MEXICO：Great Opportunity for Foreign Investment in All Productive Sectors

AMBASSADOR: Mexico and China enjoy a multidimensional, dynamic and very complex relationship that has been strengthened in the last years by the Comprehensive Strategic Partnership agreed by both countries in 2013. There is no question that, before the COVID19 pandemic, the bilateral relation was at its peak with a fluid political dialogue at various levels, quite intense cultural, touristic and academic exchanges, many technical cooperation projects and a continuously growing trade and investment relationship. Paradoxically, the sanitary crisis has brought our two nations even closer together, deepening our well developed ties.

In 2020, political dialogue at the highest level has advanced steadily by means of phone conversations between President Andrés Manuel López Obrador and President Xi Jinping and between Minister of Foreign Affairs, Marcelo Ebrard, and Minister of Foreign Affairs and State Councilor, Wang Yi, who discussed collaboration strategies to mitigate and control the COVID19 pandemic and to keep the good level of exchanges. 

Additionally, three high level meetings took place in 2020. First, the meeting on Political Consultations Mechanism to review the bilateral agenda and determine the next steps to further deepen our collaboration in the context of the challenges posed by COVID19, among other topics. Secondly, the meeting of the Consultation Mechanism on Multilateral Issues to review our common interests in international organizations and on global governance. And, third, the 8th Meeting of the High Level Group on Economic Matters (GAN) between the Ministry of Economy of Mexico and the Ministry of Commerce of China.

From the commercial point of view, 2020 has been a challenging but also a gratifying year. In 2019, the commercial exchanges between China and Mexico reached $95 billion USD and despite the COVID19 pandemic, it is expected that our bilateral trade for 2020 will be of about $75 billion USD, which proves the resilience of our integrated market through robust value chains of raw materials, electric and electro mechanic components for home appliances, the automotive industry and technology information sector, among others. 

In April, we witnessed the first shipments of Mexican bananas to China and in October a protocol to export Mexican sorghum to China was signed at Ministerial level. Moreover, investment is also increasing. By August 2020, more than 2,100 Chinese companies were registered in Mexico including big names like DiDi, Huawei, Lenovo, TrinaSolar and ZTE, among others. In the past couple of years, the quantity and quality of the investment has also increased with more research and development conducted in collaboration with Mexican universities.

Furthermore, on the economic promotion strategy, one of the first activities held this year in Mexico was the celebration of the "China Day", carried out in January by the Ministry of Economy and the Ministry of Foreign Affairs, with the aim of strengthening economic ties and providing practical information on business opportunities to facilitate access to the vast Chinese market, as well as to attract more investment to Mexico.

Another aspect we should also highlight is the collaboration of China with all countries in Latin American and the Caribbean, which this and next year is being conducted under Mexico’s Pro Tempore Presidency of the Community of Latin American and Caribbean States (CELAC). In the last few months, China and the CELAC countries hosted several events like a forum on COVID19 mitigation strategies and the Second Forum on Science, Technology and Innovation. 

This quick review of the current situation of the bilateral bonds clearly shows a path of better understanding, more integration and further collaboration in a wide range of areas that benefit our countries and our peoples. I am confident that this trend will continue way beyond the celebration of the 50th anniversary of the establishment of diplomatic relations between China and Mexico that will take place in 2022.

AMBASSADOR: Generally speaking, there are five key factors that make Mexico a successful foreign direct investment attraction pole: population, strategic geographic location, specialized supplier hubs for high tech components, a relevant cluster of universities and a dynamic network of free trade agreements.

Mexico is the tenth most populated country in the world, with an estimated population of 125 million inhabitants, most of them young people. This demographic bonus is a powerful source of economic growth as well as the core of a robust domestic market. In this regard, it is important to know that 75% of Mexico’s population (around 95 million people) is in the working age bracket and 45% is part of the economically active population. This provides a wide margin for companies searching for qualified labor. 

The geostrategic location of the country is also a great advantage for competitiveness and logistics. Mexico is the natural link between North America and Latin American and the Caribbean. Its 117 seaports and 58 international airports well connect Mexico with all the countries of the Pacific Basin on one side and with Europe and Africa through the Atlantic side.

Furthermore, Mexico has a vast array of free trade agreements (13 in total) with 50 countries that serve as a platform to reach 1.36 billion consumers worldwide in North America, Latin America, Asia and Europe.

For example, the recently modernized free trade agreement in North America, T-MEC (USMCA/CUSMA), provides more precise rules, strengthens regional business integration and includes sectors that weren’t regulated before like clean energies, e-commerce and financial technologies. 

