Three things that may surprise you about Mexico, that smallish state just south of the US: It’s proper name is the United Mexican States; it is the world’s 14th largest country and, with more than 120m people, is the 11th most populated.
Not so small after all, so a pretty good target for any business already in, or looking at North or South America as target markets.
That’s the thing about Mexico. Since its independence from Spain in 1810, it has served as a gateway to the host of smaller nations in that region (such as Cuba or Jamaica) as well as the fast-growing economies in South America. “It occupies a strategic global position, being the natural bridge between Latin America to the south and the United States and Canada to the north,” says UK Trade & Investment.
Location is one thing, but what about stability and opportunity?
Here are some more startling stats. Its GDP at $1.845-trillion puts it at number 10 in the table but add in that huge population and its per capital GDP sees it slump to 67.
There is huge potential, though. According to The Economic Commission for Latin America, in 2014 Mexico is expecting economic growth of 3.5%“on the back of a recovery in external demand and an upturn in domestic demand”. It is set to become the world’s 10th largest economy in 2014, according to the IMF.
“Mexico is a country of huge potential that has demonstrated predictable, stable economic growth,” adds UKTI. “It is a dynamic market and analysts predict that its economy will be larger than the UK’s by 2050.” The average age is 26 so, as a workforce and consumer base, it is ideal for setting up in business. Joint ventures or having a representative office are suggested by UKTI as the best ways to open operations in Mexico.
The path is already well trodden. The EU-Mexico Free Trade Agreement has led to the elimination of all tariffs on EU-origin industrial goods, adds UKTI. “With no import duties, UK exporters can now compete on equal terms with exporters from the US and Canada who also enjoy preferential access to the Mexican market.” In 2011 trade between the UK and Mexico was worth US$12.2 billion.
The top growth sectors are manufacturing (16.1%), retail and sales (15.4%) and real estate and housing services (11.8%).
So, what are the pitfalls? The language is Spanish and all labelled products have to be in Spanish. A hurdle, but a small one. “English is widely spoken in Mexico but there are still many who don’t speak it. Having a basic knowledge of Spanish will help you make a good impression,” says UKTI.
And impressions count in Mexico. Business attire is more formal than in the US or Europe and you need to use titles rather than simple first names.