Czech Republic Eyes Areas of Opportunity in MexicoBy Alejandro Enríquez | Tue, 02/23/2021 - 09:11
Q: What are the challenges and opportunities for Czech companies in the face of the COVID-19 pandemic in Mexico and what is the Embassy of the Czech Republic’s role in this regard?
A: Due to the COVID 19 pandemic, the world economy saw its deepest collapse on record, creating unprecedented challenges for businesses. In particular, certain economic activities suffered a significant decline, many jobs were lost and the impact on the most vulnerable population have been severe all over the world. Our companies were also impacted by the sharp drop in demand and by disruptions of supply chains.
On the other side, many Czech entrepreneurs have seized the moment as an opportunity and some of our industries have seen significant growth, such as technology services, medical equipment suppliers or e-commerce retailers. This trend has the potential to lead to previously unseen innovations and international opportunities for businesses. For example, the Czech company LINET, a leading global supplier of hospital beds, practically doubled its production to be able to meet the demand created by the COVID-19 pandemic, including here in Mexico.
In its immediate response, the embassy was providing insight and advice on trade and travel restrictions. Currently, we are focusing on facilitating long-distance contacts and communicating new commercial opportunities.
During the COVID-19 crisis, the Czech Embassy as well as CzechTrade Promotion Agency here in Mexico, we have expanded our support to Czech companies. Under the new instrument PROPEA, for example, the Embassy is encouraging companies to export and invest more in Mexico. To that end we have been providing them with an enlarged list of subsidized consulting and soft-landing services.
Q: What opportunities do you see for collaboration and investment from the recently renewed free trade agreement between Mexico and the EU?
A: Mexico is the EU’s top Latin American trade partner with bilateral trade in goods worth €66 billion and trade in services worth another €19 billion. We are very pleased to see customs procedures simplified as well as the reciprocal opening of public procurement markets in the new agreement. I see potential especially for our industries, such as car parts, medical equipment production and agricultural food export, as well as in services.
Q: The Czech Republic and Mexico have a strong supplier base to support automakers’ operations in their respective regions. What opportunities do you see for Czech companies looking to the Mexican automotive industry?
A: The automotive industry represents one of the most dynamic and competitive industries both in the Czech Republic and in Mexico. Mexico, as the world’s sixth-largest vehicle producer before the pandemic, has always been a very important market for Czech automotive producers.
The United States-Mexico-Canada Agreement is an important step that provides stability in the North American market. At the same time, the new rules of origin and requirements of regional content for the automotive sector present a challenge to Czech companies. We support them in the adaptation to the new conditions and I believe it could motivate new Czech investments in Mexico.
Q: Given both countries' expertise in the sector, what is the potential of common innovation and R&D initiatives in the industry?
A: Technological cooperation not only in the traditional sectors, but also in the field of Industry 4.0, innovation and new technologies is among our top bilateral interests. This trend is reflected in our new National Innovation Strategy for 2019-2030, which foresees a budget of almost US$400 million and an increase in R&D spending to 2% of Czech GDP. Cooperation in R&D with Mexico was an important issue during the visit of the Czech minister for foreign affairs in 2019, especially in the aerospace and security sector, and we are developing partnerships with several local actors in this field.
Q: The Czech Republic is a major player in the aerospace industry as an ultra-light plane manufacturing hub. What opportunities do you see for both countries to strengthen their cooperation in this sector?
A: The Czech Republic has a long aviation tradition and is known for its outstanding quality, reliability and innovation in the industry. Recently, the traditional Czech producer Aero Vodochody introduced a new light jet aircraft, the L-39NG, that could be of interest to the Mexican Air Force. Other Czech planes, such as the ZLIN Z-242, are already being used by the Mexican Navy. Currently, as the industry is becoming more and more globalized, I see many opportunities for bilateral joint programs and technological partnerships that would take advantage of the unique Czech know-how in the fast-developing aerospace industry in Mexico.
Q: How feasible is it for Czech companies to work with Mexican businesses to expand into the US market?
A: With its qualified and inexpensive labor force, expanding middle class and access to the North American market, Mexico presents vast opportunities both as a manufacturing site and as an important market for the Czech companies to exploit. We see great potential across sectors and some Czech companies are already expanding their presence to Mexico. For example, top design and quality Czech street furniture mmcité is now being fabricated at the company’s plant in Guadalajara and sold in Mexico as well as to the US market.
Q: How can Mexico and the Czech Republic work together on innovation and use that to effectively approach the COVID-19 pandemic and diminish its negative impact on society, trade and economy?
A: We have witnessed that new technologies and innovative solutions are critical in facing the COVID-19 pandemic. Governments are being urged to deploy more effective digital governance technologies in areas such as public services, health or security at a much faster pace. Due to this trend, several Czech companies have been active in Mexico recently: ADUCID in the e-voting and digital identity area, COMPELSON in digital forensic solutions and INVIPO with smart city technologies.
In general, I believe modern technology has become a core factor in development and economic efficiency, and can empower and equip the world's poor in the foreseeable future.
Q: What are some of the projects or initiatives from the Embassy of the Czech Republic to promote bilateral relations with Mexico in the coming years?
A: The sanitary and travel restrictions have changed our agenda greatly; nevertheless, we are planning a number of webinars in different areas of common interest, and also several commercial missions later this year.