doing business in mexico
Download
Skip this Video
Download Presentation
DOING BUSINESS IN MEXICO

Loading in 2 Seconds...

play fullscreen
1 / 28

Doing Business in Mexico - Queens Library - PowerPoint PPT Presentation


  • 345 Views
  • Uploaded on

DOING BUSINESS IN MEXICO EDMUNDO GONZALEZ TRADE COMMISSION OF MEXICO QUEENS LIBRARY, JANUARY 7, 2006 BANCOMEXT- TRADE COMMISSION OF MEXICO The Mexican Eximbank An entity of the Mexican government Promotes Mexican exports Promotes and attracts foreign direct investment in Mexico

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Doing Business in Mexico - Queens Library' - jana


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
doing business in mexico

DOING BUSINESS IN MEXICO

EDMUNDO GONZALEZ

TRADE COMMISSION OF MEXICO

QUEENS LIBRARY, JANUARY 7, 2006

bancomext trade commission of mexico
BANCOMEXT-TRADE COMMISSION OF MEXICO
  • The Mexican Eximbank
  • An entity of the Mexican government
  • Promotes Mexican exports
  • Promotes and attracts foreign direct investment in Mexico
  • 25 offices in Mexico, 31 trade

offices abroad

slide3

TRADE OFFICES:

ASSISTANCE SERVICES FOR U.S. FIRMS

  • Identify Mexican suppliers
  • Match-making with Mexican firms
  • Subcontracting
  • Buyers’ missions

Trade

  • Legal and economic information
  • Identify potential partners
  • Contacts with government officials
  • Business Tours to Mexico
  • Investment- Industry Seminars
  • Publications: Industrial costs
  • www.investinmexico.com

Partnerships & Investment

contents
CONTENTS
  • ECONOMIC AND POLITICAL ENVIRONMENT
  • BILATERAL TRADE AND INVESTMENT
  • MEXICAN MARKET
  • SECTORS OF OPPORTUNITY
  • DOING BUSINESS IN MEXICO
  • LEGAL ASPECTS
  • USEFUL WEBSITES
  • Q&A SESSION
slide5

THE MEXICAN ECONOMYIN A GLOBAL CONTEXT

  • Twelfth in the world economy MEX. GDP: $670 Bn

U.S. GDP: $11,750 Bn

  • First Latin American Exporter
      • Mexico: $190 Bn
      • Brazil: $97 Bn
      • Argentina: $34 Bn
  • 13th Exporter: $190 Bn
    • Total Trade: $386 Bn
  • 2nd largest recipient of FDI in Latin America: $17 Bn

Note: 2004 data.

2004 2005e

$189b $200b

slide6

Fundamentals of the Mexican Economy

Inflation Rate

1. ECONOMIC STABILITY

  • Low Inflation
  • Economic growth
  • Investment grade status by S&P, Moody’s and Fitch.
  • Strong domestic financial market
  • Integration to the U.S. economy

Growth Rate

slide7

Fundamentals of the Economy:

2. Free Trade Agreements

NAFTA:

Entry into force: Jan. 1, 1994.

Liberalization of automotive sector: Jan. 1, 2004.

AELC FTA:

Switzerland, Liechtenstein, Norway & Island

Negotiation: November 1, 2000

UE FTA:

Entry into force: July 1, 2000.

Trade liberalization in 2007

FTA Israel:

Entry into force: July 1, 2000

FTA Bolivia:

Entry into force: Jan. 1, 1995.

Trade liberalization in 2002

NT FTA (North Triangle):

Guatemala, Honduras & El Salvador

Entry into force:Jan. 1, 2001.

FTA Chile:

Entry into forcer: Jan. 1,1992.

Trade liberalization in 1998

FTA Nicaragua:

Entry into force: July 1, 1998.

Trade liberalization in 2002

FTA Colombia & Venezuela (G3):

Entry into force: Jan. 1, 1995.

Liberalization for heavy trucks and buses will be 2007

FTA Japan

2005

FTA Costa Rica:

Entry into force: Jan 1, 1995.

Trade liberalization in 1999.

slide8

Fundamentals of the Mexican Economy: 3. The Institutions

  • Central Bank
  • Electoral Institute
  • Nafta
  • More transparency and accountability of the government
  • Free press
  • Political balance
recent economic developments
RECENT ECONOMIC DEVELOPMENTS

STRENGHTS

  • High level of reserves: $60 Bn
  • No external debt service pressure
  • The U.S. is to grow in 2006:3.5%
  • High oil prices
  • High level remittances: $20 bn 2005
  • Deep financial market
  • Inflation historically low: 3%

RISKS

  • Political uncertainty
  • A slowdown of the U.S. economy
bilateral overview
BILATERAL OVERVIEW

SECOND TRADE PARTNER OF THE U.S.