Another good example is the modernization of the Free Trade Agreement between Mexico and the European Union (TLCUEM) that incorporates new commercial sectors such as energy and raw materials, sustainable development, SMEs, transparency and anti-corruption.

In addition to the aforementioned treaties, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in force since 2019 among 11 countries in the Asia-Pacific region (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) and the Pacific Alliance composed by Colombia, Chile, Mexico and Peru expands the global reach of products manufactured in Mexico, allows access to key global value chains and provides additional incentives for foreign investment.

Furthermore, the presence of networks of specialized clusters of high tech component suppliers and higher education and technical universities contribute to Mexico’s competitiveness and make my country an optimal destination for foreign investments in many sectors like telecom, automotive and aerospace sectors, creative industries, construction and medical equipment, to name a few.

AMBASSADOR: Mexico is a favorable destination for foreign investment and has strengthened its institutional framework to favor new associations. This has facilitated a continuous flow of foreign investment in the country, and Chinese investment is no exception to this trend. According to Mexico’s Ministry of Economy, total foreign direct investment (FDI) in 2019 was around 33 billion USD, which places the country in the 14th position among the top 20 FDI recipient economies in 2019 according to UNCTAD’s World Investment Report 2020.

Several Chinese companies have found in Mexico the appropriate place to achieve their business objectives, including in sectors such as automobiles and auto parts, banking, energy, infrastructure, mining and telecommunications. I highlight the participation of the company China Communications Construction Company Ltd, which this year was declared the winner of a public bid process for the construction of the phase 1 of the Mayan Railroad, one of the major infrastructure projects of the Government of Mexico at present.

In addition to the above, I state that the entry into force of the USMCA, on July 1st of this year, has strengthened the interest of Chinese companies to invest in Mexico. In this way, Chinese companies can propose their entry strategies to the North American market from Mexico with certainty and under a state-of-the-art and well-regulated legal framework that allows a reconfiguration of value chains from a global perspective and with competitiveness criteria.

The USMCA strengthens the industrial integration of North America and for this it requires more investments, machinery and equipment, technologies, best practices and experience. Chinese companies have great capacity to integrate into these processes, so the USMCA opens up new opportunities to establish themselves in Mexico, generating jobs and contributing to the local and national development of the country. I’m sure that Chinese investment will continue flowing in the following months.

AMBASSADOR: All productive sectors constitute a great opportunity for foreign investment. Specifically, I highlight that the National Agreement on Investment in Private Sector Infrastructure, presented by the President of Mexico on November 26th, 2019, opened a series of opportunities in attractive sectors such as transportation, telecommunications, land routes, water treatment and sanitation and tourism infrastructure, in addition to the many opportunities the Mexican Economy provides in advanced manufacturing sectors, such as automotive industry, the aerospace sector, electronics and domestic appliances, electric mobility, pharma and medical equipment, transport and logistics, among others.

As can be seen, the investment opportunities are very wide, however, I consider that the high-tech manufacturing sector could be one of the most attractive in view of its greater contribution of added value. 

Recognizing the economic strengths of China and the enormous experience in the development of companies that trade through electronic means, there are also investment possibilities in this sector for its development in Mexico, which would require improving the existing logistics and distribution systems, as well as the creation of new ITC interfaces for connecting with consumers.

AMBASSADOR: The Ministry of Foreign Affairs has outlined three specific axes to deepen economic relations with China, promoting economic diplomacy, foreign investment and foreign trade. In the case of economic diplomacy, it seeks to take advantage of the diplomatic capacity of Mexico through its Embassy and Consulates in this country to promote national development interests and objectives by leveraging national economic engines with global partners. To promote foreign investment, we will continue to work hard to consolidate a network of strategic contacts with the purpose of increasing Chinese investment flows in priority economic sectors for national development. Regarding foreign trade, work will continue to increase the presence of Mexican companies in relevant forums and fairs -like CIIE- for the internationalization of their products and services, for which it is essential to continue working closely with the private sector, while providing support and guidance to companies.

In the specific case of investments, dialogue between national and local authorities in Mexico has been facilitated through the Embassy and Consulates in China, which allows potential investors to know in depth the incentives offered by each region of the country as well as tailor-made solutions according to the needs of each type of investment.

The doors of the Embassy and Consulates of Mexico in China are open to provide the support that potential investors require to facilitate and ensure a quick and successful landing in Mexico where they will join an interesting network of foreign companies that are successfully currently operating in the country.