Market Overview

The North American Free Trade Agreement (NAFTA), which was enacted in 1994 and created a free trade zone for Mexico, Canada and the United States, is the most outstanding feature in the U.S.-Mexico bilateral commercial relationship.

Since the implementation of NAFTA, Mexican imports from the U.S. have increased exponentially, totaling over $134 billion in 2006 and Mexican exports to the U.S. totaling $198 billion in the same period.  In 2007, two-way U.S./Mexico trade (goods and services) exceeded $1 billion per day.  U.S.-Mexico bilateral trade has increased 377%:  from $88 billion in 1993 to $332 billion in 2006.  
In 2007, the economy grew by 3.7% with inflation at 3.93%.

On December 1, 2006, Mexico inaugurated Felipe Calderon as President.  Although President Calderon’s narrow electoral margin and the unusually divisive nature of the election gave rise to certain challenges, Calderon has already succeeded in adopting measures of pension, tax and election reform and now aims to focus on much-needed judicial, energy and education reforms.  With inflation under control, foreign direct investment continuing to grow and relatively stable debt and equity markets, Mexico’s macro-economic picture is a healthier one than in early years of this decade.

The Calderon Administration’s major priorities are foreign investment, security, economic growth and employment.  The Administration believes Mexico’s economic growth will be fueled primarily by infrastructure investment, housing, tourism and export diversification.

Market Challenges

Mexico’s size and diversity are often under appreciated by U.S. exporters.  It can be difficult to find a single distributor or agent to cover this vast market.

The Mexican legal system differs in many significant ways from the U.S. system.   U.S. firms should consult with competent legal counsel before entering into any business agreements with Mexican partners.  The U.S. Commercial Service can provide a list of attorneys with experience in dealing with U.S. corporate clients through the Business Service Provider program.

The banking system in Mexico has shown some signs of growth after years of stagnation, but interest rates remain relatively high.  In particular, small and medium enterprises (SMEs) find it difficult to obtain financing at reasonable rates despite Mexican Government efforts to increase capital for the SMEs.  U.S. companies need to conduct thorough due diligence before entering into business with a Mexican firm, and should be conservative in extending credit and alert to payment delays.  As one element in a prudent due diligence process, the U.S. Commercial Service offices in Mexico can conduct background checks on potential Mexican partners.  There is a fee for this service.

Mexican customs regulations, product standards and labor laws may entail pitfalls for U.S. companies.  U.S. Embassy commercial, economic, agricultural and labor attachés are available to counsel firms with respect to regulations that affect their particular export product or business interest.

Have patience.  Everything takes more time to accomplish in Mexico than what U.S. companies are used to or would like.

Market Opportunities

Mexico is the second largest market in the world for U.S. exports.  Given the magnitude of the trade between the United States and Mexico, there are abundant opportunities for U.S. firms in Mexico.

Some of the most promising sectors include: airport & ground support equipment, automotive parts & supplies, education & training services, electronic components, energy technology & services, environmental technologies & equipment, franchising, hotel & restaurant equipment, housing & construction, plastic materials/resins, security & safety equipment & services, telecommunications equipment, transportation infrastructure equipment & services and travel & tourism services.

A complete list of the top prospects in Mexico is provided in Chapter Four.  However, given the size of the Mexican market, there are numerous other promising prospects, including medical equipment, food processing equipment, architectural and engineering services and more.  If an industry is not explicitly mentioned as a “best prospect,” it does not necessarily mean that there are not ample opportunities in the Mexican market.

Market Entry Strategy

In Mexico, business is done on the basis of relationships.  U.S. exporters will need to travel to Mexico frequently to develop and strengthen relationships in order to do business successfully in Mexico.

Mexican companies tend to be extremely price conscious and appreciate outstanding service.  Time is essential to cultivate trust to enhance a professional partnership.

Several market entry strategies have proven to be effective in Mexico.  In general, Mexicans appreciate close working relationships, so working with a locally-based agent, representative or distributor is usually essential.  However, market entry strategies can vary by sector and region in Mexico.  U.S. Commercial Service staff is available to provide individualized counseling to determine the best market entry strategy for a given U.S. company/product. 

Access Full Text  of the Country Commercial Guide

The information of this section (Doing Business in Mexico) is the Executive Summary of our "Country Commercial Guide" that is a comprehensive annual report that includes an overview of Mexico's commercial environment, economic analysis, best prospects for products and services, and valuable contact information. To access full text, please contact us.

The following are the chapters included in this Guide:

Political and Economic Environment
Selling U.S. Products and Services
Leading Sectors for U.S. Export and Investment
Trade Regulations and Standards
Investment Climate
Trade and Project Financing
Business Travel
Contacts, Market Research and Trade Events
Guide to Our Services