suggestions of business partners, introductions and organisation of events. We can tailor our work to your specific needs. We aim to save you time, cost and reduce the inevitable risks of doing business in an overseas market. Our contact details are provided throughout this guide. We look forward to welcoming you to Mexico and to helping your business succeed here. ROBERT FITCHETT Director of Trade & Investment British Embassy Mexico City 38 3 FREE TRADE AGREEMENTS Mexico currently has free trade agreements with 52 countries on three continents, more than almost any other country in the world. Mexico is expected to continue expanding its network of agreements to diversify its export markets and to attract Mexican and foreign enterprises to invest and reap the benefits of joint production in a strategic location. EU-Mexico Free Trade Agreement The EU-Mexico Free Trade Agreement allows British industrial goods and other qualifying exports to enter Mexico tariff free. This agreement also guarantees access to public tender offers in Mexico for EU companies. NAFTA NAFTA is the free trade agreement between Canada, Mexico and the United States. Since the advent of the EU-Mexico free trade agreement, British manufacturers have been able to export industrial goods to Mexico on equal terms to those enjoyed by American and Canadian exporters, as they do not pay Mexican import duties. NAFTA may also present advantages for British companies, particularly in the absence of a free trade agreement between the EU and the United States. By establishing themselves in Mexico, British companies can use Mexico as a low-cost manufacturing base with direct, duty-free access to the largest consumer market in the world, the United States. NAFTA has led to the creation of numerous manufacturing operations based in Mexico that are able to supply the USA and Canadian markets. Excellent export opportunities exist for British tier two and tier three manufacturers who already supply similar operations in Europe to supply these operations in Mexico. WHY MEXICO? There has never been a better time to consider Mexico as a place to do business, given the limited growth rates in traditional markets and the Mexican Government and businesses' desire to reduce dependency on trade with the USA. The past decade has seen sound management of public finances including economic growth and stable inflation. Mexico is a country open for business and regularly ranks in the top three emerging markets in which to do business. With a population of 107 million people, including a large and growing middle class, Mexico is a significant potential consumer market. It is the UK's second largest export market in Latin America after Brazil and it is the number one receptor of Foreign Direct Investment in Latin America. In fact, the UK is one of the largest investors in Mexico and demand for UK goods and services extends across the economy from sectors as diverse as education and infrastructure to food and drink. Mexico currently has free trade agreements with 52 countries on three continents, (more than almost any other country in the world including North America and the EU). There are no import duties on industrial goods manufactured in the UK entering Mexico. Combined with its 4 impressive network of Free Trade Agreements is its strategic location between the USA and Latin America, meaning Mexico has the potential to act as a springboard into the region as well as being an attractive proposition in its own right. Mexico is perceived to be a tough proposition, even for the seasoned exporter, due to high levels of bureaucracy and complicated procedures. In fact, doing business in Mexico is no more difficult than in other emerging markets, and in many cases it is much easier. The Government is actively working to reduce bureaucracy and improve competitiveness, and is driving forward reforms to attract new investment and diversify trade and many of the potential pitfalls can be avoided with adequate preparation. UK Trade & Investment helps companies of all sizes do business in Mexico through a network of international trade teams based in the English regions and devolved administrations. In Mexico, there are dedicated trade & investment teams based in Mexico City, Monterrey, Guadalajara, Tijuana and Villahermosa. 5 AEROSPACE Mexico is the largest military and commercial aircraft market in Latin America. It has the second largest business aircraft fleet in the world and has a large private aviation services industry to service the oil and gas sector and provide executive transport. Mexico is striving to develop the capacity to assemble executive jets in the next 6-8 years. Mexican aerospace imports are spread evenly between aircraft and aircraft parts, aero-engines and avionics. After China, Mexico and Latin America is forecast to be the second largest market for the Aerospace sector in the next two decades. The Mexican Government has targeted aerospace as a strategic industry in its economic development strategy. Government, industry and academia are co-ordinated in their approach to attract foreign investment. There are around 190 aerospace manufacturing companies employing over 20,000 individuals. The main clusters are located in the north and the Central State of Queretaro. In recent years the sector has attracted significant investments from some of the largest companies in the sector including Honeywell, Bombardier, Bell, Cesna, GKN and Triumph. 6 SUCCESS STORY Business Opportunities Key Fact • Engine, electronic and landing system components, plastic injection, heat exchangers, precision machining, airfoil repairs, audio & video systems, fuselage insulation and interior parts. Mexico exports over US$600 million in aircraft parts. This figure is expected to increase with exports forecast in the region of US$900 million by 2010. GKN Aerospace a first-tier supplier to the global aviation industry began operations in Mexico in 2001 through its association with Mexicali in the north of Mexico. Contact and Further Information Originally, GKN's Mexican operations consisted of a few machines and employees making airplane turbine cases. By 2008 the company underwent a US$50 million expansion improving its facilities and increasing its workforce to 150 employees in the process. • Engineering design and aeronautical components for military and civil applications. • Machining parts, vacuum heat treatment and chemical processing. There is low availability of aerospace grade materials for structural welding. • Sheet metal fabricators of super alloys, major sub-assembly companies, structure manufacturers, tooling companies and casting companies. • Special/chemical processes and non-destructive testing. • Environmental solutions for reducing emissions including noise emissions. • Maintenance, repair and overhaul services. • Support for the Mexican Air Force and overhaul of their fleet. A report on the Mexican aerospace sector as well as more information about the specific business opportunities, can be obtained by contacting the UKTI team in Monterrey: British Consulate Monterrey Tel: +52 81 8356 5359 Email: [email protected] In 2008, GKN's senior managers met representatives from UK Trade & Investment at the Farnborough International Airshow and together they began working to seek out ways to further expand GKN's