Market Opportunity
Many economic analysts agree that the Mexican economy is closely linked to its American counterpart. Nevertheless, the country continues to face many challenges, the income distribution remains highly unequal. According to a study conducted by BusinessWeek, the Mexican middle class is slowing growing due to the financial crisis and has an income between $7,200 and $50,000 a year. Moreover, the Mexican government still needs to upgrade the countries infrastructure, modernize its labor laws, and allow private investment in the energy sector. Currently, the president, Felipe CALDERON Hinojosa is focusing the government efforts into reducing poverty and creating jobs. Mexico's main importing partners are the US 49.6%, China 10.5%, Japan 5.8% and South Korean 4.5%.
Best Industry Segments
The Mexican economy is strongly linked wit the American economy. In fact, the US is the second largest trading partner of Mexico. According to the U.S. Department of State, U.S. exports to Mexico include electronic equipment, motor vehicle parts, chemicals, building and construction material, energy and environmental technologies, and the finance and insurance service. As confirmed by the importance of trade between Mexico and other countries and the socio-economic affluence, Mexico can provide many opportunities to American exports in several sectors of the economy.
Regulatory and Tariff Landscape
According to the CIA Factbook, Mexico has 12 free trade agreements with over 40 countries. As part of the NAFTA (North American Free Trade Association) agreement between the United States, Canada and Mexico, American goods are duty free. In addition, the General Import Duty Law establishes the MFN rates. An annual directive determines the preferential tariff rates applicable to originating goods exported from those countries to which Mexico grants preference. Moreover, the WTO indicates that a ceiling of 35% must cover all tariff items but applied rates are much lower due to tariff preferential treatment granted in trade agreements. Customs authorities collect a value added tax (VAT) upon entry of the goods into Mexico. In addition, Mexican customs charges a customs processing fee (DTA) of 0.8%. Maquiladoras and PITEX companies pay a preferential fee. Mexico regulates products in a number of areas, mainly for health and safety reasons. Goods subject to non-tariff regulations include hazardous materials, pharmaceuticals, food items, medical equipment, etc. Finally, in terms of standards, a NOM, a certification to Mexican customs regarding product safety must be presented to customs. In order to acquire such a license companies can import samples in order to be tested by approved laboratories. For more information, contact the Ministry of Economy Standards Division
https://www.economia.gob.mx/ (search for "Normatividad empresarial" / "Normas".)
Online Marketing Profile
According to eMarketer.com Mexico is one of the fastest Internet growing countries in Latin America. Furthermore eMarteter.com predicts that the Internet penetration in this market will be of 82% by 2012. Since Spanish is the third most spoken and searched language in the world, advertising in this language could be profitable in Mexico as well as in other Spanish speaking countries.
Summary
The Mexican economy continues to grow. U.S. exporters should focus targeting the more affluent Mexican citizens by advertising online especially in the previously mentioned websites. Moreover, American goods have a competitive advantage since they are free from import duties. On the other hand, Mexico suffers from consistently increasing income inequality and unemployment. These could have an impact on US export opportunities.
Xenia Kolesnikov is a Global Market Research Analyst at Global eMarketer (GeM). GeM is an international business and marketing consulting firm that helps business expand globally from preparation, to implementation through global online campaign management.
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