August 27, 2013
Asia could become twice as important to Mexico as an export market over the next five years as the country strengthens trade ties with the fast-growing economies of the region, Mexican Economy Minister Ildefonso Guajardo said on Monday.
Latin America’s biggest exporter is working to diversify its trade to reduce its dependence on the U.S. market, which takes in more than three quarters of Mexico’s exports. For years a peripheral market for Mexico, Asia has been growing in importance, and Mexican President Enrique Peña Nieto has been at pains to bolster relations with China in particular since he took office at the start of December.
July 31, 2013
Smart Planet , 7/30/2013
Tequila makers are celebrating the long-awaited opening of China’s market after President Xi Jinping came here in May and, among other things, announced China would relax the restrictions that have prevented brands like Herradura, Patron, Don Julio, and José Cuervo from exporting there. The industry envisions positioning its tequila on China’s top shelf: competing for a share of that country’s fast-growing luxury lifestyle market.
Currently, 79 percent of Mexican tequila heads north to the United States, the world’s top consumer. As China gets wealthier, people are buying more liquor. Spirits sales volume rose 5 percent in 2011 to reach 4.4 billion liters in 2011, according to Euromonitor, a market research provider. And the trend towards pricier, higher quality products — “premiumization” — is happening across all categories, from traditional Chinese baijiu to Scotch whiskey.
July 19, 2013
For those who like volatility, there’s money to be made on the Mexican peso. It could rally on the hopes of a more robust future for Latin America’s second-biggest economy. Or it might get hammered by U.S. Federal Reserve policy moves. Maybe both will happen in the next six months.
While other regional economies are suffering from China’s slowing demand for commodities, Mexico is humming along. Factory exports to the United States are seen picking up and a series of economic reforms has investors seeing a brighter future.
July 3, 2013
The shale gas boom has done a lot to boost the US economy. It’s such a big deal you can see it from space. All that new natural gas has lowered energy costs, which has led analysts to wonder if it could help make America’s energy-heavy manufacturing businesses more competitive with countries that have low labor costs but over-burdened energy infrastructure. But there’s a lot standing in the way of that vision, including the potential for gas exports to affect the value of the dollar, and the observation that maybe energy costs aren’t such a big deal.
But where the US is faltering, Mexico is taking advantage of all that cheap natural gas to boost factories; last year, pipelines brought more natural gas across the border than ever before. Mexico is already successfully competing with places like China on labor prices, but its energy costs are lower, too. Combine that with its proximity to the United States and deep integration into the American supply chain, and you’ve got a recipe for export-oriented success. Pemex, the country’s state-owned oil company, is spending $3.3 billion to build a new, 750-mile pipeline from Los Ramones, Mexico, near the country’s industrial heartland, to Agua Dulce, near Texas’ shale oil fields.
July 3, 2013
Appliance Magazine, 7/3/2013
Manufacturing in Mexico will increasingly offer cost advantages over manufacturing in China and other major economies, according to new research by The Boston Consulting Group (BCG), which foresees manufacturing adding $20 billion to $60 billion in output to Mexico’s economy annually within the next five years.
The group said that, with the North America Free Trade Agreement (NAFTA), U.S. manufacturers of components for finished goods assembled in Mexico also stand to benefit. The group said Mexico’s improving competitive edge is driven by relatively low labor costs and shorter supply chains, which results from Mexico’s closer proximity to U.S. markets.
July 2, 2013
Financial Times, 7/1/2013
The US shale gas boom is shaping up to be an important competitive advantage for manufacturers – in Mexico. US natural gas exports to Mexico hit a record last year, helping hold down the country’s energy costs as its industry grew rapidly. Planned new pipelines that will enable further rapid growth in imports from the US will strengthen and lock in that advantage, and help to give Mexico a competitive edge over other emerging economies for as long as North American shale production remains strong.
China’s manufacturing labour costs overtook Mexico’s last year because of its high rates of wage inflation, and its energy costs are also significantly higher. By 2015, China’s total manufacturing costs will be about 95 per cent of US levels, with gas contributing about 4 percentage points of that, while Mexico’s will be just 89 per cent, with gas at just 1 percentage point, according to new research from the Boston Consulting Group. Mexico’s industrial output has been falling this year, but its lower costs and proximity to the US, which reduces transport costs and increases flexibility, will make it increasingly competitive as a manufacturing location, analysts say.
June 28, 2013
Mexico is beginning to beat China as a manufacturing base for many companies despite its higher crime rate, according to a new report from Boston Consulting Group. Mexico’s gain is a plus for the U.S. because Mexican factories use four times as many American-made components as Chinese factories do, says the consulting firm. Here are Mexico’s four key advantages:
1. Manufacturing wages, adjusted for Mexico’s superior worker productivity, are likely to be 30 percent lower than in China by 2015. China’s wages have soared. They were about one-quarter as high as Mexico’s in 2000 but are catching up rapidly and will be slightly higher by 2015. And labor productivity remains higher in Mexico, even though the gap is narrowing. The crossover point was 2012, when unit labor costs in China (i.e., wages adjusted for productivity) grew to equal those in Mexico. By 2015, Mexico will be around 29 percent less expensive.
June 28, 2013
The Wall Street Journal, 6/28/2013
Within five years, higher manufacturing exports due to a widening cost advantage over China and other major economies could add $20 billion to $60 billion in output to Mexico’s economy annually. And thanks to the North America Free Trade Agreement (NAFTA), U.S. manufacturers of components for everything from automobiles to computers assembled in Mexico also stand to benefit, according to new research by The Boston Consulting Group (BCG).
The key drivers of Mexico’s improving competitive edge are relatively low labor costs and shorter supply chains due to the country’s proximity to markets in the U.S. Another important advantage is that Mexico has 44 free-trade agreements — more than any other nation — allowing many of its exports to enter major economies with few or no duties.
June 20, 2013
Mexico wants China to loosen up and have a little tequila. Actually, lots of it. Since China President Xi Jinping and Mexico’s Enrique Pena Nieto broke a diplomatic and economic chill and agreed to boost trade, tequila producers have been gearing up to make the world’s most populous country their second-biggest market, after the margarita-loving United States.
The drink synonymous with Mexico already is available in more than 100 countries. But export of the alcoholic beverage to China has been limited by legal and sanitary restrictions. Chinese authorities changed their rules last week, deciding that the purest and best tequila, known as blue agave, has no detrimental health effects. That has opened the door for businesses in both countries to begin promoting and exploring ways to sell more tequila. With the purchasing power of 1.3 billion Chinese, tequila producers see a niche market, especially among the emerging upper class.