Mexico operation. “The one thing we were concerned about in Mexico was our ability to fulfil our future skills requirements," says Ardy Najafian, Director GKN Mexicali. “We established some training programmes at local technical schools and universities, but have now begun to seriously consider establishing our own training facilities to ensure we have a sufficient supply of technical specialists. UK Trade & Investment’s leverage with the state and federal agencies has been instrumental in helping GKN Aerospace in Mexicali move forward in this area." 7 AUTOMOTIVE Mexico is the eleventh largest automotive producer in the world, currently producing just over two million vehicles annually. Mexico has also become the auto parts hub for North America. The Automotive sector in Mexico has attracted some of the largest Original Equipment Manufacturers (OEMs) from the USA and Japan and provides excellent opportunities for supply chains from tier one to tier four suppliers (domestic and foreign). In the past decade, Asian and European auto-parts suppliers have invested heavily in the USA and now analysts predict a wave of new investment in Mexico. Major investments by the main automakers and new free-trade activity are triggering further expansion as well as a move to more advanced and lighter weight vehicles and those with fewer emissions. Automobile suppliers now see Mexico as a viable production centre for all of North America. UKTI’s office in Monterrey has good relations with the main automotive clusters including government offices such as ProMexico, the Mexican organisation responsible for foreign trade and direct foreign investment and the main automotive trade associations. 8 Business Opportunities Key Fact • Demand for raw materials used in the manufacture of spare parts and components. Mexico is the eleventh largest automotive manufacturer in the world, and the most important manufacturing platform for the Americas. • Components (engineered parts for diagnostic and assembly equipment): Braking systems, electrical components, transmission and engine components, moulded plastic section, stamped steel parts steering assemblies, interior trims and light weight alternative metals. • Opportunities for tier one & two suppliers: OEM parts & components, hybrid vehicle components, materials, stampings, electronic components, equipment and specialised tooling. Contact and Further Information A report on the Mexican automotive sector as well as more information about the specific business opportunities can be obtained by contacting the UKTI team in Monterrey: British Consulate Monterrey Tel: +52 81 8356 5359 Email: [email protected] SUCCESS STORY COMAU Estil, a UK company in advanced robotics, has developed a new commercial partnership over the last year, through their US operation Comau Pico, a leading Monterrey based automotive tier one manufacturer. This successful partnership was partly due to the direct support from the UKTI office in Monterrey. With this new contract, COMAU will be providing UK design and engineering expertise to the one of the leading automotive tier ones in Monterrey. • High tech components and the mainstream application of motor sport technology and high-end manufacturing and design automotive engineering. • Supplies to the automotive after market with an increasing emphasis on high technology. • From 2010, the NAFTA trade agreement will allow the importation of used cars of newer models with no restrictions. This will provide a wide range of opportunities for repair equipment and replacement parts. 9 CONSUMER GOODS The Consumer Goods sector in Mexico has grown rapidly over the last five years and prior to the current global economic downturn, a growing middle class and stable economy has seen an increase in demand for imports including UK sophisticated goods and services. The sales increase that we observed in 2008 was directly related to the expansion of the space to sell these products. The sector grew 5.6 per cent in 2008. Sub-sectors include cosmetics, shoes, jewellery, toys and furniture. Although we expect a slowdown in the growth of the consumer goods sector during 2009, there will still be opportunities to supply the Mexican market. Luxury goods are the second most important sector of business in the Mexican market only after mass consumption products. Mexico represents 55 per cent of the overall sales of luxury goods in Latin America. Key Fact Business Opportunities Contact and Further Information • Increasing demand of high-end furniture and interior design goods (cushions, rugs, throws, decorative accessories in general, tapestry, blinds, curtains, etc.). More information about the specific business opportunities for consumer goods can be obtained by contacting the UKTI team in Guadalajara: • Designer fashion merchandise (apparel, shoes and accessories). British Trade Office Guadalajara Tel: +52 33 3630 4357 Email: [email protected] Mexico is the most important luxury-goods market in Latin America and international brands tend to experience rapid growth after entering the Mexican market. LUXURY GOODS ARE THE SECOND MOST IMPORTANT SECTOR OF BUSINESS IN THE MEXICAN MARKET 10 SUCCESS STORY Since early 2008, a number of high-end UK designer labels have established themselves in Mexico. In April 2008 the first Thomas Pink store opened in Mexico City and it far exceeded short-term investor expectations. A second store started operations in July 2008, and the opening of other stores around the country took place in late 2008 and 2009. Jonathan Heilborn CEO of Thomas Pink said, “The Mexican market has shown a growing demand for luxury goods and we feel it was a terrific idea to bring Thomas Pink stores to Mexico”. In November 2008, Jeremy Hackett, the British designer and owner of brand “Hackett London", came to Mexico and hosted the opening of its first retail store in the country. The store is located in the high-end and luxury mall, Antara Polanco in Mexico City. The store has shown continuous growth since they started operations. Another store was opened in December 2008 in the luxury mall, Andares in Guadalajara. 11 CREATIVE AND MEDIA Creative and Media is a growing sector in Mexico and it accounted for 6.7 per cent of GDP in 2008. During that year, Mexico exported creative goods and services to the value of US$4,271 million and is ranked number one in terms of creative economies in Latin America and eighteenth worldwide. The growth of the sector has created a large number of jobs and made it the fourth most important sector in the Mexican economy. Subsectors include TV/broadcasting, film, publishing, music and fashion where 11 per cent of Mexican jobs are related to these industries. In terms of entertainment, Mexico now features on the tour schedule of most mainstream British bands and is beginning to feature more on the schedule of up and coming bands. The cinema market is huge in Mexico; in fact it's the largest cinema market in Latin America. Mexico will increase investment in the internet publishing sector. By 2013, 2.2 per cent of the overall private investment in the publishing sector will be targeted to internet. Business Opportunities • Design Consultancy on products and packaging. • Consultancy on branding and marketing. • Local TV companies are importing material from the USA and Europe, providing opportunities