Following an Internationalization Strategy engagement we did for a client, he considers setting up a manufacturing plant in Mexico. As part of our engagement, we thus traveled to Mexico to conduct a feasibility study and establish trade relations.
First off, purely from a travel perspective, we were highly impressed by the country and her people. All our preconceived ideas (thank you Hollywood!), has been proofed wrong. It is a vibrant country, with diverse nature and generally very hospitable (and professional) people. It is definitely a country to visit again, even if just for pleasure. And whilst it is an emerging economy, there is evidence of development everywhere (and it has definitely “emerged” further than South Africa).
(As a side-note: I doubt Donald Trump has actually made an effort to get to know the Mexican people….which is his loss!)
From a business perspective, Mexico is deemed a “Rising Global Star” by the Boston Consulting Group, due to “improved competitiveness because of moderate wage growth, sustained productivity gains, stable exchange rates and energy cost advantages.” From our international dealings, we can definitely confirm as much.
Mexico is the eleventh most populous country in the world. It has reached a level of political maturity and economic stability that makes it a more attractive place to do business than other developing countries. In the old days, with de facto one-party state, the economic fragility turned every problem into a crisis. Today the same country ranks in the best top 3 emerging markets in which to do business. It is a country of huge potential that has demonstrated predictable, stable economic growth. It is a dynamic market and analysts predict that its economy will be larger than the UKs by 2040.
Mexico is constantly making an effort to improve its ease of doing business ranking by deregulating trade and industry and providing incentives for foreign direct investment. Sound economic stability has attracted foreign direct investment of more than 30,000 companies in recent years, currently doing business in the country. Its favourable business relationship with the world is exemplified by its wide network of Free Trade Agreements, which assures preferential access to the markets of North America (plus added bonus of proximity!), the European Union, the countries of the Free Trade European Association, Israel, the countries partners of Latin America and Japan. This preferential access together with its young and qualified labour force makes Mexico an attractive destination for investment.
It is purported that Mexico offers an attractive risk-return combination, because of the following main factors:
- Guaranteed market access
- Legal security and transparent rules
- Macroeconomic stability
- Political stability and transparency
High return on investment:
- Growing domestic market
- Access to high-quality inputs at competitive prices
- Optimum services and low costs
- Large network of Free Trade Agreements
Obviously there are a legion of factors to consider when formulating an Internationalization Strategy (detail which I cannot go into here), but it may be worth your while to consider doing business in Mexico – a Rising Global Star.
Do not hesitate to contact us to discuss your Internationalization Strategy or Feasibility requirements.