Brexit and the Coronavirus pandemic have created new hurdles for businesses, with supply chains seeing huge impact and the uncertainty of future trade agreements affecting business confidence and the ability to plan for the future.
Although the current situation has presented many challenges for businesses, it has also opened up new windows of opportunity for exporters, encouraging many to look at new markets. From 2018 – 2019 UK exports to the EU grew by 1.3%, while exports to non-EU countries grew by 6.3%.
I am seeing new enquiries from companies wanting to explore new opportunities on a daily basis, particularly in markets outside the EU where growth is most likely in the coming years. Latin America is a key target for many and as someone who has lived and worked in Mexico for 3 years, in support of UK business, I’m excited to lead the first UK Virtual Business Forum to the market in November with ten South West companies.
Mexico’s economic status
Mexico’s economy is second only to Brazil in Latin America but is quite distinct in its focus with its proximity to the US.
The agreement signed earlier this year with the US and Canada, the USMCA, which replaced NAFTA, reshaped the arrangements for near tariff-free trade across these huge borders.
Numerous US, UK, Japanese and EU companies have sizeable manufacturing plants right along the Mexican-US border, as do many of Mexico’s largest conglomerates, all continuing to serve the US market.
So, sectors of importance to UK and international business include Advanced Engineering; Technology; Financial Services; Food & Drink; Energy and Security. UK companies that design and produce components for the automotive and aerospace industry have long recognised the market as an opportunity and this will continue to be the case even as these industries increasingly go green.
Mexico is a keen advocate of renewable energy, even as its oil market opens up to international investment. It also looks to the UK for new technologies that will support and sustain its manufacturing base.
Business representatives that visit Mexico are invariably surprised by the size and scale of Mexican business. I have previously headed a number of Trade Missions to the country and recall one businessman who’d invested £600,000 in an Indian automotive plant wishing he’d come to Mexico beforehand. I helped Aston Martin open their first Mexican showroom in Mexico City and they sold 20 vehicles within a month.
Its steel industry continues to manufacture millions of large and small vehicles, trains and planes for shipping all over the world. Yet there is keen demand to upscale the level of technology within industry, so Mexican businesses are very open to engaging with international companies and hugely welcome of UK expertise.
UK company, Smiths Medical has 4 plants along the northern border for good economic reasons and they produce the most sophisticated medical equipment with their highly skilled engineers.
From 2010 – 2019, exports of goods to Mexico from the UK increased by 65% and remained steady at £1.597 billion in 2018 and 2019, according to the ONS. This year so far, exports of services from the UK to Mexico totalled £2.24 billion, an increase of 24 % from 2017.
The UK is seeking to agree a trade deal with Mexico that replicates the EU-Mexico agreement, so it’s a good time to consolidate relationships with current distributors or develop new business leads so that you’re in a good position to trade as the world emerges from the current pandemic.
What are the opportunities?
Although Mexico, like many countries, was hit hard by the coronavirus pandemic, President Andrés Manuel López Obrador’s response to the economic challenge includes a $14bn infrastructure plan designed to boost business. The funds will go towards 39 projects, 7 which are already under way, with the rest kicking off next year – many support the expansion of transport links. UK companies with expertise in planning, developing, and regenerating urban areas as well as water generation and improving transport will see great opportunities.
According to Institute of Export & International Trade over 42% of Mexico’s population are middle class and in recent years the food and drink sector has grown particularly quickly. Statista reported that revenue in the food and beverage sector is projected to reach £500 million by the end of this year and show an annual growth rate of 9.5% up to 2024.
As a key part of the DIT South West’s trade recovery support, we have selected 10 companies to take on a Virtual Trade Mission to Mexico from 10th – 13th November 2020.
We’re excited to see business result from this unique event and to support these companies in their virtual journey. However, if you are not attending but still need support in Mexico, please contact our DIT team on 01275 774 456 or get in touch with me on firstname.lastname@example.org to find out more. You can also visit www.great.gov.uk to find out about the range of export support available and live export opportunities.
DIT’s services in the South West are delivered by Business West. For further information, click here.