1. Business Opportunities in Mexico Business Opportunities in Mexico OSAC/CS Seminar July 12, 2011 Ann Bacher Senior Commercial Officer, U.S. Embassy, Mexico City

2. U.S and Foreign Commercial Service/International Trade Administration/USDOC  Over 75 Countries – Commercial Section of Embassy or Consulate  US Export Assistance Centers – 110 offices  Represent Smaller Export Affairs Agencies – USDA, EXIM Bank, OPIC, SBA  Last year – 12,000 international buyers to 36 certified trade shows in the US resulting in $800billion of trade

3. U.S. Commercial Service in Mexico The U.S. Commercial Service is an agency of the U.S. Department of Commerce Our mission is primarily to help small and medium size, export- ready companies to enter Mexico and to protect U.S. business interests abroad In Mexico we have four offices. Globally, we have a network of 100+ offices in the U.S. and 150 world-wide Tijuana Guadalajara Monterrey Mexico City 3

4. Regional Opportunities: Mexico City  Mexico City, with a population of 20 million, is one of the largest cities in the hemisphere and the world.  It is both the Political Capital and Financial Center of Mexico.  It is also a manufacturing and distribution powerhouse.  Centrally located near other major industrial areas including Toluca, Puebla, and Queretaro. 4

5. Regional Opportunities: Guadalajara “Mexico’s Silicon Valley”  Size: Second largest market in Mexico  Business Culture: Bilingual, open to U.S. goods and services  Multinational Investors: GE, IBM, Intel, HP, Flextronics, Jabil, Oracle  Logistics: Major distribution center  Major Industries: Electronics, industrial process controls, packaging, agribusiness and food processing equipment  Largest Exposition Center in Latin America: Regional shows  Other Activities: Host of Pan-American Games, October 2011 5

6. Regional Opportunities: Monterrey Mexico’s Industrial Heartland  Strategic location in NAFTA corridor  11% of Mexico’s total manufacturing output  Over 1800 foreign companies  Key industries: automotive, household appliances, electronic equipment, packaging, software, specialized medical services, and biotechnology.  Pro business environment with stable workforce 6

7. Regional Opportunities: Tijuana, Baja California Main manufacturing industries in Tijuana: Medical, Electronics and Automotive. Sub sectors: Plastics (injection molding, blow molding, thermal molding, extrusion), Metal-Mechanic and Packaging. Manufacturing companies in the city: more than 500 in Tijuana (State has approximately 900+) Tijuana Manufacturing workforce: 160,000 employees. Other areas of opportunity for U.S. Exporters: food and beverage, IT, telecomm, construction, medical tourism, energy. Business culture: ease of doing business and affinity to working with American suppliers- bicultural and bilingual businesspeople. 7

8. Why Mexico?  Location / Access to Goods/Services/Market in U.S.  Size, Diversify, and Vast Market  Shared Culture: Western, Hispanic  Manufacturing base in various sectors  Stronger legal protections  Politically stable  Macroeconomic stability 8

9. U.S. – Mexico Relationship The North American Leaders Summit “A new era of cooperation and partnership” “Shared responsibility” in the drug wars  Narco Violence  Immigration  Environmental Issues  Commercial 9

10. Safety & Security in Mexico: A Changing Environment  The changing security environment in Mexico presents challenges for U.S. companies  Border cities are particularly vulnerable, such as Nuevo Laredo, Juarez, Reynosa, Matamoros, and Tijuana  Businesses in Mexico are investing more in security for their personnel, facilities  Visitors need to use common sense and be aware  State Department Website for Travel Advisories: http://travel.state.gov/travel  American Chamber Survey, The Impact of Security in Mexico on the Private Sector http://www.amcham.org.mx/CWT/EXTERNAL/WCPAGES/Committees/Se curity.aspx http://www.amcham.org.mx/CWT/EXTERNAL/WCPAGES/Committees/Se curity.aspx 10

11.  Mexico is the United States’ 3 rd largest trading partner  Mexico is the 2 nd destination of all U.S. exports  Mexico accounts for roughly 1/8 of all U.S. exports  26 American states depend on Mexico as their first or second destination for exports  One billion/day in two way trade Mexico - U.S. Trade 11