for TV content production. • Mexican companies are demanding interactive and marketing content. • There is a growing cinematographic industry which is demanding consultancy on development and production financing. • Publications and books written in English. SUCCESS STORY Design Bridge, a branding agency who creates and develops brands for a wide range of prestigious companies, has found success in Latin America after designing the export packaging for “Sol" beer manufactured by FEMSA, one of the biggest beverage manufacturers in Latin-America. of Mexico. Through their initiatives we have had enquiries from a number of companies interested in our branding services and continue connections with a number of these. We will continue to maintain our link with the UK Trade & Investment team in Mexico throughout 2009 and beyond. The UKTI office in Guadalajara invited Design Bridge to attend the “GuadalajaraMexico-UK Design Forum 2008" as well as providing business agendas and high-level contacts. The company took the opportunity during this visit to maintain their relationship with FEMSA and to identify potential new customers. The BBC recently started an operation in Mexico. In July 2008, BBC Worldwide and Televisa Networks, the largest Media Company in the Spanish-speaking world, signed a partnership deal to launch two BBC branded channels: “BBC Entertainment" and “Cbeebies", which has been specially designed for Spanishspeaking pre-school children. Both have a good audience in the Mexican market and in December 2008, they started to broadcast with another cable operator, giving them a greater audience reach. John Morris (Managing Director) said “The UK Trade & Investment team in Guadalajara have proved invaluable in our cultural and business understanding Key Fact Contact and Further Information The Creative Industries sector accounts for 7.3 per cent of the national GDP, making it the fourth largest sector in Mexico. A report on the Mexican creative industries sector as well as more information about the specific business opportunities can be obtained by contacting the UKTI team in Guadalajara: British Trade Office Guadalajara Tel: +52 33 3630 4357 Email: [email protected] 12 13 EDUCATION Education and training is a high priority for the Mexican Government. The Government currently spends 7.3 per cent of the GDP on education. In the Government’s plans, education in Mexico will concentrate on five pillars: upgrading of the education infrastructure; continuing to incorporate ICT in classrooms; vocational training; permanent evaluation and educational reform. The Federal Education Ministry is committed to reducing the urban-rural gap by investment and technological training. A new educational reform has come into force, and a National IT Skills Programme was introduced. The Programme aims to create a major change in traditional educational models of primary and lower secondary, virtual lower secondary school and the educational programmes for the indigenous groups, by applying ICT teaching models. Business Opportunities Key Fact • Specialised software for subject teaching in schools. In 2008-2009, 33 million students were enrolled at all levels of the education structure accounting for 31.4 per cent of the Mexican population; with a faculty of 1.7 million teachers in 242,000 schools. This is about three times as many as those enrolled in the UK. • English language training courses/ material. There is a strong and growing demand for English at all levels, both within the private and public education sector. Contact and Further Information • ICT education technologies (ICT learning programmes, ICT training for teachers, implementation of a “Digital School Zone“, ICT infrastructure). • Engineering teaching equipment for laboratories and workshops. At the higher and technological education level, there is emphasis on software and scientific instruments to teach engineering and industrial skills. • Teacher training aids. Through the educational reform and the IT Skills Programme, the Ministry of Education has approved a US$40 million budget, aiming to equip 350,000 classrooms and 700 ICT programmes for teachers by 2012. A report on the Mexican education sector as well as more information about the specific business opportunities can be obtained by contacting the UKTI team in Mexico City: British Embassy Mexico City Tel: +52 55 5242 8543 Email: [email protected] SUCCESS STORY Michelsen Consulting Ltd is a British company that specialise in designing software for interactive business training programmes. The Mexican subsidiary, LABSAG (Laboratory for Business and Management Solutions) has equipped 23 different universities and more than 100 campuses with business simulators including some of the most prestigious universities in Mexico including the National Autonomous University of Mexico (UNAM), the National Polytechnic Institute (IPN) and the Technologic Institute of Monterrey (ITESM). They have been established in Mexico since 2003 but Michelsen/LABSAG has been most successful since 2006, seeing 100 per cent annual increases in sales. Their projection shows that in the long term (8-10 years), their sales could exceed £2 million by equipping 30 universities per year. • Software and didactic materials for special needs. • Vocational training on engineering and industrial areas. • Distance learning. 14 15 ENVIRONMENT With the development of environmental legislation and increasing awareness in the country, Mexico’s environmental market has been rapidly and steadily growing at an annual average of 6 per cent since 2004. According to the Mexican National Institute of Ecology, it is the second most important environmental market in Latin America after Brazil. Demographic and industrial growth has placed extreme pressure on Mexico's ecological systems. These trends have caused the deterioration of air, water and soil quality in most regions of the country. In fact, the lack of clean water and deforestation are actually considered national security issues by the Mexican Government and air pollution, particularly in Mexico City, has long been a public health problem. Mexico imports 80 per cent of its environmental equipment and services to fill the rising demand, which will generate an increasing pool of good opportunities for British companies. For environmental technology exporters, a federal tax incentive programme has been introduced allowing private companies to write off the valueadded tax for the purchase of pollution control equipment used to comply with environmental regulations. 