With a gross domestic product of USD 1 300 billion and a population of more than 130 million, Mexico is the 15th largest economy in the world. It is also the largest Spanish speaking country in the world. Mexico benefits from a geographically strategic position that provides a link between North and South America. This is partly reflected by its comprehensive trade policy which covers over 50 nations – more than any other country in the world. In addition, Mexico is the region’s leading manufacturing nation after the United States and is leveraging new opportunities as the nearshoring trend accelerates.
SWEDENS SECOND LARGEST EXPORT MARKET
In 1986, Mexico joined the General Agreement on Tariffs and Trade (GATT) and in 1994, the North American Free Trade Agreement (NAFTA). With these agreements, Mexico shifted from an import substitution industrialisation model to a free trade economy which has had positive impacts on the country’s economic growth.
Mexico is Sweden’s second largest export market in Latin America and the free trade agreement between the EU and Mexico has significantly improved the trade balance. Being a member of USMCA has also made the country more attractive from an investment perspective. Already today, many companies manufacture products in Mexico that are sold across the Americas.
Possibilities for Swedish companies IN MEXICO
Mexico offers great potential in several sectors where Sweden is an industry leader, including automotive, mining, energy, IT and telecoms. There is also a growing need for solutions within security and the environmental sector as well as health care and medicine. Foreign investments in Mexico have surged in the past ten years, especially in the automotive industry. Moreover, Mexico's key attractiveness factors are the country’s skilled workforce, cost competitiveness and effective labour relations. Currently, Mexico`s has the 7th largest labour force in the world. Additionally, in 2020 Mexico´s manufacturing cost of labour per hour was USD 1.68 cheaper than that of China. Because of this, most major automotive companies and key suppliers have manufacturing facilities in Mexico, which means potential business opportunities for Swedish subcontractors.
Possible obstacles for Swedish companies include corruption and fraud, and it is important to always ask for professional advice if there is any uncertainty. It might also be recommendable to consider how to ensure fair working conditions while maintaining a high level of productivity.
How we can help YOU EXPAND
Business Sweden has been active in Mexico since 2003. The office is also responsible for markets in Central America and the Caribbean. We can help you prepare for market entry by producing tailor-made market analyses, giving advice on issues related to corruption and security, finding suitable business partners and much more.
Jenny EngströmTrade & Invest Commissioner Mexico
What growth potential does Mexico offer Swedish companies?
Mexico is home to over 130 million people, and the sheer population size alone is reason to consider this emerging market. The big cities have growing middle-classes who are digitally savvy and open to testing new technologies and solutions, and start-ups, scale-ups, and large international companies can all identify and target segments within the market and still reach more potential customers than the Nordics combined. Growth in areas like sustainability, FinTech, and AI is on the rise, driven by both organic factors and government led policies and initiatives. Infrastructure improvements are also high on the political agenda and across all sectors there is a demand for technologies and solutions that can drive change.
What are the biggest misconceptions about Mexico?
Perceptions about Mexico are often outdated and inaccurate; it isn’t a country that many Swedish people or companies are familiar with from either a business or tourist perspective. Mexico City is modern and progressive, with a culture that is liberal, inclusive, and fast paced which often surprises international companies when they first do business in the market. Mexico is flourishing and is already a strong MedTech R&D hub with advanced development and treatment centres. Manufacturing and factories also represent a big part of the business economy, and this is only set to grow with the US shifting production closer to home.
What cultural practices influence business interactions?
Business in Mexico is still built around traditional relationships. Local connections and supplier partnerships have proven to be invaluable during the global pandemic, proving that a presence on the ground can keep business moving and facilitate agile decision making to meet local and regional demands. With Mexico’s increasingly important role in the region as a connection between North America and Central and Latin America, established contacts and suppliers on the ground are imperative if Swedish companies are going to be competitive and relevant.