Carlos Berzunza
Director General
View from the Top

Business Pushes Forward Via Trade Agreements

Wed, 09/07/2016 - 11:44

Q: What specific strategies is CANIPEC enforcing to gain more competitiveness in the Mexican market?

A: Our aim is to gain competitiveness in the personal care and household care products industry. Our products play an important role in the daily lives of Mexican consumers. Improving conditions for doing business in the Mexican arena is important. We are pursuing many initiatives with a priority being the communication between the industry and the consumer.

Besides complying with the authorities’ regulations regarding advertising, CANIPEC developed a selfregulation code called COSMEP, which includes ethics guidelines for the advertising of affiliated enterprises. However, it is not an exclusive code and is open to any other company that might want to adhere to it. Several associations such as AMAP and CONAPEC have accepted our COSMEP code. These agreements help enterprises maintain communication among them but also make them vigilant of each other making sure everyone complies with the regulations. Complementing authorities’ regulations with self-regulation has been an interesting experience. Thanks to this, we have been able to develop better advertising, which has evolved into increased confidence from our clients and improved communications with the authorities.

The personal care and household care products industry was recognized by the Ministry of Economy as a key sector for the Mexican economy, so we have been working with them very closely to identify opportunities for strengthening supply chains and to raise awareness among consumers about the benefits that come from using our products. There are several products we sell that improve life quality but do not have the consumption levels they should have, like hair conditioning and sunscreens. That is why it is so important to promote an informed and responsible usage of products, encouraging consumers to adopt products from formal establishments rather than informal venues where there is no institution or authority that takes responsibility if the product causes an adverse reaction

Q: How do you make sure that the personal care and household care product industries take advantage of the export opportunities Mexico provides?

A: Mexico has a solid investment platform being Latin America’s largest exporter of personal care products. Our industry has achieved exports diversification. Around 52 percent of our exports go to the US and the rest go to other Latin American and Caribbean countries, which means that a total of 96 percent of our exports stay on the continent. However, we still have work to do to make sure that the conditions in which Mexican exports happen are the best possible. We maintain constant communication with Mexican trade agreements negotiators to make sure our products receive the best possible treatment regarding tariffs and market access. We have a very active industry on the exports market. Cosmetic products exports amount to US$2.8 billion. When added to household care products we arrive at a total of US$3.6 billion with a trade surplus of US$1.7 billion.

We have done many things to achieve high export figures. Our most recent accomplishments have been the Pacific Alliance negotiations. For this particular agreement, we wanted to take advantage of the opportunities the free product flow segment offers. Cosmetics chambers in the four countries involved proposed a common agenda for eliminating tariffs, flexible origin rules, homologated regulations and a document with international best practices for the industries. Around 90 percent of our proposals were accepted by our governments. The idea behind this joint effort was to eliminate requisites that do not provide added value to consumers’ safety and are time-and-resource consuming.

We took the same approach in the Trans-Pacific Partnership (TPP) negotiations. Chambers from the involved countries wrote position papers in which we proposed a common agenda for negotiators. At the moment we are participating in talks for the extension of the Economic Complementation Agreement with Brazil, the largest market for beauty products in Latin America, so we need to work on tariff reduction and commercial facilitation. 

Q: What are the positive economic effects CANIPEC has on the Mexican Industry?

A: Our industry has an extensive catalog that adapts to consumer needs and possibilities. There are many affordable products and several premium products. Our products amount to more than US$9 billion. This magnitude of product consumption generates an important effect on the country’s economy. Our estimations show that over 200,000 jobs are created, either directly or indirectly, by our industry.

Our growth in the local market has attracted investment. Personal and household care have grown at rates of 4 percent and 5 percent per year, respectively, In the last decade the industry has attracted more than US$300 million in foreign direct investment annually. We have seen significant amounts of investment in the past five years in plants and research centers. That is why our goal is to achieve a solid double-digit growth. This can be done by maintaining the growth of products that are already being consumed and increasing the consumption of products that have yet to be accepted by the market. The 68 enterprises that make up CANIPEC are having an impact on the economy. To increase our impact we are developing new services to help small enterprises that develop artisanal products. Additionally, we believe there are some enterprises in the chemical and manufacturing industry we could affiliate in the next years.

Q: What steps are you taking to improve opportunities in the Mexican market?

A: Improving consumer culture is important. Mexican consumer habits are influenced by their beliefs. If people believe that hair conditioning triggers hair loss they are definitely not going to buy it even if it is not true. Erasing these myths is a double responsibility. We are doing what we can to improve our communication and provide our consumers with more sources of information. But consumers also need to inform themselves regarding the products they use. Maintaining an open communication channel with the government is vital. Fortunately, we have established a relationship of trust and constant communication, especially with the Health Ministry and COFEPRIS. They have accompanied us on our selfregulation processes and in our efforts to negotiate our free trade agreement regulations. Another important authority we maintain constant communication with is the Ministry of Economy. Government support is fundamental to many processes, for example trade agreement negotiations. We are partners with the government regarding the observance of applying existing regulations and upgrading them. We have had openness from the federal government, we have been able to maintain communication and we have generated agreements. Communication with consumers and creating synergy with the government is vital for the success of the industry