16 Climate change is a priority for the Mexican Government, which has made it a cornerstone of its 2007-2012 National Development Plan, which is the basis for the current administration's policies. Ranking fourteenth for its greenhouse gas emissions and generating about 1.6 per cent of the world's total, Mexico has been a keen and active player on climate change issues on the international stage since 1992, when it signed the United Nations Framework Convention on Climate Change (UNFCCC). Business Opportunities • Waste management and recycling. • Water pollution control. • Air pollution control. • Contaminated land remediation. • Environmental monitoring equipment. • Environmental consultancy. • Clean Development Mechanism (CDM). • Carbon trading. Key Fact Mexico is the fourth most active country in CDM projects accounting for 187 projects from 900 worldwide registered at the United Nations Framework for Convention on Climate Change (UNFCCC), behind China, India and Brazil. Contact and Further Information A report on the Mexican environment sector as well as more information about the specific business opportunities can be obtained by contacting the UKTI team in Mexico City: British Embassy Mexico City Tel: +52 55 5242 8590 Email: [email protected] SUCCESS STORY EcoSecurities, a leading British company in the business of sourcing, developing and trading emission reductions has been awarded a project of Methane capture and utilisation in Durango's (Northern Mexico) landfills. By utilising EcoSecurities' technology, Durango saves over a million US dollars per year. By reducing the emissions of this gas, the project is expected to generate about 700,000 carbon credits over 10 years, which represents a considerable income for the municipality. Following participation in a mission organised by UK Trade & Investment, EcoSecurities identified opportunities in Mexico, including those in the area of Clean Development Mechanism (CDM). UKTI have since provided promotional and networking support, involving EcoSecurities in carbon market events and helping them with useful contacts and information. EcoSecurities has other contracts for Mexican landfill projects: three of these have already been registered with the UN (Tultitlan, Ecatepec and Aguascalientes). The British company has other landfill projects in Estado de Mexico. 17 FINANCIAL SERVICES There are two main areas of opportunity for British companies within the financial services sector: Public Private Partnerships (PPPs) and listing on the exchanges. Public Private Partnerships (PPPs) With the help of UK advisors, the Mexican Government introduced a PPP programme based on the UK model. A total of nine Federal PPP projects have been implemented including three hospitals, one university and five road projects. There are ten more Federal PPP projects in the pipeline including six hospitals and four more road projects. At a state level four PPP projects have been implemented, all in the State of Mexico including a cultural centre, a hospital, a road project and a bridge. Mexican companies are keen to form associations with British firms with proven PPP experience in order to participate in these projects. Plans to extend PPPs further has been reflected in President Calderon's National Infrastructure Plan with projects including prisons, police stations, hospitals, roads and public transport projects. 18 Listing on the exchanges Many of the major family-owned conglomerates are reaching the point where they need capital to grow and realise their expansion plans, particularly into the USA market. As they introduce professional management, they are now starting to meet international requirements for accountability and transparency and have begun to list in New York. London offers an attractive alternative. The Stock Exchange, Alternative Investment Market (AIM) and Plus Markets translate into a very appealing possible solution for them and AIM is now actively promoting themselves in the Mexican market. Business Opportunities • PPP's consultants/operators. • Consortium managers. • Contract management specialists. • London Stock Exchange, Alternative Investment Market, and Plus Market: UK Nominated Advisors to explore the Mexican marketplace for companies with listing potential. • Arbitration. Key Fact Currently, there are 19 Mexican PPP projects including those already operating, those under construction and some pending for bids. Contact and Further Information A report on the Mexican financial services sector as well as more information about the specific business opportunities can be obtained by contacting the UKTI team in Mexico City: British Embassy Mexico City Tel: + 52 55 5242 8535 Email: [email protected] SUCCESS STORY In July 2008, Currie & Brown Mexico (a Currie & Brown Limited subsidiary) was the head advisor for the entire procurement process as well as the international advisor for the PPP strategy for the new hospital in Ciudad Victoria, Tamaulipas State. Due to the PPP strategy implemented by the Federal Ministry of Health, the hospital in Ciudad Victoria was officially opened in March 2009. With an estimated investment of £37 million and a £209 million contract over 25 years, this regional hospital will provide highly specialised medical services for the north east States of Mexico. With more than 100 beds, this hospital is the second of the PPP wave of new hospitals procured by the Mexican Private Finance Initiative (PFI) scheme named “Proyectos para Prestacion de Servicios” (PPS). These hospitals will improve substantially the provision of health services in the area and in the country. 19 FOOD AND DRINK Changes to eating habits in a country with a population of over 105 million, rising living standards and the spread of large USA style supermarkets have led to an increase in the import of foreign foods. The USA, France, Spain and Germany are doing well in this sector as are some British companies. Beer consumption in Mexico per capita in 2007-2008 was approximately 58.5 litres. There are about 63 million potential beer consumers and every year this number increases by about one million (from consumers that reach drinking age). Grupo Modelo and Femsa Cerveza have about 97 per cent of the beer market in Mexico. This has limited the inclusion of foreign brands to between 2 per cent and 3 per cent of the Mexican Market. Unilever, Cadbury Adams and Diageo are clear examples of how UK companies are operating and doing business successfully in the Mexican market. In 2009, Cadbury Adams announced that they will invest US$250 million within the next five years in Mexico as Mexico is their fourth most important market. Business Opportunities Key Fact • Niche products such as delicatessen, gourmet, and organic foods. Includes natural and dietary products. Mexico is the world’s second biggest consumer of soft drinks. It is estimated that the average daily consumption per person is three soft drinks or 300 million soft drinks per day! • Food and drink products reflecting health concerns, weight loss and a healthy way of living. • Food and drink products that address the needs of an ageing population including calcium rich and energy specific products. • Ready to drink beverages and beer. • Specialised food and packaging machinery given the need for many companies to renovate existing machinery to satisfy health and safety standards. Contact and Further Information A report on the Mexican food and drink sector as well as more information about the specific business opportunities can be obtained by contacting the UKTI team in Guadalajara: British Trade Office Guadalajara Tel: +52 33 3630 4357 Email: [email protected] SUCCESS STORY Until 2008, Mexico was one of the tougher markets for foreign beers. There was no presence of UK beers in the market until 2008 when Cervecería Minerva started the distribution of Fullers. In the same year, UK Trade & Investment Mexico helped Vallance Imports and Exports by introducing them to City Market, which is a premium and gourmet store and one of the largest Mexican supermarkets. Other UK brands now available in Mexico are Charles Wells, Youngs, St Peters and Hobgoblin. Now Mexicans are enjoying some British beers without travelling to the UK. • Dairy products and services including refrigeration, packaging and advertising. • Sweets and confectionery, given that the market share of imported confectionery is increasing and as of 2009 is approximately 25 per cent. Given the size of the market and changes to eating habits, opportunities exist for British companies. There is a continuing increase in the imports of foreign food and drinks. As the Mexican market is price and quality driven, opportunities exist for both investing in the retail sector and for selling to the market. 