Economic Data
(in U.S. dollars, 1998 figures)
Total GDP (in U.S.$): purchasing power parity: $694.3 billion (1997)
GDP Growth: 7.3% (1997)
Per Capita GDP (in US$): purchasing power parity: $7,700 (1997)
Inflation: 15.7% (1997)
Unemployment Rate: 3.7% (1997 est.) urban, plus considerable underemployment.
Trade Balance (in U.S.$): 600 million surplus
Trade with RI: Mexico is Rhode Island’s third largest export destination, with $68 million in exports in 1998.
Exports (U.S.$): $110.4 billion, includes crude oil, oil products, coffee, silver, engines, motor vehicles, cotton, consumer electronics. Trading partners: U.S. 85%, Canada 2.1%, Japan 1%, Spain 1%, Chile 1%, Brazil 1% (1997)
Imports (U.S.$): $109.8 billion, includes metal-working machines, steel mill products, agricultural machinery, electrical equipment, car parts for assembly, repair parts for motor vehicles, aircraft, and aircraft parts. Trading partners: U.S. 74.8%, Japan 4.1%, Germany 3.5%, Canada 1.8%, South Korea 1.4%, Italy 1.2%, France 1.1% (1997)
Best Prospects for Export: Automotive parts, supply and services, telecommunications equipment, franchising, building materials, computers and peripherals, and pollution control equipment.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
Like the telecommunications industry itself, Schroff Inc. is moving quickly and efficiently to make sure its customers have what they need, especially when it comes to the Mexican market. The 30-year-old company, which has a manufacturing plant in Warwick, produces packaging systems for the technology industry, including large cabinets and racks. For the last two years, Schroff has been shipping its products to Mexico. And though it currently does about 2 to 3 percent of its business there, company officials are expecting that figure to jump to 10 percent next year.
“In only two years our exporting to Mexico has gone from a good level to an exceedingly good level,” said Frederick Duquette, a Schroff vice president. “Any time you enter a new market, things start out slow, but the growth of the industry and manufacturing is really helping us.”
Duquette said the company, which has factories worldwide, exports to several countries, including Canada, China, and throughout Europe. He said company officials decided to export to Mexico when they realized they “were neglecting an entire market.”
“The telecommunications industry is growing quickly in Mexico,” Duquette said. “Before this our company never did anything south of the border, and now we are thinking about opening some factories there.”
But like any new endeavor, Duquette said the exporting hasn’t come without some setbacks. Because of the distance, the company has to work overtime to make sure that all of the orders are intact and on time when they arrive in Mexico. Duquette said the company has relied heavily on its Texas plant to help ease the distance strain.
“We have definitely had to work on the logistics of getting things from here to there,” he said. “Once we had a strike on our rail link and that set us back. Even after one setback you don’t look as good, and companies will sometimes look for more local suppliers.”
Another problem, Duquette said, is that the cabinets and packaging systems that the company ships are quite large, and often can’t be stored by the purchaser.
These things are in such high demand, that sometimes we ship a lot of them at one time,” Duquette said. “But our customers can’t afford to store them because the units alone are enough to fill a good size building.”
Duquette said the company has been able to work out “the hiccups” of the operation and provide their customers with a quality product, and said the company is looking forward to finding future business in the area.
“Getting it there for a good price is very important,” he said. “So far we have found reliable customers, and good margins.”
Mexico
Location: Middle America, bordering the Caribbean Sea and the Gulf of Mexico, between Belize and the U.S. and bordering the North Pacific Ocean, between Guatemala and the U.S.
Geographic Area: 1,972,550 square km, slightly less than three times the size of Texas.
Climate: Ranges from tropical to desert
Population: 98,552,776 (1998)
Languages: Spanish, various Mayan, Nahuatl, and other regional indigenous languages.
Time Zone: GMT – 5, – 6, or -7
Workweek: The length of the workday varies depending on the region of the country and the type of organization. In Mexico City, companies typically open at 9:00 or 9:30 a.m. and work until 7 p.m., with a long lunch beginning at 2 p.m. or later. In the north, the workday may begin and end earlier with lunch at 1 p.m. Federal government offices in Mexico City begin work about l0 a.m., break at 2 or 3 p.m. for lunch and return at 5:00 or 6:00 p.m. to work into the evening until 9:00 p.m.
Type of Government: Federal republic operating under a centralized government
Head of State: President Ernesto Zedillo Ponce de Leon (since December 1994). The president is both the chief of state and head of government
Currency: 1 New Mexican peso (Mex$) = 100 centavos
Exchange Rate: U.S.$1: 8.18 (January 1998), 7.91 (1997), 7.59(1996), 6.42 (1995), 3.38 (1994), 3.12 (1993).
