When you hear the word investment, you automatically think of setting up a company, buying shares, or the purchase of a property; all which have heavy returns on investments when done correctly. However, because of globalization and increased logistics and operational efficiency, international trade is becoming one of the better investment options in Latin America. Especially in Mexico, where this investment opportunity is bringing in big money for foreign investors.
Mexico boasts many advantages with respect to international trade, including the following:
- Free Trade Agreements with 45 countries
- Strategic location
- Bridge between North America and Latin America
- Access to two oceans
- Huge consumer market; A population of 130 million with a growing middle class
- Large and educated labor market (one of the key reasons for success in the automotive industry)
- Trading competitive advantages – low number of tariffs, customs transparency, and openness to foreign participation
- Modernization of Mexican Customs
For foreigners looking at investing in Latin America through trade, whether through importation or exportation, Mexico has proven time and time again to be a great strategic choice.
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Advice from our International Trade Lawyer – Export Products from Mexico?
Mexico has great engineering capabilities which make vehicles their biggest export. In the last two decades, Mexico has grown to be a key player in automotive manufacturing, with many international companies choosing to relocate their manufacturing plants to there. These companies are taking advantage of the large skilled market, low start-up costs and numerous free-trade agreements.
A favorable climate means Mexico has an abundance of fruit and vegetables available all year round. A western region in Mexico, Michoacán, produces huge amounts of avocado; these avocados are exported all around the world, with the USA receiving the biggest proportion of the avocados. Some estimate that 8/10 avocados that are consumed in the US come from Michoacán. Mexican avocado exports are expected to reach over 1 million metric tons in the 2016/2017 marketing year.
Import Products into Mexico
As mentioned previously, the growing consumer market has been encouraging foreigner investors to import to Mexico.
Mexico has a strong beer culture, partly due to a climate that encourages socializing. One would think that due to the wide range of beers available, the market would be tough to penetrate. However, Biz Latin Hub had a client from the UK who was interested in importing artisanal beer into Mexico. Aftermarket studies, and with the help of our international trade lawyers, the company successfully entered the market and is currently experiencing steady growth in Mexico City.
Another alcohol that has gained traction in Mexico is wine. The importation of wine into Mexico is another area that presents great opportunities for investors. Mexico is not world-famous for its wine production, however, there is a large market opportunity. Chilean and Argentinian wines have been enjoyed in Mexico for many years due to proximity and quality. Mexico’s free-trade agreement with the EU means that there are great opportunities for famous wine-producing countries such as France and Italy to import into Mexico. The same can be said for up-and-coming wine producing countries such as Australia and New Zealand.
How to Successfully Export and Import in Mexico
Despite ranking very well in a 2014 study by the World Economic Forum called ´The Global Enabling Trade Report´, there are some factors individuals or companies should consider before investing in Mexico through importation or exportation. For example, Mexico uses the Harmonized System Tariff Schedule, a system which places products in a certain commodity group’s base on their content. This is an effective system but can be complicated to understand. In addition, in Mexico, it is required by law to hire the services of an importation agent to handle the customs clearance of a product.
How the Biz Latin Hub can help?
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean. We have offices in 17 key cities around the region, making us ideal partners to support multi-jurisdiction market entries and cross-border operations.
Our portfolio includes accounting & taxation, company formation, due diligence, hiring & PEO, and corporate legal services.
Contact us today to find out more about how we can assist you.
If you found this article on financial regulatory compliance in Mexico of interest, you may want to check out the rest of our coverage of this massive North American economy. Or read about our team and expert authors.