Jul 2008
Putting the steadfast outlook aside, Mexico’s heavy economic
dependence on the US may hinder the penetration of Hong Kong products in the
near term. Hong Kong companies should adopt a more long-sighted approach when
developing the Mexican market.
dependence on the US may hinder the penetration of Hong Kong products in the
near term. Hong Kong companies should adopt a more long-sighted approach when
developing the Mexican market.
With a population of 109 million earning a per-capita GDP of
US$8,400, Mexico presents the 2nd largest consumer market in Latin America,
behind only Brazil, and is currently the No. 1 export destination for Hong Kong
exports to the region. Given its steady economic performance as well as extended
access to consumer credit, Mexico sees a surging demand for imports of quality
consumer goods, despite a vigorous export-oriented manufacturing
sector.
US$8,400, Mexico presents the 2nd largest consumer market in Latin America,
behind only Brazil, and is currently the No. 1 export destination for Hong Kong
exports to the region. Given its steady economic performance as well as extended
access to consumer credit, Mexico sees a surging demand for imports of quality
consumer goods, despite a vigorous export-oriented manufacturing
sector.
Hong Kong’s trading relations with Mexico have grown fairly
speedily in recent years. Over the period 2003-2007, Hong Kong’s total exports
to Mexico soared by 74% or a compound annual growth rate (CAGR) of 15% between
2003 and 2007, while total imports from Mexico grew by 69% or a CAGR of 14%.
This upward trend continued in the first quarter of 2008, when Hong Kong’s
exports to Mexico saw a growth of 18%, reflecting not only Mexican consumers’
ready acceptance of Hong Kong products, but also importers’ positive perception
towards Hong Kong as a reliable sourcing platform.
speedily in recent years. Over the period 2003-2007, Hong Kong’s total exports
to Mexico soared by 74% or a compound annual growth rate (CAGR) of 15% between
2003 and 2007, while total imports from Mexico grew by 69% or a CAGR of 14%.
This upward trend continued in the first quarter of 2008, when Hong Kong’s
exports to Mexico saw a growth of 18%, reflecting not only Mexican consumers’
ready acceptance of Hong Kong products, but also importers’ positive perception
towards Hong Kong as a reliable sourcing platform.
However, Mexico’s wide-ranging anti-dumping duties (AD) on
products of China-origin, together with the hostile sentiment towards Chinese
imports, have long been the major obstacles hindering the growth of Hong Kong
exports to the country. Despite gradual reduction, Mexico still imposes a
comprehensive array of AD duties against Chinese imports. The most affected
product categories include apparel, footwear and toys, which currently face AD
duty rates as high as 1,105%.
products of China-origin, together with the hostile sentiment towards Chinese
imports, have long been the major obstacles hindering the growth of Hong Kong
exports to the country. Despite gradual reduction, Mexico still imposes a
comprehensive array of AD duties against Chinese imports. The most affected
product categories include apparel, footwear and toys, which currently face AD
duty rates as high as 1,105%.
Six years after China’s WTO accession, the so-called “peace
clause” granting Mexico the right to maintain its existing AD duty orders on
Chinese products under 26 tariff categories came to an end on 12 December 2007.
Mexico has thenceforth launched a review of the antidumping duties it imposes on
goods imported from China. After nearly six months of bi-lateral negotiations,
Mexico and China recently signed an agreement under which Mexico will eliminate
or gradually reduce the AD duties it currently maintains against imports of a
broad range of products from China. Evidently, this agreement looks set to paint
a rosy picture for Hong Kong companies that mainly produce or source across the
border and are therefore affected by Mexico’s trade restrictions against the
mainland.
clause” granting Mexico the right to maintain its existing AD duty orders on
Chinese products under 26 tariff categories came to an end on 12 December 2007.
Mexico has thenceforth launched a review of the antidumping duties it imposes on
goods imported from China. After nearly six months of bi-lateral negotiations,
Mexico and China recently signed an agreement under which Mexico will eliminate
or gradually reduce the AD duties it currently maintains against imports of a
broad range of products from China. Evidently, this agreement looks set to paint
a rosy picture for Hong Kong companies that mainly produce or source across the
border and are therefore affected by Mexico’s trade restrictions against the
mainland.
Mexico has a very young population, where nearly 80% of the
total population is at or below 45 years old, with a median age below 26 years
old. The young population on one hand represents a ready source of labour to
various economic sectors, and on the other hand, a steadfast consumer market for
a wide variety of products catering for the youth. By and large, Mexican
consumers are informed about and receptive to international trends and brands.
Given the proximity to and the close economic ties with the US, they are very
much affected by the US consumption style, though they may lack the purchasing
power to fully follow suit. Buoyed by the continuing improvements in employment
and income, as well as the expansion of consumer credit, the consumer market in
Mexico is expected to see solid and sustained growth in the foreseeable
future.
total population is at or below 45 years old, with a median age below 26 years
old. The young population on one hand represents a ready source of labour to
various economic sectors, and on the other hand, a steadfast consumer market for
a wide variety of products catering for the youth. By and large, Mexican
consumers are informed about and receptive to international trends and brands.
