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Irvine Chamber of Commerce Explore Export Opportunities in Mexico March 1, 2011

Irvine Chamber of Commerce Explore Export Opportunities in Mexico March 1, 2011. Ann Bacher Senior Commercial Officer, U.S. Embassy, Mexico City. Why Mexico?. Location / Access to Goods/Services/Market in U.S. Size, Diversify, and Vast Market Shared Culture: Western, Hispanic

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Irvine Chamber of Commerce Explore Export Opportunities in Mexico March 1, 2011

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  1. Irvine Chamber of CommerceExplore Export Opportunities in MexicoMarch 1, 2011 Ann Bacher Senior Commercial Officer, U.S. Embassy, Mexico City

  2. Why Mexico? • Location / Access to Goods/Services/Market in U.S. • Size, Diversify, and Vast Market • Shared Culture: Western, Hispanic • Manufacturing base in various sectors • Stronger legal protections • Politically stable • Macroeconomic stability

  3. U.S. – Mexico Relationship • The North American Leaders Summit • “A new era of cooperation and partnership” • “Shared responsibility” in the drug wars • Narco Violence • Immigration • Environmental Issues • Commercial

  4. Safety & Security in Mexico:A Changing Environment • The changing security environment in Mexico presents challenges for U.S. companies • Border cities are particularly vulnerable, such as Nuevo Laredo, Juarez, Reynosa, Matamoros, and Tijuana • Businesses in Mexico are investing more in • security for their personnel, facilities • Visitors need to use common sense and be aware • State Department Website for Travel Advisories: • http://travel.state.gov/travel

  5. Mexico’s Economic Challenge • Projected growth approximately 4-5% in 2011 • 5.5 percent growth in 2010 • Foreign Direct Investment increasing • - 17.7 B in 2010, a 16.6% increase from 2009 • Building on NAFTA • Finding other sources of economic growth (Services, IT) • Energy cooperation • Monopolies • Labor and migration/people to people

  6. Mexico - U.S. Trade • Mexico is the United States’ 3rd largest trading partner • Mexico is the 2nd destination of all U.S. exports • Mexico accounts for roughly 1/8 of all U.S. exports • 26 American states depend on Mexico as their first or second destination for exports • One billion/day in two way trade

  7. The Impact of NAFTA • World’s largest free trade area: 455.4 million people; $16.9 trillion GDP • No tariffs on U.S. exports to Mexico (except current dispute) • It clarifies and simplifies rules of trade • Institution of Dispute Resolution Process • Trucking is Major Issue • U.S.-Mexico trade increased 347%: from $88 billion in 1993 to $393 billion in 2010 • Trade has grown faster than the infrastructure • Mutual Recognition Agreements for testing/certification in • some sectors

  8. NAFTA - Trucking Dispute • 2009: Due to cancellation of pilot program allowing Mexican trucks to transport cargo in the United States, Mexico instituted retaliatory tariffs on 89 U.S. industrial and agricultural products • August 2010: Mexico removed 16 products--including carpets, dental floss and shelled peanuts--and added 26 new ones--including pork, cheese and ketchup, so 99 products are now affected, 54 agricultural and 45 for industrial goods • Tariffs range from 10-20% • U.S. and Mexican govts are currently trying to negotiate a phased resolution • List of products affected: • http://www.trade.gov/mas/ian/static/MX%20Retaliation%20Summary_FINAL_public%20version_Latest_tg_ian_002692.pdf

  9. California Exports • 55,878 California companies export (95% are Small or Medium Sized Enterprises) • 23.7 percent of manufacturing jobs in California • depend on exports • California exported 143.3 Billion in goods in • 2010 (19 percent increase from 2009) • Exports to Mexico in 2010 were 21 billion • dollars (20 percent increase from 2009) • California exports more to Mexico than to any other country