12. The Impact of NAFTA  World’s largest free trade area: 455.4 million people; $16.9 trillion GDP  No tariffs on U.S. exports to Mexico (except current dispute)  It clarifies and simplifies rules of trade  Institution of Dispute Resolution Process -Trucking is Major Issue  Trade has grown faster than the infrastructure  U.S.-Mexico trade increased 347%: from $88 billion in 1993 to $393 billion in 2010  Mutual Recognition Agreements for testing and certification in some sectors 12

13. Best Prospects for U.S. Exporters Agribusiness Sector Airport and Ground Support Equipment Automotive Parts and SuppliesEducation and Training ServicesEnergy SectorEnvironmental SectorFranchising SectorHousing and ConstructionIT HealthPackaging EquipmentPlastics/ResinsSecurity and Safety EquipmentTechnology Transportation and Infrastructure Equipment 13

14. Automotive Parts and Supplies  Market size in 2010: 71 Billion dollars  U.S. has 24 percent of the market share (16.9 Billion dollars)  General Motors has invested 4.1B in manufacturing facilities in Mexico in past four years  Ford and Chrysler also investing heavily in Mexico  Mexico produces more than two million cars per year. (79 percent for export market, mostly to U.S.)  PAACE Automechanika Mexico, July 13-15, Mexico City, Dept. of Commerce certified trade show 14

15. Aerospace & Aviation  Market size in 2010: Estimated imports over USD $3 billion, exports $4.5 billion  Mexico has become the fifth largest supplier of aerospace products in the European Union and the eighth largest supplier for the U.S. market  Currently over 200 manufacturing facilities and growing (80% manufacturing, 10% maintenance and repair, 10% engineering and design)  Industry clusters: Monterrey, Chihuahua, Queretaro, Mexicali, and Empalme  All major aerospace OEM’s have presence in Mexico, but many are increasing their presence within these manufacturing clusters  AeroExpo 2011, April 6-9, Toluca International Airport 15

16. Energy  Market size in 2010: 10.8 Billion dollars  Oil and gas 6.4 B  Electric power and renewable: 4.4 B  Energy production/infrastructure huge priority of PEMEX, CFE state run energy companies (23 B budget in 2011 for new infrastructure projects/maintenance)  Several upcoming opportunities in natural gas, oil exploration, refineries, electric power generation, and renewable energy (See 2011 Country Commercial Guide for more information)  2011 Petroleum Exhibition and Conference of Mexico (PECOM) July 19-21 in Villahermosa, Dept. of Commerce certified trade show 16

17. Renewable Energy  The Government of Mexico’s Renewable Energy goal is, by Dec. 2013, to develop and utilize 3.600 mW of renewable energy, mainly driven by the wind and mini-hydraulic sectors.  SENER plans to investment USD92 million to reach this goal.  The USG’s Renewable Energy and Energy Efficiency Export Initiative covers export in the following sectors: WindSolar GeothermalBiomass HydropowerEnergy Efficiency

18. Packaging  Market size in 2010: 664 million dollars  18 percent of market from United States  Opportunities include:  Cardboard and paper, metal, glass, plastic and wood packaging sectors  Food processing, pharmaceutical, and cosmetics/personal care products are the primary sectors for packaging sector  Expo Pack 2011, June 21-24, Mexico City 18

19. Security  Market size in 2010: 23.7 Billion dollars  Imports from the United States: 6.7 Billion dollars  Govt procurement opportunities through Mexican Defense Dept. and Navy (local partner strongly recommended)  Opportunities in:  Armored solutions, electronic devices for mobile phones, CCTV, biometric solutions, access control, communication systems, tactical equipment, alarms, among others  2011 Expo Seguridad, April 12-14, Mexico City. Dept. of Commerce certified trade show 19

20. Technology  Market size in 2010: 37 Billion dollars  33 million people (29.4 percent of population) with internet access (20 percent increase from 2009), almost all of it broadband.  Telecom dominated by Telmex (90% of fixed lines) and Telcel (80% of cell phones). Both companies owned by Carlos Slim.  Areas of opportunity include: security solutions, software apps, wireless apps, social networking, cloud computing, business intelligence software, IT healthcare solutions, Green IT solutions  B 3 Forum, February 22-24, Mexico City. 20

21. Travel and Tourism  Market size in 2010: 14.3 million visitors  Spent an estimated 9 billion dollars in 2010.  89 percent travel to U.S. via automobile, 11 percent via air.  Popular destinations: Texas, California, New York, Florida, Las Vegas  Visit USA Week by Expo Vacaciones, Mexico City, Feb. 22-23  Feria Internacional de Turismo de las Americas (FITA), Mexico City, Sept. 22-25 21

