BUSINESS OPPORTUNITIES IN MEXICO A Canadian Chamber of Commerce in Mexico Perspective, 1996
Introduction
Canadian imports to Mexico increased 29% between 1993 and 1994; demand is strong for capital goods, technology and investment in sectors where Canada is highly competitive. The sectors where there is a large potential for business development between Mexico and Canada include: -Agroindustry
In 1994, Mexico recorded imports for an approximate amount of US$ 6,300 million dollars worth of fresh and processed food products, Legislative reforms in the country promote the development of markets and the changes on landholding legislation open new options for direct production. Opportunities for investment and strategic alliances to develop natural resources in Mexico are broadened for Canadian agricultural experts, in both services and technology.
Transportation: infrastructure, services and equipment
One of the most important sectors is that of automobile parts, where exports increased from US$ 1,889 million dollars in 1993 to US$ 2,107 million in 1994. An import substitution program is contemplated to supply the terminal industry, and a production increase of 11 % is estimated for 1996, which expands the opportunities for direct investment or joint ventures.Modernization of the highway, harbor, airport and public transportation infrastructure offers an important market to Canadian products such as machinery, equipment and technology. In 1994, approximately US$ 3,571 million dollars worth of transportation components and equipment were imported.
Through the amendment of Article28 of the Constitution and the Regulatory Law of Railway Service (March/3/ 95), the railway infrastructure that will continue to be a part of the Government may be concessioned to the private sector. It determines that foreign investment may participate by up to 49% in the corporate capital stock of the concessionary companies or in providing ancillary services to the railroad sector. A favorable resolution by the National Board of Foreign Investment will be necessary for the foreign investor to participate by a higher percentage than stated above.
Furthermore, there have been amendments as regards civil aviation and according to the new Mexican legislation, the foreign investor may participate up to 25% in the capital stock of Mexican corporations engaged in providing domestic air transportation services, air taxi transportation and specialized air transportation.
Oil: equipment, products and services
Oil is a fundamental sector in the economy, with Mexico as the third producer at world level. The industry is regulated by the state company Petroleos Mexicanos (PEMEX). Currently, primary and secondary petrochemicals are open to private sector participation and the production of 774 secondary petrochemicals allows foreign investment participation.The Decree to reform the Regulatory Law of Article 27 of the constitution in matter of oil is being prepared. lt. will provide that gas transportation, storage and distribution may be performed, with prior permission from the competent authorities, by the private sector and that foreign investment may participate in any proportion, with some exceptions such as distribution of liquefied oil gas, which will remain reserved to Mexican nationals.
Telecommunications
This is a high priority branch where promoting a high degree of modernization is sought. Thus, Canadian technology and equipment have great potential, 2S in the case of fiber optics, cellular telephone service, satellite communication equipment and services, radio and television equipment, among others.According to the amendments made to the Federal Law of Telecommunications, foreign investor participation is allowed by up to 49% in cable television and basic telephone services and satellite communication. In the case of cellular telephones, foreign investment may exceed 49%, upon favorable resolution by the National Board of Foreign Investment.
Environment.- equipment and services
There is a strong commitment by both the Federal government and civil society to implement the existing environmental regulations. This originates an ample demand for anti-pollution equipment and ancillary services, particularly at industrial level, such as treatment of solid wastes, treatment of drinking water, of polluted air, etc.
Mining: equipment and services
Mining sector projections reveal a 5% growth in annual production. Deregulation programs have been put forth to reduce the bureaucratic factor, the fiscal structure has been revised and requirements to grant productive lands concessions have been eased. The sector is open to foreign investment; there are two types of fiduciaries whereby exploitation of mining deposits is allowed.Estimates have been published stating that NAFTA will stimulate mining production by 13.2%, in view of economic growth and demand for basic minerals. The Canadian presence in this area will allow to continue with an active participation in productive development.
Industrial Machinery and Technology
The demand for a large part of this type of equipment is covered through imports. Total imports of machinery, tools and equipment by Mexico in 1994 added up to US$ 4,521 million dollars, considering both the metal, mechanical and the electrical branches. It is important to mention that the domestic industry has increased its productivity to stay competitive in the market.Close to 70% of imports are machinery for metal shearing, metal transformation equipment, drilling, industrial technology and equipment for power generation, etc.
Consumer products
Imports of different consumer products such as fashion novelties, high tech, entertainment and sports products are highly attractive to Mexican consumers, in particular to the under 30 years old segment, which accounts for 70% of Mexico's total population. This segment exhibits a marked preference for imported products. Among the products with potential we may speak of: jewelry, toys, sports equipment, books, gifts, medical and pharmaceutical products, among other things.