  10. California’s Exports to Mexico in 2010

  11. Best Prospects for U.S. Exporters

  12. Automotive Parts and Supplies • Market size in 2010: 71 Billion dollars • U.S. has 24 percent of the market share (16.9 Billion dollars) • General Motors has invested 4.1B in manufacturing facilities in Mexico in past four years • Ford and Chrysler also investing heavily in Mexico • Mexico produces more than two million cars per year. (79 percent for export market, mostly to U.S.) • PAACE Automechanika Mexico, July 13-15, Mexico City, Dept. of Commerce certified trade show

  13. Aerospace & Aviation • Market size in 2010: Estimated imports over • USD $3 billion, exports $4.5 billion • Mexico has become the fifth largest supplier of aerospace products in the European Union and the eighth largest supplier for the U.S. market • Currently over 200 manufacturing facilities and growing (80% manufacturing, 10% maintenance and repair, 10% engineering and design) • Industry clusters: Monterrey, Chihuahua, Queretaro, Mexicali, and Empalme • All major aerospace OEM’s have presence in Mexico, but many are increasing their presence within these manufacturing clusters • AeroExpo 2011, April 6-9, Toluca International Airport

  14. Energy • Market size in 2010: 10.8 Billion dollars • Oil and gas 6.4 B • Electric power and renewable: 4.4 B • Energy production/infrastructure huge priority of PEMEX, CFE state run energy companies (23 B budget in 2011 for new infrastructure projects/maintenance) • Several upcoming opportunities in natural gas, oil exploration, refineries, electric power generation, and renewable energy (See 2011 Country Commercial Guide for more information) • 2011 Petroleum Exhibition and Conference of Mexico (PECOM) July 19-21 in Villahermosa, Dept. of Commerce certified trade show

  15. Energy-Renewable • A Renewable Energy and Energy Efficiency Export initiative • Wind; • Solar; • Geothermal; • Biomass; • Hydropower; • And Energy Efficiency. • Wind Power: State of Oaxaca, La Venta I: Wind Farm with 14 wind power generators, CFE operator • La Venta II: 94 Wind Power generators, operated by CFE • Oaxaca I and Oaxaca 2, operated by Ibedrola (Spanish) • IBP Wind Power Show, Anaheim, California, May 22-25, Mexican delegation and a Seminar on WindPower Mexico

  16. Energy -Renewable • SENER ‘s objective by December 2013 is to increase 3.600 mW of • Renewable Energy , divided in : • Geothermal 490 mW • Wind 1,125 mW • Biomass 495 mW • Minihydraulic 1,120 mW • Solar (PV) 370 mW • This is equivalent to 7 percent of the 51,105 mW of Mexico’s installed • capacity • SENER’s investment will be USD 92 million, divide in 55 million to develop projects that use competitive technologies like mini-hydraulic (less than 20 mW. The balance will be applied to develop other, as yet less competitive technologies, like PV and bio

  17. Packaging • Market size in 2010: 664 million dollars • 18 percent of market from United States • Opportunities include: • Cardboard and paper, metal, glass, plastic and wood packaging sectors • Food processing, pharmaceutical, and cosmetics/personal care products are the primary sectors for packaging sector • Expo Pack 2011, June 21-24, Mexico City

  18. Security • Market size in 2010: 23.7 Billion dollars • Imports from the United States: 6.7 Billion dollars • Govt procurement opportunities through Mexican Defense Dept. and Navy (local partner strongly recommended) • Opportunities in: • Armored solutions , electronic devices for mobile phones, CCTV, biometric solutions, access control, communication systems, tactical equipment, alarms, among others • 2011 Expo Seguridad, April 12-14, Mexico City. Dept. of Commerce certified trade show

  19. Technology • Market size in 2010: 37 Billion dollars • 33 million people (29.4 percent of population) with internet access (20 percent increase from 2009), almost all of it broadband. • Telecom dominated by Telmex (90% of fixed lines) and Telcel (80% of cell phones). Both companies owned by Carlos Slim. • Areas of opportunity include: security solutions, software apps, wireless apps, social networking, cloud computing, business intelligence software, IT healthcare solutions, Green IT solutions • B 3 Forum, February 22-24, Mexico City.