2004

$267 bn

2ND LARGEST BUYER OF U.S. PRODUCTS : $111 bn in 2004

FDI: 1994-2005: $90 bn / US COMPANIES IN MEXICO: 16,830

Mexico and U.S.: Industrial Production

nafta
NAFTA
  • Most prominent trade agreement
  • Signed in 1994
  • Between Mexico, Canada and the U.S.
  • By 2008, all products are duty free

NAFTA FACTS

  • The U.S.-Mexico border is the busiest in the world
  • Two way trade has almost tripled to reach 232 billion dollars annually
  • Daily transactions average 640 million dollars
  • Each year, around 90 million cars and 4.3 million trucks cross the border
mexico u s bilateral trade
Mexico-U.S. Bilateral Trade

$40 billion (1993)

$155 billion (2004)

Exports

$42 billion (1993)

$ 110 billion (2004)

Imports

Source: SE w/ BANXICO

mexico is the 2 nd largest market for the u s
MEXICO IS THE 2ND LARGEST MARKET FOR THE U.S.

U.S. exports

Billions of dollars 2004

Source: SE with USDOC

slide15

TRADE BETWEEN THE U.S. AND MEXICO

EXPORTS TO THE US

  • Electrical equipment (TV, cables,)
  • Vehicles and parts (cars, trucks, motor)
  • Oil
  • Machinery (computers and components, engines, air cond.)
  • Medical Instruments
  • Clothes
  • Food and beverage
  • Furniture (seats, lamps)
  • Plastics
  • Steel and Iron products

177

155

138

trade between the u s and mexico
TRADE BETWEEN THE U.S. AND MEXICO

IMPORTS FROM THE US

  • Electrical machinery (integrated circuits,

transmission eq.)

  • Machinery (compression, computers and components, parts of engines)
  • Vehicles ( Autos, trucks, parts)
  • Plastics
  • Natural gas
  • Iron and steel products
  • Organic chemicals
  • Medical instruments
  • Paper (cardboard, etc)
  • Food and beverage
nafta benefits
NAFTA BENEFITS

MORE THAN A FREE TRADE AGREEMENT

  • Liberalizes and protects investment
    • Promotes fair competition
    • Provides protection of intellectual property rights
    • Mechanisms for Resolution of Disputes
    • U.S. direct investments
    • U.S. – Mexico industrial integration

Encourage

u s fdi in mexico
U.S. FDI IN MEXICO

Source: Secretaría de Economía

recent trends in manufacturing in mexico
TRENDS

Strong recovery of FDI in manufacturing in 2004

26% surge in new investments in the Maquiladora Industry in 2004

Shift from labor-intensive industries to higher value- added products

Clusters Development

INCENTIVES

Reduction in the income tax from 40% to 27% in 2007

Immediate deduction of new investments

Special tax-reduction for Maquiladoras

Recent Trends in Manufacturing in Mexico
mexico strong competitive advantages
MEXICO STRONGCOMPETITIVE ADVANTAGES

Stable Economic Environment

Proximity to

the U.S.

Competitive and skilled labor force

FTA with 43

Countries

Familiar Business Culture

Protection for investment and

I.P. rights

Diverse Regions

mexican market
CHARACTERISTICS

100 million inhabitants

Diverse

Middle class growing

Employment growth

Consumer spending is growing

Firms are spending

GDP/capita:

1995: $6900 PPP

2004: $9600 PPP

MAIN DRIVERS

OF DEMAND

Strong remittances

More consumer credit

Mortgages available

Lower interest rates

High price of oil

Growing pension funds available to financing projects

MEXICAN MARKET
opportunity sectors in the mexican market
OPPORTUNITY SECTORS IN THE MEXICAN MARKET
  • Maquiladora (assembly) Industry
      • Automobile parts and electronic components
  • Housing construction
  • Public Infrastructure
  • Energy
      • (Technology and equipment)
  • Tourism
      • Services
      • Transportation Equipment
recent actions to increase competitiveness
More efficient and secure border

with the U.S.

Reducing Income Tax

Partial exemption for assembly plants

Free Trade Zones

RECENT ACTIONS TO INCREASE COMPETITIVENESS
doing business in mexico26
SOME BUSINESS

PRACTICES

Friendly environment

Business based on relationship

LEGAL ASPECTS

Legal system differs

Foreign investment is allowed, with very few exceptions

Common type of business form: corporations

Labor law: minimum wages: $2 – 2.4

DOING BUSINESS IN MEXICO
doing business in mexico27
CUSTOMS

No duties for NAFTA made products

No duties under FTA

if manufacturing in Mexico

TAXES

VAT: 15%

Asset tax: 2%

Payroll tax

Income tax: 29%

Real Estate tax

Social Security

Housing Fund

DOING BUSINESS IN MEXICO

ESPECIAL PROGRAMS

PITEX MAQUILA

CUSTOMS Duty Free Duty Free

TAXES No VAT No Vat

Reduced Income tax

ad