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March 11 th supply-chain disruptions, an opportunity for Mexico-Japan business collaboration

March 11 th supply-chain disruptions, an opportunity for Mexico-Japan business collaboration. Raúl Urteaga Minister Office of Mexico-Japan Economic Partnership Agreement Embassy of Mexico Tokyo. April 2011. 1. March 11 th events exposed vulnerabilities of Japan’s supply-chain.

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March 11 th supply-chain disruptions, an opportunity for Mexico-Japan business collaboration

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  1. March 11th supply-chain disruptions, an opportunity for Mexico-Japan business collaboration Raúl UrteagaMinister Office of Mexico-Japan Economic Partnership Agreement Embassy of Mexico Tokyo April 2011 1

  2. March 11th events exposed vulnerabilities of Japan’s supply-chain • Reduced input supply and inventories are affecting firms in Japan and elsewhere • Infrastructure bottlenecks at ports and highways are serious concerns • Planned electricity power cuts will greatly affect manufacturing and the supply-chain process. This is the biggest concern. • Risks associated with relocation of production (technology transfer, IPR protection, labor quality, clients’ satisfaction, on-time delivery)

  3. Alternative plans for Japanese supply-chain companies • Reduce outside contractors in Japan but especially in low-labor countries with deficient infrastructure and legal uncertainties. • To base supply operations in Mexico: • Low cost manufacturing • Excellent labor skills • Legal protections guaranteed, including IPR, FD Investors • Enhanced export market access trough its FTA network • Hundreds of Japanese suppliers already in Mexico (automotive, electronics) • Mexico – Japan EPA

  4. JBIC Survey 2010 for overseas business operations Source: 2010 JBIC Survey

  5. JBIC Survey on Japanese Companies Overseas Investment Source: 2010 JBIC Survey

  6. MEXICO TOTAL VEHICLE EXPORTS AND PRODUCTION Last year, 81% of Mexico’s automotive production was exported to more than 50 countries, including Japan Source: Mexican Automotive Industry Association (AMIA) 6

  7. Mexico’s GDP Source: Mexico’s Ministry of Finance, International Monetary Fund Note: 2011 and 2012 indicators are forecasts

  8. Foreign Direct Investment registered in Mexico Unit: Billion USD 8 8

  9. Strengths of the Mexican Market Mexico’s internal demand growth: • Recovery of employment and income • Wider credit and financing availability • Investment in infrastructure • Structural measures to increase competitiveness • Population growth and demographics: • 112.6 million population (2010 Census) • Almost 1 million young Mexicans become consumers every year

  10. Mexico’s Macroeconomic Variables • INFLATION • 2010 4% • 2011 3.9%- 4.3% (projected) EXPORT PERFORMANCE 2010 Exports: US$ 298 billion Imports: US$ 301 billion TOTAL US$ 599 billion Mexico is the largest exporter in Latin America, even above Brazil

  11. Extensive FTA Network Mexico has an extensive network of free trade agreements (13 FTAs in three continents) with preferential tariff access to 45 countries, including Japan. EPA Japan FTA EU NAFTA NAFTA FTA Honduras El Salvador & Guatemala FTA Colombia FTA Nicaragua FTA Costa Rica FTA Bolivia MERCOSUR: - Brazil - Argentina - Uruguay - Paraguay FTA Israel FTA Chile On July 1st 2011, the Mexico-Peru FTA will enter into force

  12. Mexico-Japan Trade 2005-2011(Unit: Billion USD) In February 2011, bilateral trade grew by 20.4% compared with the same period of 2010. Mexico's exports to Japan increased by 32% to US$634.6 million, while imports from Japan increased by 17.6% to US$2,354 million. 12

  13. THANK YOU! Office of Mexico-Japan Economic Partnership Agreement Tokyo, Japan Tel: 03-3506-6681 www.mexicotradeandinvestment.com comunicatokio@economia.gob.mx

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