  20. Travel and Tourism • Market size in 2010: 14.3 million visitors • Spent an estimated 9 billion dollars in 2010. • 89 percent travel to U.S. via automobile, 11 percent via air. • Popular destinations: Texas, California, New York, Florida, Las Vegas • Visit USA Week by Expo Vacaciones, Mexico City, Feb. 22-23 • FeriaInternacional de Turismo de las Americas (FITA), Mexico City, Sept. 22-25

  21. National Infrastructure Plan • Created by President Calderon in 2007, to stimulate economic growth and jobs creations – originally 300 projects valued at USD $250 billion • Of the 68 projects currently active, 38 have been identified by the Commercial Service as viable for U.S. companies, and are highlighted in our report: http://www.buyusainfo.net/docs/x_3824638.pdf • Areas of opportunity include: Highways, telecommunications, water treatment and drainage control, power generation, airport and marine port expansions. • Local partners key to participating in bids and winning service contracts!

  22. U.S. Commercial Service in Mexico The U.S. Commercial Service is an agency of the U.S. Department of Commerce Our mission is primarily to help small and medium size, export-ready companies to enter Mexico and to protect U.S. business interests abroad In Mexico we have four offices. Globally, we have a network of 100+ offices in the U.S. and 150 world-wide Tijuana Monterrey Guadalajara Mexico City

  23. Regional Opportunities: Mexico City • Mexico City, with a population of 20 million, is one of the largest cities in the hemisphere and the world.  • It is both the Political Capital and Financial Center of Mexico. • It is also a manufacturing and distribution powerhouse. • Centrally located near other major industrial areas including Toluca, Puebla, and Queretaro.

  24. Regional Opportunities: Guadalajara “Mexico’s Silicon Valley” • Size: Second largest market in Mexico • Business Culture: Bilingual, open to U.S. goods and services • Multinational Investors: GE, IBM, Intel, HP, Flextronics, Jabil, Oracle • Logistics: Major distribution center • Major Industries: Electronics, industrial process controls, packaging, agribusiness and food processing equipment • Largest Exposition Center in Latin America: Regional shows • Other Activities: Host of Pan-American Games, October 2011

  25. Regional Opportunities: Monterrey Mexico’s Industrial Heartland • Strategic location in NAFTA corridor • Pro business environment with stable workforce • 11% of Mexico’s total manufacturing output • Over 1800 foreign companies • Key industries: automotive, household appliances, electronic • equipment, packaging, software, specialized medical services, and • biotechnology.

  26. Regional Opportunities: Tijuana, Baja California Main manufacturing industriesin Tijuana: Medical, Electronics and Automotive. Sub sectors: Plastics (injection molding, blow molding, thermal molding, extrusion), Metal-Mechanic and Packaging. Manufacturing companies in the city: more than 500 in Tijuana (State has approximately 900+) Tijuana Manufacturing workforce: 160,000 employees. Other areas of opportunity for U.S. Exporters: food and beverage, IT, telecomm, construction, medical tourism, energy. Business culture: ease of doing business and affinity to working with American suppliers- bicultural and bilingual businesspeople.

  27. Market Entry Strategies • The best strategy to enter the Mexican market is to find a local representative or distributor. • With this, buyers feel secure that initial training, spare parts and service will be provided. • Due to regional concentration throughout Mexico, representation locally will yield better results than a single, nation-wide distributor. • Price is important, but not necessarily the deciding factor. • Be prepared to provide brochures, catalogs, and printed materials in Spanish. Keep websites international-user-friendly.

  28. Financing • Expect to negotiate on payment terms. Consider full spectrum of options. Financing options important. • Export-Import Bank finances exports through various term loan, guarantee and insurance programs. • Works through commercial banks in the U.S. and Mexico.