20 21 HEALTHCARE Healthcare provision is a high priority for the current president’s administration (2006-2012). President Calderon’s National Healthcare Programme will concentrate on six main pillars: universal healthcare coverage; high care; reinforcement of infrastructure; prevention and promotion of health; a fair and adequate drug policy and an effective and dynamic health regulation. The Expenditure Budget approved for 2009 included over US$8,544 million for the healthcare sector, 11 per cent higher than the 2008 budget. The private sector market is valued at US$7,394 million and the governmental market, through social security, is estimated at US$1,850 million. Within the six pillars, President Calderon’s priority is to achieve universal health coverage, by focusing on the following four areas: • Boosting the country's hospital infrastructure. In 2007 alone, over US$3.39 million were invested in the expansion and modernisation of hospitals, clinics and health units. • A national promotion and prevention strategy. • Health Caravans, a plan that will provide medical services for the country’s most isolated communities that lack sufficient medical infrastructure, mainly indigenous villages and communities. • Strategy for supplying medication at health institutions; US$324 million are now available to boost supplies at hospitals and units in the health sector. UK/Mexico relations in the Healthcare sector are good and Mexico wishes to adopt the NHS model, focusing on the fundamental concepts of free at the point of delivery and universal coverage. Within the Healthcare sector the pharmaceutical and MedTech market have been the most dynamic, offering the most opportunities. This market accounts for approximately 1.21 per cent of the national GDP, generating US$11,376 million – a figure which is constantly increasing. Business Opportunities • PPPs (Private and Public Partnerships). • Biomedical products. • Investment and supply of pharmaceuticals. • Medical equipment. • Healthcare promotion. • Training in PPP hospital management. • Training in geriatrics. • Consultancy and training for nurses. • Consultancy in institutional reform. • Quality assessment and management. • Accountability. • Telemedicine. • Medical informatics. • GP training in prescribing, team building, management, etc. • Primary healthcare and paramedics. • Patient Safety. Key Fact The pharmaceutical market in Mexico is now the largest in Latin America and it is the ninth largest in the world. Contact and Further Information A report on the Mexican healthcare sector as well as more information about the specific business opportunities can be obtained by contacting the UKTI team in Mexico City: SUCCESS STORY Smiths Medical has achieved continued growth by manufacturing its medical supplies in Mexico. After opening their first factory in 1999, its Mexican plants are now responsible for producing around 40 per cent of the company’s products. “We have more than 3,000 employees in Mexico,” says Lorenzo Casas, Director of Smiths Medical’s operations in Monterrey. “We have three factories in Tijuana and one in Monterrey. We make thousands of products and take great pride that these goods are shipped to the USA, Europe, Japan and Asia. We have achieved significant cost savings by transferring some of our production to Mexico.” Smiths Medical has been in close touch with UK Trade & Investment since it came to the country. “There are many opportunities in Mexico, but it helps tremendously to have the right contacts,” says Lorenzo. “UK Trade & Investment can really help businesses with their great contacts in the Government and in private industry” British Embassy Mexico City Tel: +52 55 5242 8543 Email: [email protected] 23 INFRASTRUCTURE In 2007 the Mexican Government produced a five year National Infrastructure Development Plan, providing US$250 billion of new investment. An additional US$200250 billion was allocated to be spent on housing, taking total expenditure to approximately US$500 billion. A significant number of projects have already been undertaken but there are still opportunities aplenty for British companies to get involved. In addition to the National Infrastructure Plan, urban development is seen as a priority sector for the Government. Currently there are plans for the development of approximately 20 new satellite cities that include the appropriate social infrastructure to create successful sustainable communities, with adequate infrastructure links to the main cities. Business Opportunities The plan aims to finance transport infrastructure projects; developing roads, railways, airports & ports as well as telecommunications, water supply and sanitation, irrigation and flood control infrastructure, electricity, oil and gas production and refinery, gas and petrochemicals. Despite the current global economic crisis, the National Infrastructure Plan is considered decisive for the development of the country, and all necessary efforts will be employed to work towards this goal. In response to the economic slowdown, President Calderón announced emergency spending proposals, which actually include stepping up public spending, especially on infrastructure, including roads, schools, houses, prisons and a new oil refinery. • Consulting engineers. • Facilities managers. (Roads, ports, airports and railways). • PPP specialists. • Equipment and machinery suppliers. • Roads, ports, airports and railways security consultants. Copies of the National Infrastructure Plan and further details of the projects are available from the UKTI Infrastructure Team in Mexico, contact details opposite. SUCCESS STORY McBains Cooper, an interdisciplinary property and construction consultancy based in London, opened an office in Mexico City in October 2008. By mid 2009, its success had surpassed its expectations including having expanded their staff from one to twenty. Over the next four years, the company expects to double its business and increase the size of its office. The company chose Mexico City as a base, hoping to benefit from the Mexican Government’s US$250 billion investment programme to improve the country’s infrastructure. “We saw that we needed to expand beyond the UK to keep growing,” says Santiago Klein, Managing Director at McBains Cooper International. UK Trade & Investment has guided us through the process of expanding our company in Mexico. From initial advice to the many contacts it has introduced us to, UK Trade & Investment has been a real support. What I have found is that more than just making introductions or sending a letter with the UK Trade & Investment letterhead, the team there is committed to our success and continually follows our progress.” In