Jonathan C. Clare
Regional Director
British Embassy
/
Insight

Investment Opportunities in Mexico

Mon, 10/21/2013 - 10:07

Mexico offers the huge advantage of offering a friendly environment for foreign direct investment as a result of the regulatory system in the mining sector. This has brought a lot of success for Canadians and other international companies that have come here to invest. Another opportunity is the fact that local companies have been investing in the renovation and improvement of their existing mining operations, while at the same time strengthening their environmental practices and technologies. UK companies could potentially find ways to seize these opportunities in Mexico.

We anticipate an increased flow of trade between Mexico and the EU. Given the EU’s current economic predicament, European countries will also be looking more to sustainable emerging markets that can help to stimulate growth. Mexico is well positioned in that sense, and so is the mining sector, not only within the Mexican market, but also at a regional level in emerging markets such as Brazil, Colombia, and Peru, where we have seen interesting levels of growth in the last few years.

At this moment in history Mexico’s geographical location brings a great economic advantage. NAFTA has certainly helped the flow of trade with Canada and the US, and was an initial stepping stone in successfully diversifying into other international markets. Over the last 15 to 20 years the country’s automotive sector has been an emerging market and is now an important player in the global supply chain, and the same development is taking place in the aerospace industry. We have seen American and other international OEMs expanding into Mexico and investing not only in assembly operations in the automotive market, but in many different sectors such as steel, manufacturing, cement, glass, and financial services, among others. This diversified industrial base is helping the country to retain its competitiveness. When comparing Mexico to China we do not currently see a big difference in terms of labor rates, but a significantly larger cost is incurred in shipping cargo from China to the US, than simply transporting goods from Mexico to the US, which remains a vast consumer market. The preferential arrangement between Mexico and the largest consumer market in the world tells us that Mexico will continue to benefit from its location, as well as from having a diversified industrial base, skilled labor, and relatively low wages compared to its northern neighbor.