Mexico-Japan Commercial Relationship at Its PeakBy Raúl González | Fri, 07/03/2020 - 09:11
The Japan External Trade Organization (JETRO) is a government-related organization that works to promote mutual trade and investment between Japan and the rest of the world. Established in 1958 to promote Japanese exports abroad, JETRO's core focus in the 21st century has shifted toward promoting foreign direct investment (FDI) into Japan and helping small to medium-sized Japanese firms maximize their global export potential.
The main activities of JETRO are based on facilitating innovations through inward FDI in Japan and supporting overseas expansions of startups; supporting exports of Japanese agricultural, forestry, and fishery products and food; assisting Japanese companies with their overseas businesses; and contributing to the activities and trade policies of Japanese companies through surveys and research.
In Mexico, JETRO established offices in 1958 to contribute to the development of the businesses that Japanese companies carry out in Mexico, including those that are already established in the country, offering the necessary information and support to help their decision-making through activities such as research, coordination and advice on specific projects.
JETRO Mexico’s main activities are oriented to coordinate B2B exhibitions, seminars and meetings to facilitate the efforts of Japanese companies, mainly in the automotive sector; promote FDI from Mexico to Japan as well as promotes business between Japan and Mexico in collaboration with industrial chambers, the Mexican Business Council for Foreign Trade, Investment and Technology (COMCE), the Ministry of Economy and the states’ economic development ministries.
To complement our efforts, we carry out promotional activities for the conservation of the environment, energy efficiency and "smart cities" and promote business programs by inviting Mexican entrepreneurs to Japan in different sectors such as multimedia content, medical equipment, food, IT, machinery and equipment, video games and animation.
We implement programs to promote Japanese gastronomy and the export of Japanese foods to the Mexican market, such as Wagyu meat, Kobe meat and fish and seafood.
Bilateral relations between Mexico and Japan date back more than 400 years and today these relationships have been significantly strengthened by the agreements signed between the two countries. On Sept. 17, 2004, both countries signed the Agreement between Japan and the United Mexican States for The Strengthening of the Economic Partnership (EPAJM), which entered into force on April 1, 2005.
For Mexico, the EPAJM has represented an important opportunity to strengthen Mexican exports to the Japanese market and thus attract greater investment flows that will contribute to increasing production, employment and competitiveness. For Japan, the EPAJM has been an advantage for Japanese companies to extend their international production network and take advantage of Mexico as a platform for exporting their products to US, Europe, South America and Asian markets, taking advantage of the Mexican network of 12 free trade agreements signed with 46 countries.
Another recent agreement that has strengthened and benefited the Mexico-Japan trade relationship is the Comprehensive and Progressive Trans-Pacific Partnership Treaty (CPTPP) or TPP 11, in force since Dec. 30, 2018, where new-generation rules are established that favor commercial exchange for both countries.
Currently, the commercial relationship between Mexico and Japan is going through one of its best moments. In 2019, Japan was ranked as the fifth-largest commercial partner of Mexico globally and the second in Asia, after China. At the end of 2019, bilateral trade reached US$22 billion. Among the main products exported from Japan to Mexico are classified into vehicles and parts, reactors, boilers, industrial and electric machinery, sound equipment, TV equipment, iron and steel, optical and photography equipment, as well as medical equipment and surgical instruments, among others.
The main products that Mexico exports to Japan are electric machinery, sound and TV equipment, mineral fuel, oil, vehicles, meat and edible meat offal, ores, slag and ash, edible fruit and nuts, citrus fruit, melon, salt, sulfur, earth stone, lime, cement plaster, as well as fish and marine products among others. One of the most representative products of Mexico that has had great acceptance in the Japanese market is tequila, which in 2019 totaled an export volume of 2.5 million liters.
According to the most recent statistics on FDI in Mexico, Japan occupies the fourth place with a cumulative investment of US$27.05 billion, representing 4.6 percent of total FDI, just after the United States, Spain and Canada. It is important to point out that 85 percent of the investment of Japanese companies in Mexico is concentrated in the manufacturing industry. The automotive industry concentrates most of this investment, with a total 14.60 billion, ranking second after the United States. Currently, there are approximately more than 1,200 Japanese companies operating in Mexico, located mainly in the Bajio region.
For 2019, Japanese automakers participated with 31 percent of the total production of light vehicles in Mexico. Regarding exports, Japanese brands participated with 27 percent of total light-vehicle exports. Toyota has plants in Baja California and Guanajuato; Nissan in Aguascalientes and Morelos; Honda in Jalisco and Guanajuato; Mazda in Guanajuato. In the case of commercial vehicles, Hino is in Guanajuato and Isuzu is in the State of Mexico.
Currently, Japan is immersed in a process of revitalization of its economy through structural reforms both in its government entities and in the private sector. In this sense, JETRO is making greater eﬀorts to attract companies and visitors from overseas, while creating a more open market and facilitating business expansion. If you are interested in Japan, talk to JETRO first!