New Zealand-Mexico Synergies Foment Innovation, GrowthBy Sofía Hanna | Thu, 11/04/2021 - 12:22
Q: What are the challenges and opportunities of boosting trade between New Zealand and Mexico?
A: New Zealand and Mexico have a long-standing relationship at a governmental level and in trade. Mexico is New Zealand’s biggest trading partner in Latin America and 21st largest overall, demonstrating how important this market is for New Zealand, especially for milk-based products. Slowly but surely, we are working on diversifying that trade base.
In 2020, two-way trade between New Zealand and Mexico totaled US$492 million and most of that was manufactured industrial products, which indicates how we are working to diversify the trade base. New Zealand and Mexico are very complimentary economies to each other, which I see as a benefit to economic growth.
Other opportunities are in technology transfer, in which we have strong experience, and supply chain opportunities given that the US is also among our important trade partners. In fact, the opportunities for New Zealand businesses and Mexico come from across all different sectors, such as agriculture and horticulture, mining and resources, retail and consumer products. Where I see a special growth opportunity is in technology generally.
In terms of difficulties, people tend to think that New Zealand is really far away but, at the end of the day, we have daily flights between our country’s capitals. Language, however, is seen as the biggest barrier. There are very few New Zealanders who are fluent in Spanish but that is why organizations like NZTE and my team are important. We can support them locally, helping them understand market needs, finding the right partner and exploring opportunities in the market.
Culturally, people also fall into the belief that we are very different. But, for instance, Mexican culture has strong values around family and New Zealand also has a very strong family orientation. We have a word in our indigenous language Maori, “whanau,” which means family. People often talk about the whanau not just in relation to blood relations but also to friendships. I think that Mexico has a similar kind of philosophy.
Overall, I see Mexico as a long-term growth market. We would like our companies to establish long-term relationships to scale over time. Mexico is definitely an optimal location to consider.
Q: What could a deeper commercial relationship between both countries bring to the table?
A: A good example of deeper commercial relations is something that we have started in the mining sector. We created a project last year called Koura, which means gold in Maori. That project was designed to help mining-related technology companies from New Zealand to really understand the shifting needs of the sector here in Mexico and to find ways where they could add value. We had a range of activities, including relationship-building and facilitating business meetings through Zoom or webinars. The idea was to encourage dialogue on important challenges that the sector is facing. I see that as a key area in which we can continue and go deeper. What I like about this program is that it ties really closely to a key theme that we have across a great deal of our work, which is sustainability.
New Zealand’s ambition is to build a sustainable future for all. This is also based on our Maori ethos of kaitiakitanga, which is the inextricable connection and the responsibility that people have between themselves and the natural world. Based on this thinking, we call ourselves guardians because Kaitiaki means guardians and New Zealand does believe that we have a responsibility to leave the world in a better place for future generations.
There are many aspects of that ethos where we can collaborate quite deeply.
Q: Which future projects are being developed between New Zealand and Mexico?
A: Koura is definitely one and we are also working in horticulture, given our horticulture expertise and technology. Particularly in that area, we see opportunities to support the whole supply chain for Mexico, which is a growing horticultural powerhouse. New Zealand has leading companies that support those industries across the world with technology and the transfer of technology know-how. We have started to work with Mexican growers, pack houses and exporters that are looking to increase efficiencies and productivity across all stages of the supply chain.
Another area where I see potential is around technology, as it has become essential for the future. In New Zealand, the tech sector has been one of the fastest-growing sectors over the last four to five years. Even over the last year under the pressures of the COVID-19 lockdowns, that sector grew 11.4 percent.
Q: Mexico is known for being a business hub for countries trying to expand to the US. What is New Zealand’s plan when it comes to this vision of Mexico?
A: Mexico's geographic position presents a really strategic opportunity for New Zealand companies that are looking to set themselves up for sustainable success over the long term. We are starting to understand the opportunities around manufacturing and the fact that Mexico has the USMCA. In terms of supply chains, Mexico has become an even more attractive market, especially for local manufacturing strategies.
We do have one company called Fisher & Paykel Healthcare that has done local manufacturing very successfully. They have a plant in Tijuana that employs more than 1,000 people and their technology is exported from there to a number of markets. It is estimated that some 10 million patients around the world are using Fisher & Paykel Healthcare technology out of the Tijuana plant. That is a really powerful example of how Mexico can be a strategic partner for New Zealand companies that are looking to optimize their supply chains.
Also, I feel like Mexico is a really nice transition market for foreign companies looking to expand further into Latin America eventually. The level of English in Mexico is much higher than some of the markets in Latin America as the country is very US-oriented. That makes it much easier for our companies to adapt to Mexico, recognizing that it is a completely different business style to the US.
Q: Why are Mexico’s trade agreements attractive and how do you think this could boost New Zealand's plans?
A: New Zealand and Mexico share a really strong commitment to trade liberalization and regional economic integration and that is symbolized with the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), which is New Zealand's first trade agreement with Mexico and was a very important landmark for advancing our trading relationship.
I think that free trade agreements come with a framework that helps bring attention to a market and it builds confidence around New Zealand companies. Without a doubt, the advent of the CPTPP between New Zealand and Mexico was a very important step for us and has definitely helped us to highlight the Mexican opportunity among New Zealand companies.
This also means that Mexico is becoming part of a New Zealand supply chain strategy, meaning it is becoming increasingly important. I see all of these things helping to close the distance gap and therefore create exchange in communication and relationships.
A trade relationship that Mexico is part of and that New Zealand has been interested in participating in is the Pacific Alliance. There have been discussions in which New Zealand has indicated that we would like to participate in the Pacific Alliance. Our Ministry of Foreign Affairs and Trade takes responsibility for those kinds of things but it is up to me and my team to work to help New Zealand companies understand what these agreements might mean for the business once they have been agreed. I think that agreement inside Latin America is an important one, especially when we are thinking about regional economic integration.
New Zealand Trade and Enterprise (NZTE) is the New Zealand government's international business development agency. It supports exporters to grow a productive, sustainable and inclusive economy.