the months since it opened its Mexico City office, McBains Cooper has secured both private and publicly financed contracts. A contract for its largest project in Mexico to date came about as a result of an introduction to the Governor of Tabasco by UK Trade & Investment, and the company is now advising the Government on procurement for the development of a new city in the Tabasco state. Key Fact Contact and Further Information The Suburban Rail system in Mexico City started operations in 2008 making it the first new passenger rail service in decades. Reports on the Mexican construction sector, ports, railways, airports and the water sector as well as more information about the specific business opportunities can be obtained by contacting the UKTI team in Mexico City: British Embassy Mexico City Tel: +52 55 5242 8580 Email: [email protected] 24 25 MINING AND STEEL Mining Mexico is a major supplier of metals including silver, ranked second in the world, lead (fifth), zinc (seventh), copper (thirteenth) and gold (fourteenth). Today 137 foreign enterprises are contributing to the investment and exploration of Mexico’s mining sector. Many new investments are beginning to come to fruition. In Mexico the mining extraction sector is second in terms of investment and it sees stable yearly growth. Steel Mexico is the sixteenth largest producer of steel in the world and the second largest producer in Latin America with a production of 17.6 million tonnes in 2008 and an installed capacity of 22.4 million tonnes. Mexico has considerable appeal as a steel producer, and factors like receptivity to foreign investment are encouraging major players in steel end-use sectors such as automotive and electrical equipment to establish extensive and sophisticated manufacturing facilities in Mexico. The industry’s input cost advantage, which includes labour, electricity and gas, enables it to profitably and competitively export steel products. Business Opportunities Key Fact Mining • Mexico also has major opportunities in mineral exploration. According to the 2009 edition of “Ranking of Countries for Mining Investment” by BEHRE DOLBEAR, Mexico occupies fifth place worldwide in the lowest risks for mining investment table, after Canada, Australia, Chile and the USA. • Mexico has eleven giant deposits of silver, three of copper, two of molybdenum, five of zinc, one of lead, one of manganese and one of fluorite. These deposits represent opportunities for exploration, machinery, tools, consultancy and new technology. • Companies with expertise in feasibility studies have also big opportunities in the mining sector in Mexico. Steel • The iron and steel industry in Mexico is experiencing intellectual challenges. Companies are open to R&D that can provide the know-how and knowledge in different fields such as new technologies, composites material, new applications, demand and price forecast, among others. Contact and Further Information Information about the specific business opportunities for the mining and steel sector can be obtained by contacting the UKTI team in Monterrey: British Consulate Monterrey Tel: +52 81 8356 5359 Email: [email protected] SUCCESS STORY Compañía Fresnillo, a 100 per cent subsidiary of Industrias Peñoles, assumed control of the precious metals mining operations, and subsequently a British entity was created, in London, in order to then merge them. On May 14, 2008, Industrias Peñoles made a successful primary and secondary placement of Fresnillo shares, and Fresnillo plc was listed on the London Stock Exchange. Fresnillo plc is a public company with its own governing body, administrative structure and corporate governance, and taxed under Mexican law. Peñoles, through its subsidiary, thus became the first Mexican company to trade in that market. At the close of 2008, Industrias Peñoles held a 77.1 per cent stake in Fresnillo plc. • In the next five years, the ironworks sector in Mexico will invest about US$10,000 million to grow and diversify their products, replacing imports. • Home supplies such as stoves and refrigerators continue to grow in demand; therefore materials such as steel and copper are being required much more. 26 27 OIL & GAS Mexico is the sixth largest oil producer in the world and ranks eighteenth in terms of gas production. PEMEX, the State National Oil Company, requires resources to the value of US$22 billion per year in Capital Expenditure. The focus is to maintain production in declining fields, a more efficient exploitation of proven reserves, a move towards deep-water reserves and to increase security and minimise environmental impact. While the great majority of the oil and gas industry is in the hands of the nationalised oil company PEMEX (third largest producer in the world and eleventh in terms of sales), there are opportunities for UK companies, particularly for equipment and service suppliers. PEMEX has oil reserves of 45 billion barrels and proven reserves equivalent to 9.2 years of production. Key Fact Onshore and Offshore • Platform design and construction. Mexico is the world's sixth largest oil producing country (after China, Saudi Arabia, the Russian Federation, the USA, and Iran) producing approximately 2.7 million barrels per day and has the world's fifteenth largest oil proven reserves. Mexican oil giant PEMEX awarded a US$150 million contract to Mexican engineering company Techint S.A. DE C.V. and its technology supplier, Manchester based Costain Oil, Gas & Processes Ltd. Contact and Further Information The project is due for completion by late 2009 and involves the installation of the world’s largest nitrogen rejection unit at PEMEX’s Ciudad Pemex gas plant in Tabasco, Mexico. The facility has a capacity of 630 million SCFD (standard cubic feet per day). • Decommissioning of production facilities. • Design, construction, installation and commissioning of pipelines. • Receiving terminals and production facilities. • Exploration and appraisal drilling. • Production operations. • Environmental control. • Regional geological studies (including 3D and 2D seismic). British firms are already participating in Mexico’s shallow waters, but there is more potential to make Mexico's future deepwater production a safe, clean and efficient one. • Reservoir appraisal and exploration techniques. In October 2008, an energy reform was passed by the Mexican Government. The reform means that PEMEX has been granted greater autonomy for decision making, alleviating some of their previous restrictions and therefore are more open to doing business with foreign companies. • Deep water technologies. 