Joana Torrents
Director General
Spanish Chamber of Commerce (CAMESCOM)
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View from the Top

Mexico-Spain Energy Link Broadens

Wed, 02/22/2017 - 15:25

Q: What elements of the Mexican market have made it so attractive for Spanish energy companies?

A: Spanish companies are interested in Mexico because it is an emerging and large-scale market that is strategically located next to the US and offers significant legal stability. Mexico also is a widely open market, with a large number of international agreements in place. The advantages of the market here have become even more attractive to Spanish companies after the economic crisis, which hindered the conditions for new business development in Spain. The business relationship between Mexico and Spain is not new. A great number of modern Spanish enterprises have been present in Mexico for over 30 years. Currently, there are around 6,000 Spanish companies across different sectors operating in the country and that presence has increased considerably in the last five years due to the conditions of the European market, which have pressured companies to expand their operations globally. In the case of Latin America, the cultural proximity and the shared language are two other important factors that attract Spanish companies thinking of expanding beyond Europe. Among Latin American economies, Mexico particularly stands out because it has shown positive growth for the past few years and has put in place a range of structural reforms that have attracted the interest of international investors.

Regarding the energy sector, Spain plays an important role thanks to its strong expertise in developing energy projects, particularly in renewables. Besides the economic crisis, legislative changes in Spain that were unfavorable for renewable energy projects have also pushed companies working in the sector to expand to other markets. Mexico, on the contrary, has just enacted new regulations to boost energy production and has ambitious goals regarding clean energy production. These two factors have created the perfect landscape for Spanish companies to start operations in Mexico, using their skills and expertise to develop successful projects and help Mexico reach its clean energy targets.

Q: How has the Energy Reform impacted the commercial relationship between the two countries?

A: Since the early stages of the Reform, Mexico has worked to communicate to the world the objectives of the new legislation as well as the country’s interest in attracting international investment. The Spanish Chamber of Commerce, like other international entities, has taken advantage of Mexico’s openness to disseminate the message and highlight the business opportunities this represents to Spanish companies. Particularly in the energy industry, the Reform has created great expectations, promoting a stronger exchange of information and enhancing the commercial ties between the countries. The boom from the Energy Reform has impacted businesses of all sizes and from different subsectors, such as consulting, engineering or manufacturing, and has boosted the inflow of new Spanish companies into the Mexican market.

Q: What are the main challenges faced by Spanish companies here and how can the Spanish Chamber of Commerce help?

A: A generalized issue is the legal uncertainty resulting from the newness of the Reform, which has forced companies to wait before moving big investments forward. However, in the past few months we have seen the Mexican authorities take great strides in defining gray areas of the regulations, including sensitive topics like social impact studies. The main challenge for companies already operating in Mexico is to keep their businesses active during this transition period. For those planning to enter the country, the main challenge is to design a strategy to face the fierce competition before the regulatory framework is completely developed. This is a major challenge as companies do not want to miss the Mexican momentum but cannot heavily invest until the regulations are completely clarified. Moreover, most of these companies have little or no experience in the country.

In the energy sector one of the key functions of the CAMESCOM is to keep Spanish companies informed about the latest trends and the potential of the Mexican energy market. During the internationalization stage, when companies start to move their operations to Mexico, we get even more involved in helping them shorten their learning periods. We continue to provide companies with updated information and networking opportunities to connect with key entities and players in Mexico, as well as other Spanish players that could be interesting. For companies based in Mexico, we work to keep them informed about legislative changes and function as a bridge between them and the Mexican authorities, institutions and decision-makers. The three main objectives of the Chamber are to represent, provide exposure and link the different companies working in this market.

Q: What are the specific objectives of the Energy Commission created by the Chamber?

A: All commissions in the CAMESCOM work in a similar way. A commission is formed by a core group of members that are relevant to the sector. This group decides the particular lines of action and objectives of the commission. At the same time, there are different working groups within the commission in which all the members of the Chamber can participate according to the guidelines established by the core group. Within the energy commission there are four working groups focused on the electricity, oil and gas, sustainability and renewable energy subsectors.

In general all commissions have the same objectives: collaborate with the Mexican authorities to exchange knowledge and best practices, coordinate events with Mexican entities involved in the sector, network with relevant players in the industry and participate as a key agent in the improvement of the business structure of the sector, represent the different voices and viewpoints of Spanish companies before the Mexican government and create analysis and communication tools to enhance the knowledge and skills in the sector.

Q: What role does energy play in the portfolio of industries within the Chamber’s scope?

A: As an entity focusing on strengthening commercial and investment relations between the two countries, all industries hold the same importance in our agenda. Similarly, we give equal weight to the four working groups involved in the energy commission. But we are aware that some subsectors do have higher potential for investment or are growing faster than others. The energy sector is strongly represented in the Chamber and we give them a special focus.

Q: How can Mexican companies looking to collaborate with Spanish enterprises benefit from the Chamber’s services?

A: The CAMESCOM has the core objectives of promoting Spanish investment and business in Mexico, as well as the other way around. Therefore, we focus our efforts on Spanish companies operating in Mexico but also on Mexican companies looking to establish commercial relations with Spanish enterprises. We have a large number of Mexican service providers that have become members of the Chamber as a strategy for establishing commercial relations with Spanish members. We also regularly organize activities addressed to Mexican companies planning to start operations in Spain.

Q: Which energy subsectors do you expect to grow the most after the establishment of the Energy Reform?

A: The theme of the electricity tariffs is generating great interest, mainly due to its key role in the booming investment in Mexico. Local electricity tariffs are considerably high compared to international standards but this is expected to change as the new market evolves. Even though Mexico has always been an attractive market for Spanish companies, the high electricity tariffs have also represented a barrier to establishing certain productive enterprises in the country. We are working on communicating this situation to Spanish companies, highlighting the opportunity that dropping electricity tariffs could bring for productive investment in Mexico. Renewable energies are another subject attracting the attention of Spanish companies.

Q: How does the Chamber plan to continue providing support to companies working in the energy sector?

A: In the near future we plan to continue with the same line that we have been following in the past few years, keeping companies updated about the latest trends in the market and providing training services for our members. In this regard, the energy commission is already working on special programs to train human resources in various areas of interest, including renewables. The commission is mobilizing the resources needed to create an Energy Club in Mexico, based on the Spanish counterpart that is dedicated to providing training and knowledge exchange for companies working in the energy industry.