Mexico business opportunities and challenges
Those organization that are seeking to grow and prosper in 2016 must consider Mexico business opportunities.
A collaborative study conducted in 2015 by Capgemini Consulting, Penn State University, Penske, Korn Ferry, as well as IndustryWeek presents a series of aspects regarding both economic and Mexico business opportunities, as well as makes the case as to why investors might do themselves a positive turn by considering the shift of operations to Mexico. The studies also consider possible concerns that exist in some quarters as regards doing business in Mexico.
Eight things to think about
Looking at Mexico business opportunities from an economic perspective, the researchers point out that there are eight primary issues to consider:
- economic size: (14th largest economy in the world and 2nd largest economy in Latin America);
- economic outlook: (the average growth rate during 2019 expected at 4% and is on track to becoming the fifth largest global economy by 2050 according to Goldman Sachs);
- growing demand for internal consumption;
- open economic policies that encourage, enable and allow access to international markets;
- twelve free trade agreements along with an Economic Partnership Agreement that grants it preferential access for its goods to over forty countries;
- twenty-eight investment promotion and protection agreements
- strong and well-defined double taxation treaties with more than forty countries;
- low country risk with a local currency rating of A-.
Additionally Mexico’s ranking in the Global Competitiveness Index (GCI) places it among the fifty nations with a pro-commerce environment, and its privileged location enables nearshore outsourcing options for the North American Market. These conditions and others makes the Mexico business opportunities exist in a politically and economically stable environment.
Why business executives and strategist should take a long look, serious at Mexico
According to the research, investors’ principle reasons to shift operations to Mexico are:
- lower cost wages;
- production closer to the point of consumption of goods;
- risk management (minimizes potential disruptions and cuts cost and also enables companies to carry less inventories);
- lower overall operating costs;
- tariff and tax incentives that result in competitive advantage; exchange rate;
- reduced freight transport time.
Some concerns exist
Concerns cited by the researchers related to Mexico business opportunities and their successful exploitation, relate to:
- freight/supply chain transparency;
- potential lack of strategic partners/suppliers in region;
- border crossing delays,
- sufficient infrastructure to handle projected growth;
- workforce readiness;
Key areas of concentration for improving the environment for Mexico business opportunities to improve exist in the need to:
- grow manufacturing industries such as aerospace and automotive, which goes hand in hand with future investment in multi-modal transport corridors;
- continue infrastructure development through building and modernizing highways, airports, railroads and maritime ports;
- resolve regulatory issues to executing import and export operations with greater speed and efficiency; foster public-private partnerships to strengthen collaboration in important infrastructure