Given the proximity to and the close economic ties with the US, they are very
much affected by the US consumption style, though they may lack the purchasing
power to fully follow suit. Buoyed by the continuing improvements in employment
and income, as well as the expansion of consumer credit, the consumer market in
Mexico is expected to see solid and sustained growth in the foreseeable
future.
On the other hand, as a regional power and the only Latin
American member of the Organization for Economic Co-operation and Development
(OECD), Mexico is considered an upper-middle-income country. With one third of
its population, or 36 million inhabitants, belonging to the middle class, Mexico
presents one of the largest and most promising consumer markets in Latin America
for Hong Kong exporters. This sizable middle class, together with Mexican
consumers’ and importers’ ready acceptance and good perception of Hong Kong
products and businesspeople, paints a bright picture for Hong Kong companies
that are well-known for their price-competitive and quality offerings. In
particular, electronics, toys and games, watches and clocks, footwear, garments
and jewellery are products with lucrative growth potential.
American member of the Organization for Economic Co-operation and Development
(OECD), Mexico is considered an upper-middle-income country. With one third of
its population, or 36 million inhabitants, belonging to the middle class, Mexico
presents one of the largest and most promising consumer markets in Latin America
for Hong Kong exporters. This sizable middle class, together with Mexican
consumers’ and importers’ ready acceptance and good perception of Hong Kong
products and businesspeople, paints a bright picture for Hong Kong companies
that are well-known for their price-competitive and quality offerings. In
particular, electronics, toys and games, watches and clocks, footwear, garments
and jewellery are products with lucrative growth potential.
Despite a steadfast outlook, trading with Mexico is not free
from risks and challenges. Other than AD orders, the most pressing issue,
perhaps, is Mexico’s heavy economic dependence on the US, which is now in the
midst of a downturn. Nowadays, most manufacturing plants in Mexico are still in
the business of assembling imported materials from the US into finished products
for re-export to the US. As a consequence of these extensive processing trade
facilities, the US is the largest export market for Mexico, accounting for more
than 80% of its total exports. In this regard, Mexico cannot be immune to the
headwinds recently blowing in the US. Even so, barring the US economy from
further storms in coming years, Mexico’s enormous consumer base, together with
the aforesaid AD agreement, is expected to underpin Hong Kong’s trade with
Mexico.
from risks and challenges. Other than AD orders, the most pressing issue,
perhaps, is Mexico’s heavy economic dependence on the US, which is now in the
midst of a downturn. Nowadays, most manufacturing plants in Mexico are still in
the business of assembling imported materials from the US into finished products
for re-export to the US. As a consequence of these extensive processing trade
facilities, the US is the largest export market for Mexico, accounting for more
than 80% of its total exports. In this regard, Mexico cannot be immune to the
headwinds recently blowing in the US. Even so, barring the US economy from
further storms in coming years, Mexico’s enormous consumer base, together with
the aforesaid AD agreement, is expected to underpin Hong Kong’s trade with
Mexico.
Moreover, the sizable informal economy, which is estimated to
account for 27% of the country’s GDP, also poses significant challenges to Hong
Kong exporters. Apart from offering products of better quality, wider variety
and trendier designs, to survive the intense competition in the sizable informal
market in Mexico, Hong Kong exporters are advised to partner with established
retailers such as hypermarkets, supermarkets, shopping centres and department
stores to better leverage on their marketing efforts and strengths in
intellectual property rights protection. On the other hand, to cope with the
hostile sentiment towards Chinese imports, Hong Kong companies are advised to
differentiate their products by branding, as Mexican consumers have better
perception of Hong Kong-managed imports over indigenous Chinese
products.
account for 27% of the country’s GDP, also poses significant challenges to Hong
Kong exporters. Apart from offering products of better quality, wider variety
and trendier designs, to survive the intense competition in the sizable informal
market in Mexico, Hong Kong exporters are advised to partner with established
retailers such as hypermarkets, supermarkets, shopping centres and department
stores to better leverage on their marketing efforts and strengths in
intellectual property rights protection. On the other hand, to cope with the
hostile sentiment towards Chinese imports, Hong Kong companies are advised to
differentiate their products by branding, as Mexican consumers have better
perception of Hong Kong-managed imports over indigenous Chinese
products.
Last but not least, in order to avoid the exhaustion caused
by long-haul flights and excessive travelling expenses, Hong Kong companies can
consider the alternative of using Hong Kong trade fairs and exhibitions as a
platform to meet Mexican businesspeople. Apart from time and cost savings, this
helps Hong Kong traders bypass the language barriers that they will encounter in
Mexico. As an illustration, the Hong Kong Trade Development Council received
2,525 Mexican visitors at its various trade fairs in 2007, demonstrating a CAGR
of 20% over the past five years.
by long-haul flights and excessive travelling expenses, Hong Kong companies can
consider the alternative of using Hong Kong trade fairs and exhibitions as a
platform to meet Mexican businesspeople. Apart from time and cost savings, this
helps Hong Kong traders bypass the language barriers that they will encounter in
Mexico. As an illustration, the Hong Kong Trade Development Council received
2,525 Mexican visitors at its various trade fairs in 2007, demonstrating a CAGR
of 20% over the past five years.