28 SUCCESS STORY Business Opportunities • Training and education. • Develop heavy and extra heavy oil recovery technologies that are technically and economically advantageous. A report on the Mexican oil and gas sector as well as more information about the specific business opportunities can be obtained by contacting the UKTI team in Mexico City: British Embassy Mexico City Tel: + 52 55 5242 8534 Email: [email protected] The UK Trade & Investment team at the British Embassy in Mexico has given Costain support and advice throughout the project bidding process, which started in 2000. The embassy has provided valuable information on decision makers in the market, as well as advice on local business etiquette and local market knowledge. POWER & RENEWABLE ENERGY Mexico's power sector is controlled by two state-owned companies, the largest being Comision Federal de Electricidad (CFE), which generates and sells electricity across the whole country. The second is Luz y Fuerza del Centro (LyFC), responsible for producing and selling electricity only in Mexico City's metropolitan area. Although CFE and LyFC are the main clients for products and services related to power in Mexico, there are many other opportunities in Mexico for generation and control equipment, energy efficiency and other equipment and services required by private companies which in most of the cases can be supplied without tendering. There were about 30 million electricity contracts in 2008 in Mexico reaching 97 per cent of the population. Mexico had a total power generation of 234,096 GWh during 2008. It expects to invest over US$21,000 million in building new generating plants according to the programme prepared by the CFE. Mexico promotes the use of renewable energy to generate clean energy. In late 2012, it is expected that geothermal energy and wind power will grow from 2 per cent to 6 per cent of the total installed capacity. 30 Business Opportunities Key Fact • Combined cycle plants maintenance and reconfiguration. • Plants modernisation and maintenance. • Hydroplants reconfiguration. • Metering. • Interconnection projects. • Transmission lines and substations. • Co-generation projects with the National Oil Company, Pemex. • Renewable and cleaner technologies. • Energy efficiency systems. • Mini hydro technologies. • Solar energy technologies. • Wind energy projects. • Clean development mechanism. Total installed capacity in Mexico is now 51,105MW, with the following sources: • Power independent producers (11,457MW) • Hydropower plants (11,343MW) • Thermal power plants (consuming hydrocarbons) (23,291MW) • Coal fired plants (2,600.0 MW) • Geothermal power plants (965 MW) • Nuclear power plants (1,365 MW) • Wind-driven power plants (85 MW) Contact and Further Information Report on the Mexican power and renewable energy sectors as well as more information about the specific business opportunities can be obtained by contacting the UKTI team in Mexico City: British Embassy Mexico City Tel: +52 55 5242 8534 Email: [email protected] SUCCESS STORY SM Seals, a Somerset-based engineering solutions company, participated in the supply of a mechanical shaft seal for the auxiliary turbine at the El Cajon project in Mexico which started generating electricity in the first quarter of 2007. With 750MW generation capacity, El Cajon is the second largest hydroelectric project ever built by Federal Energy Commission (CFE). SM Seals were awarded the contract to design and supply the auxiliary turbine shaft seal for the project. The high shaft rotation speed of this application presented unique problems, which SM Engineers were able to overcome. SM Seals’ products are custom-built items and are 100 per cent designed, tested, manufactured and built in the UK. SM Seals specialise in the design, testing and supply of axial mechanical seals for the power generation industry, particularly hydro power. Approximately 90 per cent of their products are exported worldwide. SM Seals participated in a UKTI commercial mission and started contact with CFE engineers. UKTI Mexico continued to support SM Seals during their negotiations in Mexico providing market information and meeting programmes. 31 SECURITY The Security sector in Mexico embraces a wide range of activities relating to the Local, State and Federal Government's delivery of crime prevention and investigation, protection of people, property and assets; and law enforcement in general. Since taking office in December 2006, President Calderón has made security one of his top priorities. A new law on Public Security, aimed at boosting co-ordination between federal, state and public security institutions to reduce corruption and impunity has been ratified. The law also seeks to allow police greater freedom to investigate crime and professionalise the work of the security forces translating into the creation of the Ministerial Police. New Federal Security Programmes have been developed that concentrate on civilian security, law enforcement, and serious and organised crime. These programmes include significant budget increases to departments in charge of public security at the state and municipal level; approval of the creation of a National Policing Evaluation Centre and a National Council for Public Security; a new federal law to confiscate goods and properties of organised crime; the creation of a national criminal database register and security forces. Also, the Federal administration along with a number of State and Municipal Governments are continually assessing assets and where identified the need, restructuring and replacing current systems by renovating specialised teams and equipment. Innovative technologies will replace outdated systems in a number of areas. Business Opportunities • IT infrastructure. • Automatic license plate recognition systems. • Voice detection systems. • Explosive detection equipment. • Sophisticated CCTV cameras. • X-ray systems. • Data management software. • Mobile phone jammers. • Sophisticated biometrics. • Sophisticated anti-riot equipment. • Security infrastructure developers. • Training. Key Fact Mexico is creating a new Federal Police force with more investigative powers leading to a demand for security products and services. Contact and Further Information Information about the specific business opportunities for the Mexican security and defence sector can be obtained by contacting the UKTI team in Mexico City: British Embassy Mexico City Tel: +52 55 5242 8535 Email: [email protected] SUCCESS STORY Early in 2009, NDI technology, a UK security company, acquired Appian Technology, a company which specialises in developing and manufacturing automatic number plate recognition (ANPR) systems including vehicle identification, traffic management, parking guidance and car park management for surveillance, counter terrorism, access control and congestion charging. After several familiarisation visits to Mexico, UKTI Mexico assisted Appian Technology by organising meetings with senior Mexico City Authorities. After the visit programme, UKTI directly matched Appian with a suitable agent in Mexico, Tasser Technologies. Appian Technologies and its agent in Mexico were awarded a £350,000 contract by the Mexican City Public Security Ministry for the provision of mobile number plate recognition systems. New contracts worth over £350,000 for Appian and its agent in Mexico have followed with authorities in the States of Mexico, Tlaxcala, and Morelos. UKTI Mexico has subsequently been closely involved in helping NDI develop its contacts network, market intelligence and business opportunities through other services, such as road-shows, through a number of States in the country. 