Economic and Political Conditions: The Mexican economy continues to recover from its 1995-96 recession. Macroeconomic stabilization and floating-exchange-rate regimes have cut inflation to a third of its 1995 highs, and interest rates also have moderated substantially. The government by mid-1997 had restructured its debt, with longer payment periods and lower rates of interest. Seasonally adjusted economic growth resumed in late 1995 and has continued. Since the end of 1996, all major economic sectors have seen healthy rates of growth, although the construction sector is still relatively weak, and one or two of the hardest-hit manufacturing sub-sectors still suffer an occasional monthly downturn. Retail sales recovered in 1997.
Tarriffs, Trade,Taxes, Trademarks
Trade Regulations and Tariffs: With the establishment of NAFTA on January 1, 1994, Mexico further lowered its tariffs on U.S. and Canadian origin goods. Mexican tariffs on U.S. goods are between zero and 10 percent. The highest Mexican tariffs tend to be on agricultural products and finished motor vehicles. Currently, 80 percent of U.S. goods enter Mexico duty-free. Under the NAFTA, tariffs on U.S. goods will be phased out over a 10-year period, with a few exceptions on selective products (mostly agricultural commodities), which will be phased out over a 15-year period.
Taxation: The official corporate tax rate in Mexico is 35 percent. Residents are taxed on income from all sources; non-residents are taxed on income from Mexican sources. The majority of dividends, royalties, and fees paid to foreign shareholders of a Mexican business are subject to a 35 percent withholding tax. Capital gains are included in a corporation’s gross taxable income and are assessed the normal rate.
Foreign Investment: In December 1993, the government passed a foreign investment law that replaced a restrictive 1973 statute. The law is consistent with the foreign investment chapter of the NAFTA and opened more areas of the economy to foreign ownership. It provides national treatment for most foreign investment, eliminates all performance requirements for foreign investment projects, and liberalizes criteria for automatic approval of foreign investment proposals. NAFTA investors receive both national and Most Favored Nation (MFN) treatment in setting up operations or acquiring firms
Free Trade Zones: Special incentives are available to companies that set up manufacturing plants within 13 miles of the northern or southern border and the free zones that include both states on the Baja California peninsula, Quintana Roo, and the northern part of Sonora bordering on the United States. Companies in these areas may obtain up to 100 percent reduction of import duties on machinery, equipment, spare parts, and raw materials for a maximum of ten years from the time they begin operations.
Trade Finance: Credit is limited and expensive in Mexico. The current interest rate is between 20-30 percent, with limited access to commercial bank financing by many prospective borrowers.
Marketing and Selling Factors: The Mexican market employs many of the same sales, distribution and marketing techniques used in the United States. However, the U.S. exporter needs to be aware of and respect local customs. For example, breakfast and lunch meetings, much more so than dinner, represent important venues for conducting business in a social setting. When developing a market entry strategy for Mexico, American exporters should be aware of the wide variety of distribution channels. Small retailers and family-owned businesses dominate the market. Mass merchandising is becoming increasingly popular.
Patents/Trademarks/Copyrights: Mexico is actively seeking to enforce its intellectual property laws and has seized and destroyed millions of dollars worth of pirated merchandise. This enforcement has affected street vendors.
Key Contacts – Mexico
Rhode Island Export Assistance Center (RIEAC) and World Trade Center, Bryant College
Raymond W. Fogarty, Director
Edward Barr, World Trade Center Manager
Telephone: (401) 232-6407 or (401) 232-6408
Fax: (401) 232-6416
E-Mail: postoffice@itdn.net Website: http://www.rieac.org
Rhode Island Economic Development Corporation (RIEDC)
Maureen Mezei, International Trade Director
Telephone: 222-2601, ext. 123 E-Mail: mmezei@riedc.com
U.S. Export Assistance Center, Department of Commerce
Keith M. Yatsushashi, International Trade Specialist
Telephone: (401) 528-5104 E-Mail: kyatsuha@mail.doc.gov
U. S. Small Business Administration
Marilyn Bogue, International Trade Officer
Telephone: 528-4585 E-Mail: marilyn.bogue@sba.gov
Embassy of Mexico
1911 Pennsylvania Ave. NW., Washington, DC 20006
Country/Area Code: 202
Phone: 728-1600 Fax: 728-1698
U.S. Embassy in Mexico
American Embassy Mexico
Paseo de la Reforma 305, Mexico City 06500 Mexico, D.F.
Country/Area Code: 52 City Code: 5
Phone: 211-0042 Fax: 511-9980
Country Profile
Compiled by Providence Business News,
in collaboration with Bryant College Export Assistance Center.
