1. Mexico export overview
Mexico is the world’s 15th largest economy, according to the International Monetary Fund (IMF). World Bank analysts predict that its economy will be the world’s fifth largest by 2050.
Contact a Department for International Trade (DIT) Mexico export adviser for a free consultation if you are interested in exporting to Mexico.
In 2014 trade between the UK and Mexico was worth USD 32 billion. Many large UK companies operate in Mexico, including HSBC, GlaxoSmithKline, AstraZeneca, BAT and the Intercontinental Hotel Group.
Benefits for UK companies exporting to Mexico include:
- market about the same size as the whole of western Europe with a population of over 120 million
- Mexico and the EU have a free trade and a double taxation agreement
- largest economy in Latin America, after Brazil
Strengths of the Mexican market include:
- free trade access to the US market from Mexico under the North American Free Trade Agreement (NAFTA)
- first Latin American member of the Organisation for Economic Co-operation and Development (OECD)
- more free trade agreements than any other country – 11 agreements covering 44 countries with a potential market access of up to 60% of the world’s Gross Domestic Product (GDP)
2. Challenges doing business in Mexico
Challenges when doing business in or with Mexico include:
- open and competitive market, so be sure of your products unique selling points (USPs)
- takes time to build and maintain relationships with clients and distributors
- language barriers mean that interpreters may be required
- legal requirement to label products in Spanish
3. Growth potential
3.1 Economic growth
Mexico’s GDP per head is larger than the rest of the BRIC (Brazil, Russia, India and China) countries.
Mexico’s economy grew by 2.5% in 2015. 2.4% growth is expected in 2016. This is better than the rest of Latin America where the region is expected to contract by 0.4%. Mexico’s domestic market will be the main influence on its economy. Growth is expected in the services sector, specifically retail and wholesale trade .
The 3 most important sectors in terms of its GDP share are:
- manufacturing (16.7%)
- retail and sales (15.4%)
- real estate and housing services (11.9%)
3.2 Free trade agreements
In July 2000 the European Union (EU) and Mexico signed a free trade agreement known as the ‘Global Agreement’. The agreement helps EU goods gain preferential access to Mexico. It focuses on 3 main areas:
- commercial liberalisation
- political dialogue
NAFTA enables British companies to use Mexico as a low-cost manufacturing base with direct, duty free access to the United States.
4. UK and Mexico trade
British products have a significant presence in Mexico, although the UK’s market share in goods imports into Mexico has decreased overall in recent years. However, latest data shows UK exports in services have been gaining importance, with an increase of 20.95% in 2015.
Between 2013 and 2014, UK exports of goods and services to Mexico increased to £1.1 billion. The top exports to Mexico include:
- power generating machinery and equipment
- road vehicles
- medicinal and pharmaceutical products
- essential oils and perfume materials
- organic chemicals
- industrial and scientific machinery
- insurance and pension services
5. Opportunities for UK businesses in Mexico
Department for International Trade (DIT) provides free international export sales leads from its worldwide network. Search for export opportunities.
5.1 Advanced engineering
Mexico is a manufacturing powerhouse. It has huge annual growth in its vehicle and aerospace manufacturing sectors. Mexico is responsible for more than 60% of Latin America’s manufacturing exports and benefits hugely from its network of free trade agreements especially with the USA and Canada (NAFTA).
There are opportunities for British suppliers of:
- manufacturing technologies (machinery, tooling, instrumentation and control)
- automotive components
- aerospace components
- specialised alloys
- high precision machining
- castings, forgings and plastic injection mouldings
- high-tech engineering and design services
Contact Carlos.Botello@uk.org.mx for more information on the opportunities in the advanced engineering sector.
Total healthcare spend in 2014 was USD 90 billion. It’s growing at more than 8% year on year. Healthcare spend is at around 6.5% of GDP and is split 50/50 between the public and private sector. By 2017 it’s expected to reach USD 103.4 billion.
Mexico has an increasing elderly population. Government initiatives for the prevention and management of chronic diseases are being implemented. There is an improved and updated regulatory environment.
Some of the areas of opportunity for UK companies are:
- over the counter drugs
- generic and patented drugs
- healthcare equipment
Contact Marcela.Lopez@fco.gov.uk for more information on the opportunities in the healthcare sector.
Over 48% of Mexico’s population are middle class and in recent years the retail sector has grown faster than GDP.
Mexican consumers spend their money across a range of categories including:
- food, beverages and tobacco (33%)
- transport and communications (18.5%)
- education and entertainment (13.5%)
- housing and fuel (10%)
- personal care (9%)
- household items and services (6.5%)
- clothing and footwear (7%)
- healthcare (2.5%)
Contact firstname.lastname@example.org for more information on the opportunities in the retail sector.
Mexico spends about 5% of GDP on infrastructure.
It ranks 57 out of 140 countries in terms of infrastructure competitiveness according to the Global Competitiveness Report for 2015 to 2016.
A National Infrastructure Plan (NIP) has been set up which will invest £65 billion of public and private funding in:
- construction and modernisation of highways
- supplying new passenger trains
- expansion of the port of Veracruz
- airport improvements
The new Mexico City international airport, worth USD 13 billion, is Mexico’s largest infrastructure project to date.
UK companies ARUP and Foster + Partners have already won the contracts for project master plan and design of the terminal building. Currently the airport is at the ground preparatory stage. It’s expected that the Mexico City Airports Group will launch 40 public tenders in 2016.
There are opportunities in:
- alternative financing schemes such as Public Private Partnerships (PPPs)
- project and cost management
- master planning
- feasibility and demand studies
- structural design and engineering
- architectural design
- cargo handling services
- security, design and implementation of green/sustainable technologies
- specialised tier 2 / tier 3 services and equipment
Contact Fernando.Estandia@fco.gov.uk for more information on the opportunities in the infrastructure sector.