32 33 ICT Mexican telecommunications is an ever-changing and increasingly profitable market. The recent proliferation of wireless communications in Mexico has been so extraordinary that the country is now considered one of the region’s most promising markets for wireless equipment and services. Business Opportunities Key Fact • IT equipment for SMEs. The Mexican video games market is worth US$400 million per year, and it is the fourth largest market in the world. The IT and software sector is growing fast in Mexico. In 2008 it experienced a growth of 15 per cent. The Mexican Government expects to see a further growth of 15 per cent between 2009 and 2013, hoping to generate sales of US$15,000 million. In 2008, US$49 million was allocated to the Programme for the Development of the Software industry in order to expand the market. • Wholesalers are promoting the migration to a specialised model of distribution focused on solutions like consultancy, outsourcing, technical support, etc. that can contribute to higher profits. • Integration on wireless connectivity solutions for mobility, VoIP and servers. Contact and Further Information • Electronic consumption products such as MP3 players, mobile phones, PDAs, etc. • There is an expected growth of file storage equipment i.e. USBs and removable hard drives. A report on the Mexican ICT sector as well as more information about the specific business opportunities can be obtained by contacting the UKTI team in Tijuana: British Trade Office Tijuana Tel: +52 664 615 80 46 Email: [email protected] MEXICO IS NOW CONSIDERED ONE OF THE REGION’S MOST PROMISING MARKETS FOR WIRELESS EQUIPMENT AND SERVICES • Specific equipment for areas of high growth including multifunction equipment, digital cameras, handhelds, and telecomm equipment (voice and data). • Training on English language for the electronics industry. About 70 per cent of graduates interested in working in the IT industry do not speak English. • Recycling of electronic components. 34 35 LEISURE, TOURISM, SPORTS AND LEISURE MARINE Mexico holds an important place in the International tourist market which in turn is also very important for Mexico’s economy. According to the World Tourism Organisation (WTO), Mexico had 21.4 million tourists in 2008 which equated to US$12.9 billion in tourism revenue. The substantial level of investment (both foreign and domestic) and influx of travellers have shaped the strategy of the tourism industry. New world class developments and competitive prices means there is a shift to target a more upscale market, especially in the Northwest (Sinaloa, Sonora, Baja California Sur and Baja California) where the newest tourism destinations are being developed. Ecotourism, golf and sailing are some of the areas these new developments are focusing on. In Mexico there are around 220 golf courses and each year more are constructed. According to the Association of Golf Courses for the Mexican Caribbean, by this year they expect to build at least 16 golf courses. The Leisure Marine sector in Mexico has gone through changes in the last 30 years. The establishment of world class tourism resorts in the Baja California Peninsula and the Mayan Riviera has impacted on the yachting and sport fishing industry and we have seen an increase in Mexicans buying yachts. 36 The Mexican coastline has developed into a preferred destination by American, Latin American and European tourists. According to “Condé Nast Traveller”, Mexico has 18 of the top hotels and resorts in the world and attracts the type of tourist that is accustomed to fine sailing, and world class dining and lodging. There are many synergies between the Mexican and British sports market and companies can find a large growing market in which to sell their products. The most popular sports in Mexico are: football, baseball, basketball, golf, tennis, motor sports, boxing and sailing. Future sporting events being planned and bid for will also signal opportunities for British companies looking to supply the local market. In 2011 Guadalajara, will host the Panamerican Games and Mexico is currently bidding for the 2018 World Cup. Business Opportunities Key Fact Leisure and Tourism: • Golf course designers, developers, advice on maintenance and construction and training. • Hotel and resort investors. • Hospitality technology. • Specialised and niche products related to the hospitality sector. • Leisure marine. Sports shoes are the largest segment of sports apparel in Mexico, worth about US$350 million. Almost one in every three pairs of shoes sold in Mexico are sports shoes, according to Fila Mexico. Sports: • Sports infrastructure. • Golf course designers, developers, advice on maintenance and construction and training. • Sports and recreational products. • Sports apparel. Contact and Further Information Reports on the Mexican marine, leisure and tourism sectors as well as more information about the specific business opportunities can be obtained by contacting the UK Trade & Investment team in Tijuana: British Trade Office Tijuana Tel: +52 66 4615 8046 Email: [email protected] Leisure Marine: • Development of marinas. • Crew training and licensing. • Navigation and waterway management. • Safety, rescue systems and insurance. • Maintenance and repair facilities. • Parts, supplies, materials and services related to maintenance and repair of pleasure boats and yachts. 37 JOIN THE MOST SUCCESSFUL BUSINESSES For UK-based companies wishing to develop their business in Mexico, UK Trade & Investment can offer: specialist guidance, market reports, sales leads and programme arranging services, assistance with the organisation of promotional events and publicity as well as access to its local network of contacts. 38 For more information please contact the UK Trade & Investment team in Mexico. Sector contacts are listed on the relevant sector page of this booklet. For general enquiries the contact details are: Tel: Web: +52 55 5242 8500 www.uktradeinvest.gov.uk 39 DEVELOPING YOUR INTERNATIONAL TRADE POTENTIAL A range of UK Government support is available from a portfolio of initiatives called Solutions for Business. The “solutions” are available to qualifying businesses, and cover everything from investment and grants through to specialist advice, collaborations and partnerships. UK Trade & Investment is the government organisation that helps UK-based companies succeed in the global economy, and is responsible for the delivery of the two SfB products “Developing Your International Trade Potential” and “Accessing International Markets”. We also help overseas companies bring their high-quality investment to the UK’s dynamic economy – acknowledged as Europe’s best place from which to succeed in global business. UK Trade & Investment offers expertise and contacts through its extensive network of specialists in the UK, and in British embassies and other diplomatic offices around the world. We provide companies with the tools they require to be competitive on the world stage. For further information please visit www.uktradeinvest.gov.uk or telephone +44 (0)20 7215 8000. Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Enterprise & Regulatory Reform, and the Foreign & Commonwealth Office) accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. The paper in this document is made from 50 per cent recycled waste pulp with 50 per cent pulp from well-managed forests. This is a combination of Totally Chlorine Free and Elemental Chlorine Free. The inks are vegetable oil-based and contain resins from plants/trees and the laminate on the cover is sustainable, compostable and can be recycled. Published May 2009 by UK Trade & Investment ©Crown Copyright URN 09/1272
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