Under President Enrique Peña Nieto, Mexico has implemented sweeping reforms, that when taken in the aggregate, will do much to attract more foreign direct investment to the country to fuel its current and future growth.
The strategy appears to be paying off. At the recent annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, Pepsico, Nestle, and Cisco announced significant foreign direct investment in Mexico that totaled more than $7 billion.
PepsiCo Inc. announced that it will invest $5 billion over the next five years to increase manufacturing, product development, and marketing in Mexico, a country that also hosts significant operations for Coca-Cola, which announced a $5 billion Mexican investment of their own just two years ago. Switzerland’s Nestle announced their intention to spend $1 billion to build an infant nutrition factory in western Mexico and a pet food production facility in central Mexico.
The world’s largest food manufacturer by revenue is also expanding a breakfast cereal factory for the production of Cheerios and Nesquik. The third big announcement came from network equipment maker, Cisco Systems Inc., which stated plans to invest $1.35 billion in foreign direct investment into Mexican manufacturing operations and a support center in 2014.
This significant capital influx comes on the heels of major reforms that saw foreign direct investment in Mexico nearly double from 2012 to 2013. During the first year of his administration, President Nieto’s government passed a major education overhaul, corrected many shortfalls in labor, pushed through reforms of the tax system, and put an end to Mexico’s 75-year-old oil and gas monopoly, which will result in the ability of foreign firms to explore for new sources of energy in the country.
These changes have bolstered the growing consensus among foreign companies that manufacturing in Mexico represents positive potential in the global economy. Potential investors view Mexico as a major source of growth amid slowing sales in other parts of the world. The government in this country – Latin America’s 2nd largest – is projecting the country’s economy will expand 3.9% this year.
Nestle Chief Executive Paul Bulcke alluded to this zeitgeist in recent comments stating that Nestle’s investment reflects “our commitment to Mexico, and our long-term vision in a market with high growth potential.” Likewise, PepsiCo Chairwoman, Indra Nooyi, echoed this growing confidence in her statement that Pepsico sees “tremendous opportunities to further expand our food and beverage business,” and that Pepsico “is confident in Mexico’s future.”
Read the primary source for this post at The Post.