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 Business News | April 2007 
Exploring Mexico Export Opportunities
 Jan Norman - Orange County Register
| | Karen Zens, minister counselor for commercial affairs at the US Embassy in Mexico talks with business representatives fromAllergan, Classic Pacific, Gianna Rose, Safety Mate and other OC companies about business opportunities in Mexico. (Andy Templeton/OCR) |
When Orange County business owners consider exporting, their thoughts often travel halfway around the world.
Karen Zens, the U.S. Commerce Department's highest ranking trade official in Mexico, was in Newport Beach recently to meet with about 20 companies to remind them that our southern neighbor is one of the best markets for novice exporters.
It's close, has a growing economy, has the same time zones as the United States, honors intellectual property better than many nations, and receives most goods without tariffs, she said.
It was Zens' first trip to Orange County's U.S. Export Assistance Center, which encompasses the U.S. Commercial Service, Bureau of Industry and Security, Export-Import Bank and Small Business Administration's Office of International Trade
"It was a coup for her to come here. Too often Orange County gets passed over on trade issues when, in fact, we have some of the strongest and most vital companies doing business in Mexico," said Richard Swanson, director of the U.S. Commercial Service Newport Beach office.
Companies whose executives met with Zens included young companies like Irvine manufacturer Safetymate Inc. and corporations that already export to 60 countries like oil giant Conocophillips.
GENERAL OUTLOOK
The Mexican economy is stable although slowing slightly from 2006, Zens said. Gross domestic product is expected to grow 3.5 percent in 2007, compared to 4.8 percent last year. Inflation is projected at 4.1 percent, up a tick from 4.05 percent last year.
Mexico is our second largest export market behind Canada, buying $124 billion in U.S. products and services in 2006, Zens said. We also have huge investments in Mexico - $94 billion from 1994 to 2004 - six times greater than second place Spain.
BEST PROSPECTS
Some U.S. products are in greater demand than others, Zens said.
The best current opportunities are automotive parts and supplies, electronic components, energy, airport equipment, travel and tourism services, plastic materials and resins, telecommunications equipment, environmental products and services, low-income housing and prefabricated construction, safety and security equipment and services, hotel and restaurant equipment and education and training services.
How's the retail market, asked Steve Buckley, president of soap manufacturer Gianna Rose Atelier in Santa Ana.
"It is very price sensitive," Zens said. "There is a very high-end segment, but they just hop a plane to shop in the U.S."
On the other hand, services are booming, accounting for $30 billion in U.S. exports to Mexico.
Making the right business connections in a foreign country can be tricky. One of the offerings of the U.S. Commercial Service is setting up meetings between U.S. exporters and qualified companies in a foreign country. "We can do partner searches and background checks on Mexican companies," Zens said.
"If you're really interested in exporting to Mexico, you should visit in person; they want to meet you in person," she said.
POTENTIAL HAZARDS
U.S. exporters must be aware of Mexican business customs that can cause problems, Zens added. "They push for easy credit terms, and you must be careful about agreeing to them. They have difficulty saying no, so they might be friendly in a meeting but never order from you."
"Also, use a qualified interpreter. You want to make sure you are talking to the right person in a company, not just the person who speaks English," she said.
Mexico has the largest gap between its wealthiest and poorest residents, she said. "It's a developed country and undeveloped country at the same time. They have the newest buses and at the same time have old jitney buses that you have to close your eyes when you ride."
Teresa Chang, who represented a group of manufacturers, questioned safety in Mexico because business people reported being robbed by local police.
Police corruption has been a problem because police are underpaid and drug gangs are wealthy and violent, Zens acknowledged, "but I think the problems were worse in the past. The new (Calderón) government is concerned about it."
Mexico also needs fiscal reforms to build its middle class.
"The solution is to invest in and build its small and mid-sized companies," Zens said. "Small businesses are the engine of economic growth in the United States. That's what Mexico needs. But small companies are hampered by overregulation, lack of bank lending to small business and lack of a private equity investment."
Contact the writer: 714-796-7927 or jnorman@ocregister.com |
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