Exporting guide to Mexico
Steady export growth from UK
Since 2010, UK exports to Mexico have grown at a steady 7% annually and bilateral trade has been increasing year on year since 2014 (ONS, 2020).
Mexico is a strategic gateway, to both the US and Canada and the rest of Latin America. The US-Mexico-Canada Agreement (USMCA) entered into force on July 1st, 2020. Replacing NAFTA, this new agreement widens Mexico’s corridor of commerce with the largest consumer market in the world.
Large and youthful market
Mexico's population of 126 million is the word's 10th largest. Its capital Mexico City is home to 21.3 million inhabitants, and is the second largest metropolitan area in the Western hemisphere. Mexico is a trillion-dollar economy, enjoying stable economic conditions. It's a young nation, with 50% of the population under 28 years old (World Bank, 2020; World Population Review, 2020).
Mexico: at a glance
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Opportunities for exporters
There are opportunities for UK companies across a broad range of industries. Our trade advisers in Mexico have identified particular opportunities for UK businesses in the following sectors:
Automotive and advanced engineering
Mexico’s major manufacturing industries include automotive, aerospace, domestic appliances, medical devices and electronics. Machinery is one of the UK’s biggest categories of exports to Mexico. Over 80% of machine tools and manufacturing equipment is imported from other countries. Industry 4.0. is fast growing and in demand across sub-sectors such as: digitalisation of industrial processes, robotics, smart technologies and clean tech.
Mexico is a leading producer of heavy and light vehicles and autoparts and a main supplier of these to the US. It produces 4 million cars annually, is the 6th largest automotive producer in the world, and ranks 1st in Latin America. This represents opportunities for UK companies within the supply chain in Mexico, as there is appetite for innovating machinery and industrial solutions (AMIA, Mexican Association of the Automotive Industry, 2020).
US-Mexico-Canada Agreement (USMCA)
USMCA is set to increase investments and manufacturing in North America's automotive sector. The growing shift to low carbon vehicles will also open local opportunities for design and manufacture of zero emission vehicles, and components for light and heavy vehicles (e-motor and batteries, lightweight materials and structures, low-carbon propulsion). The UK is also well placed to be a partner for Mexican tiers 1 and 2 to develop new products.
Food and drink
Dynamic market for spirits and other alcohol
Mexico is the top market in Latin America and the Caribbean for whisky - last year exports reached £154.8 million. The alcoholic beverage industry is one of the most dynamic segments in the market, supported by domestic sales and high external demand. The key success factors for this category are a high level of consumption and price inelasticity.
Demand for meat
Mexico is the 5th biggest global consumer of meat. It ranks 8th globally for pork meat consumption and 7th for chicken, and imports make up 30% and 20% of national consumption respectively (Mexico Council of Meat, 2020). Bilateral negotiations between UK and Mexico on the Export Health Certificate are on track to secure market access.
Healthy and free-from
A slow but significant rise in health-consciousness is supporting the sales of the healthy living and free-from category. Consumers with high income search for free from sugar, gluten and dairy, and for protein and food supplements that support a nutritional lifestyle. Additionally, there is a rise in demand for herbal teas with clear health benefits.
International degree programmes
Over 30,000 Mexican students choose to study abroad every year, seeking international degree programmes. The UK is the second most popular English-speaking destination for Mexican students, with more than 2,000 students enrolled in different institutions each school year. In terms of trans national education (TNE), Mexico has the highest volume by student numbers of all non-English speaking countries in the Americas.
Strong demand for ELT
It has been estimated that the number of outbound English Language Teaching (ELT) students increased by 35% during 2018-2019, making Mexico the 18th largest market for ELT in the world (ICEF monitor, 2020). The Mexican economy is internationalising, and many Mexicans view English language acquisition as an investment that is positively correlated with occupational status and household income.
Edtech increasingly attractive
The educational technology (edtech) sector has become an attractive opportunity for overseas companies. Opportunities exist for UK companies in science, technology, engineering, arts and maths content learning platforms, and many distance-learning tools that are key to reinforcing teaching methods. There are over 25 million students at basic education level distributed across over 430,000 public and private education institutions (OECD, 2020).
Life sciences and healthcare
Demand for medical devices
Imports make up nearly 90% of the medical devices sold in Mexico. Mexico imports medical devices from all over the world, with the most coming from the USA, Asia and Europe. There is demand in areas of preventative care, diagnostic imaging, dental products, patient aids, orthopaedics, and prosthetics.
The pharmaceutical industry is a priority sector for the country, representing on average 1.5% of national GDP and 7.2% of manufacturing GDP (OECD, 2020). Mexico’s pharmaceutical industry is worth approximately USD $22.5 billion in 2020 and there are many opportunities for UK companies to supply products that generate favourable, innovative, and cost-effective results.
Private healthcare opportunities
Mexico ranks among the Latin American nations with the highest private healthcare spending, with out-of-pocket expenses accounting for nearly 41% of total spending. The consumption value of drugs and medicines is expected to increase by more than 30% by 2022, from approximately USD $14 billion reported in 2018.
Sectoral growth and customer demand
Mexico has a fast-growing electricity sector, with demand increasing year on year since 2000. Its energy matrix is diversifying. Solar and wind energy installations have grown in the last 10 years significantly. In parallel, hydro-power, geothermal and nuclear will be reinforced, while natural gas will remain as the transitional source to power Mexico’s energy needs.
UK innovation needed
New technology energy solutions will become a critical factor on the Mexican energy market. Existing facilities and installations will need operations and maintenance services, a niche that will have to be reinforced in the coming years through remote technologies and other solutions such as digitalisation, tracking devices, energy storage and smart grids.
Supply chain gaps
Existing gaps in the Mexican supply chain match the UK’s core areas of expertise such as engineering services, asset integrity and subsea technologies. There is a growing realisation that significant change is required in local supply chains to meet the needs of the new client pool, looking to maximise economic recovery through safe, environmentally compliant operations.
Financial and professional services
Mexico has one of the largest fintech ecosystems in Latin America, with a favourable regulatory environment. The country has the first comprehensive fintech law in the world, which has laid the foundations for a more inclusive ecosystem, as over 50% of Mexican adults remain unbanked. Mexico is part of the world’s largest remittances corridor, amounting to USD $36 billion in 2019 (World Bank, 2020).
Sustainable finance commitment
Although still a small percentage of the main financing offer, green finance already exists in Mexico and it is growing at a steady pace. Commitment to sustainable finance is strong in public and private sectors. Mexico has a healthy record of green, sustainable and social bond issuance.
Retirement savings reform
Recently proposed reforms to the Mexican Savings for Retirement System have been announced with the aim of increasing the pensions received by workers when they retire. As a result, pension funds will have greater capacity to invest with overseas asset managers. The current available market is around USD $30 billion.