22. National Infrastructure Plan  Created by President Calderon in 2007, to stimulate economic growth and jobs creations – originally 300 projects valued at USD $250 billion  Of the 68 projects currently active, 38 have been identified by the Commercial Service as viable for U.S. companies.  Areas of opportunity include: Highways, telecommunications, water treatment and drainage control, power generation, airport and marine port expansions.  Local partners key to participating in bids and winning service contracts! 22

23. Market Entry Strategies  The best strategy to enter the Mexican market is to find a local representative or distributor. – With this, buyers feel secure that initial training, spare parts and service will be provided.  Due to regional concentration throughout Mexico, representation locally will yield better results than a single, nation-wide distributor.  Price is important, but not necessarily the deciding factor.  Be prepared to provide brochures, catalogs, and printed materials in Spanish. Keep websites international-user- friendly. 23

24. Financing  Expect to negotiate on payment terms. Consider full spectrum of options. Financing options important.  Export-Import Bank finances exports through various term loan, guarantee and insurance programs.  Small Business Administration  Overseas Private Investment Corp (OPIC)  Works through commercial banks in the U.S. and Mexico. 24

25. Mexican Business Culture  Indirectness - difficulty in saying “no”  Expect to negotiate on payment terms. Consider full spectrum of options. Financing options important  Follow up quickly with your Mexican partner – there is abundant international competition  Use a qualified interpreter if needed  Patience pays off  Personal relationships valued 25

26. Outreach  Trade Missions –Green Week, Americas Business, Tampa FL, Vera Cruz Port Mission, COP 16 Green Solutions, Trade Winds 2011, Womens Mission, PAACE Automechanica Mexico 2011, PECOM 2011, Security Trade Mission, Aerospace Supplier Trade Mission  International Buyers Program –InfoComm 2011, The Cable Show, Offshore Technology Conference, Waste Expo, Pow-Wow Show, NRA Restaurant, hoter-Motel Show, High Point Market-Spring, ISC West 20111, National Assn Broadcasters, Con EXPO-CON AGG, International CTIA Wireless Convention, International Hospitality Week, Internationla Home and Housewares, Graphics of the Americas, MAGIC Market Place – Winter, American International Toy Fair, AAIW 2011  Local Certified Shows –Plastimagen 2011, Expo Pack 2011, Expo Construccion 2011, MEXPORT 2011, AWS Weldmex-Fabtech-Metalform, Expo Seguridad 2011, AeroExpo 2011, Expo Finanzas 2011, TECMA Machine Tools and Equipment, Expo Manufactura, ExpoTech 2011, B3 Forum(ExpoComm 2011) 26

27. In 2010, Commercial Service Mexico helped U.S. companies secure 416 distinct export sales worth over $1.6 billion in bookable business for American companies, including small and medium size firms, for the last fiscal year. Export Successes 27

28. Export Successes Maryland manufacturer of fasteners and hose clamps for industrial irrigation, plumbing, agricultural and beverage industries  Participated in Gold Key Service in Mexico  CS assistance contributed to $6,000 sale. Illinois manufacturers: Popcorn production and concession equipment  Commercial Service led a delegation of 175 Mexican buyers to the NRA show in Chicago.  As a result, $300,000 in popcorn machines and equipment was purchased by the largest movie theater company in Mexico. AND, Industrial molds and Electrical Discharge Machining (EDM)  Commercial Service helped company to collect a $60,000 payment, after a Mexican firm stopped payment on an industrial mold.

29. Export Successes Maryland manufacturer of evaporative cooling, thermal storage and heat transfer equipment  Commercial Service counseled Mexican company on product line.  CS Trade Specialist provided information on the advantages of the U.S. product and helped the company find a representative in Mexico.  As a result, Mexican company bought cooling tower valued at $18,000. Pennsylvania-based manufacturer of storage systems, wire shelving, and carts used in commercial, food service, consumer and healthcare applications.  Commercial Service led a delegation of 57 Mexican buyers to the National Restaurant Association (NRA) Show in 2008.  Mexico’s largest restaurant equipment company made a purchase $10,300.

30. You too can be successful in Mexico! Muchas gracias! www.export.gov http://www.buyusa.gov/mexico/en 30