  29. Logistics • U.S.-Mexico trade logistics incorporate the full spectrum of choices: truck, rail, port, and air cargo. • Third Party Logistics (3PL’s) can help simplify cross-border shipping process. • Price of shipping vs. Length of time? • Logistics must be factored into your product pricing! • Incoterms / Terms of Sale • Agree on logistics before final pricing

  30. Border Trade Initiative/Opportunities • The U.S./Mexico border manufacturing market represents tremendous opportunity for U.S. suppliers • U.S. market is still the preferred market for inputs, but competition from Asia is strong; costs are a factor • Everything from soup to nuts has potential, certain industries such as consumer electronics, household appliances and transportation are strong • Mexico has over 2,800 “maquiladoras” (assembly plants); About 75% of maquiladoras are located in border states

  31. Border Trade Initiative/Opportunities • Over 80% of Mexican imports enter via truck through the top five busiest land ports of entry: Laredo, TX, El Paso, TX Otay Mesa, CA Hidalgo, TX and Nogales, AZ • Even with free trade, product gets held up at the U.S./Mexico border; improper labeling, declared value, etc. CS Mexico can help U.S. companies with shipment problems; Market Research • CS has staff in Tijuana, Tucson, El Paso, Monterrey and San Antonio who help companies tap in to opportunities

  32. Mexican Business Culture • Indirectness - difficulty in saying “no” • Expect to negotiate on payment terms. Consider full spectrum of options. Financing options important • Follow up quickly with your Mexican partner – there is abundant international competition • Use a qualified interpreter if needed • Patience pays off • Personal relationships valued

  33. April 6-9: Conference on different aspects of doing business in The Americas. • Substantive market intelligence and entry strategies • Pre-arranged consultations with U.S. Commercial Service (CS) Senior Commercial Officers from throughout the region • Access to high visibility networking events with leading industry and government officials • Before/after conference: Business to Business meetings available in Mexico City, Monterrey, Guadalajara, and/or Tijuana. • Need at least six weeks to set B2B meetings up.

  34. The Western Hemisphere (North, Central, South America) is one of the United States’ fastest growing regional trading partners with approximately USD $530 Billion in U.S. exports • Expect 200+ participants in conference • There are opportunities in virtually every sector • Costs: • Conference + One-on-one meetings with SCOs only: USD $650 • Conference plus B2B mtgs in one city: USD $1,650 • Conference plus B2B mtgs in two cities: USD $2,350 (For SMEs, 500 or less employees. Slightly higher fee for large companies.) • For more information and to register your interest: • http://www.buyusa.gov/northcarolina/tradewindsmexico.html

  35. Upcoming Events in Mexico • March 1-3 Expo Manufactura, Monterrey • March 3-5 International Franchising Fair, Mexico City • March 8-11 TECMA (Machine Tools), Mexico City • April 6-12 Trade Winds, Mexico City • April 7-9 Aero Expo, Toluca • April 12-14 Expo Seguridad, Mexico City • May 11-13Fabtech, Monterrey • June 14-16 Invest in USA, Mexico City, Monterrey, Guadalajara • June 21-24 Expo Pack, Mexico City • July 4-7Gastronomia & Hoteleria 100, Ixtapa • July 13-15 PAACE, Mexico City

  36. Export Successes In 2010 Commercial Service Mexico helped U.S. companies secure 416 distinct export sales worth over $1 billion 612 million in bookable business for American companies, including small and medium size firms for the last fiscal year.

  37. Export Successes • Newport Beach medical device manufacturer • Participated in Gold Key Service in Mexico • CS set up mtgs with potential distributors • Based on those mtgs the company signed a distributor in Mexico • Sales to Mexico over 200k • San Diego manufacturer of water treatment systems • Received financing guidance from Commercial Service offices in San Diego and Mexico City • Worked with Export-Import Bank, which enabled them to offer more favorable finance terms to Mexican client • Utilized export credit insurance in recent 350k sale to Mexico

  38. Export Successes Sacramento company • Client had made a sale to a Mexican company but had not received payment • CS Mexico trade specialist discovered company had moved offices, helped re-establish contact with CA company • MX company made the 35k payment owed • Audio Visual company from Berkeley • Led a group of Mexican buyers to InfoComm trade show • CS Mexico trade specialist introduced delegate • member to CA company • Mexican buyer purchased equipment from CA company • valued at over $100,000

  39. You too can be successful in Mexico! Muchas gracias! Ann.Bacher@trade.gov http://www.buyusa.gov/mexico/en

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