Oil and gas
After the sweeping energy reforms passed in December 2013, the Mexican oil and gas industry has opened up to private investment.
Onshore and offshore shallow water blocks in the Gulf of Mexico been awarded to several companies, including a consortium involving Premier Oil, a UK independent operator. Further interest from UK oil and gas companies is expected when licences to explore and produce in Mexico’s deepwater areas and PEMEX partnerships (‘farm-outs’) are auctioned.
Around half of Mexico’s prospective oil reserves lie in deep waters. Opportunities for UK expertise include (but are not limited to):
- project consultancy
- Front End Engineering Design (FEED)
- subsea and deepwater capabilities
- enhanced / improved oil recovery
- asset integrity management
There are also plenty of opportunities in midstream. The Federal Commission of Electricity is increasing pipeline infrastructure by releasing public tenders. A particular opportunity lies within a subsea pipeline project for transporting natural gas from Texas to Veracruz, Mexico.
Power and renewable energy
Energy reform aims to promote investment in clean energy and reduce fossil fuel dependency in electricity generation. 35% of power generation is expected to come from clean energies by 2024.
The government has created a market for clean energy certificates (CELs). Wholesale electricity users will be obliged to use 5% of their total consumption from clean energy sources. This will boost clean energy use for electricity generation, particularly in energy intensive industries.
Mexico’s first long term electricity tender resulted in contracts being granted to solar photovoltaic (PV) and wind projects. Mexico is currently developing a renewables subsector capabilities map and creating international research and innovation centres.
There are opportunities for UK companies with expertise in all clean energy technologies.
6. Start up considerations
If you are thinking of exporting to Mexico, an agent or a distributor can help.
The most common forms of operation in Mexico are:
- supply chain operations
- representative offices
- joint ventures
- shelter operations
- subcontracted manufacturing
- assistance from Mexican federal and state governments
Tax and legal obligations of business structures can differ.
Contact the Department for International Trade (DIT) team in Mexico for help in finding partners and distributors and tax and legal advisers.
7. Legal considerations
Competition reforms in Mexico created 2 new regulatory organisations. These are the:
- Commission for Economic Competition, which regulates general economic issues
- Institute of Telecommunications, which regulates telecommunications
A bilateral Investment Protection and Promotion Agreement (IPPA) has been signed by the UK and Mexico which aims to:
- ensure the same rights as domestic investors
- prevent the government selling assets without market value compensation (expropriation)
You should seek legal advice before entering into agreements in Mexico.
Contact the Department for International Trade (DIT) team in Mexico for help in tracing professional advisers.
7.1 Intellectual property
The Mexican Intellectual Property Institute (IMPI) regulates the use of patents, trademarks, advertisement and business names in Mexico. An independent intellectual property rights lawyer can help you to determine the best strategy for your company.
7.2 Standards and technical regulations
Certain products, goods, processes and services must comply with Mexico’s standards agency, Norma Oficial Mexicana (NOM), regulations before products can go on sale in Mexico. The main types of NOMs cover security, labelling and emergency.
Find out more about export restrictions on products into Mexico in the Market Access Database.
All suppliers into the healthcare sector must have local representation.
Products for Mexico’s healthcare market require a ‘Sanitary Registration’ issued by Comisión Federal Protección para la contra Riesgos Sanitarios (COFEPRIS). These products must have a Mexican company or individual responsible for them as the registration is issued in the name of the distributor. The main documents required for product registration are a:
- certificate of free sale issued by the NHS
- certificate of quality
- letter of appointment of distributor
These 3 documents must be in Spanish and translated by a legal translator. Technical information may be in English with a summary in Spanish.
Mexico’s labelling requirements are often different from the EU’s. Special labels may need to be attached to products going to Mexico even if the products are already labelled in Spanish.
NOM-50 is the Mexican standard which refers to the commercial information a foreign company has to provide. The label must include a description of the goods and other information including:
- importer name
- exporter name
- declaration in Spanish that the goods have been made in the UK (Hecho en Reino Unido)
- number of items
- importer’s ‘Mexican Registro Federal de Contribuyentes’ (tax identification number)
- exporter’s tax ID
- whether an instruction manual is needed
- expiry date, when necessary
8. Tax and customs considerations
8.1 Income tax
Non-resident individuals are taxed at a rate of between 3% and 33%, depending on their level of income.
VAT, known as IVA in Mexico, is levied on most EU goods at 16%.
Goods may only pass to and from Mexico at authorised locations. Goods must be presented to the customs authorities together with the relevant documentation.
There is a 0.8% customs processing fee charged by Mexican customs. This is based on the cost, insurance and freight (CIF) value of the goods.
If you need to ship goods over the value of USD 1,000, you need to use a customs broker to clear the merchandise through customs.
You can find more about import tariffs in the Market Access Database.
The documents needed for the import and export of goods to and from Mexico are:
- commercial invoices
- Certificate of Origin
9. Business behaviour
English is widely spoken in Mexico but there are still many who don’t speak it. Having a basic knowledge of Spanish will help you make a good impression.
Business attire is more formal in Mexico than in the US or Europe.
You need to use professional titles when greeting someone. If they don’t have titles you should call them Señor (Mr), Señora (Mrs) or Señorita (Miss) – followed by their surname.
10. Entry requirements
Mexico’s consulate in the UK provides information on Mexican visa requirements.
10.1 Travel advice
If you’re travelling to Mexico for business, check the Foreign and Commonwealth Office (FCO) travel advice page beforehand.
Contact the Department for International Trade (DIT) team in Mexico for more information and advice on opportunities for doing business in Mexico.