International Marketing Outlook: Mexico
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International Marketing Outlook: Mexico

By: Brian Thomas

Market Opportunity

The most populous Spanish-speaking country in the world with a population of 110 million, Mexico should be seen as a prime destination for American exporters. Mexico enjoys a healthy real GDP growth rate at over three percent and its citizens’ per capita income is slightly under $13,000. Mexicans have made an impressive recovery over the 1994 recession and despite recent inflation near 5.25%, higher than the targeted four percent, consumer spending remains high. In fact, Mexico receives fifty-one percent of its imports from the United States – valued at $134 billion in 2006. Furthermore, this calendar year has seen the Mexican peso appreciate 5.7% against the U.S. dollar – a signal that Mexican exports of American products will continue to grow. Mexican interest rates remain at 7.75% – relatively low compared to the double digit percentages seen in 2005. This suggests strong investment within the country, and when coupled with the government’s combating of inflation, U.S. exporters should see Mexico as a stable, growth-oriented economy. However, economic problems are evident in Mexico: income distribution is highly unequal and about one quarter of its workforce is underemployed. More than forty percent of its population lives below the poverty line, according to an asset-based definition – a possible consequence of the widely received low real wages.

Best Industry Segments

Mexico is America’s second largest single-country trading partner and is among the fastest growing major export market for goods. According to reuters.com, a considerable increase in credit-card availability and other types of loans are expected to help the Mexican economy achieve steady growth despite lower U.S. demand from the industrial export sector. Mexico’s Deputy Finance Minister Alejandro Werner has stated that, “consumer spending continues to show adequate dynamism”, and overall GDP growth is predicted to be near three percent this year. Some of the leading industry sectors for U.S. exports to Mexico include service, especially travel and tourism, the automotive industry, building and construction, energy and environmental technologies, and the finance and insurance services.

Regulatory and Tariff Landscape

No tariffs exist on American exports to Mexico due to its membership in the North American Free Trade Association (NAFTA). In fact, Mexican trade with the United States and Canada has tripled since the application of NAFTA in 1994. In addition, Mexico’s twelve free trade agreements allow for more than ninety percent of its overall international trade to be free from tariffs. That being said, U.S. participation in NAFTA may be subject to change with the outcome of this year’s upcoming presidential election.

Online Marketing Profile

Latin American internet users compose 9.3 percent – 123 million – of worldwide internet users, and thus represent a huge market for online advertising. Mexico is in the top fifteen countries with the highest number of internet users at about 24 million, and has the second largest online population of any Latin American country, behind Brazil alone. Spanish is the third most popular language among internet users, an important fact when considering expanding one’s market internationally. Furthermore, when choosing to advertise in Spanish, an automatic broadening of one’s market includes the 19 million Spanish speakers in America. U.S. exporters should realize these important facts, and when seeking to expand their markets internationally, should surely advertise in Spanish online.

Popular Mexican Search Websites

In a study polling affluent Mexicans (among the top twenty percent of income earners) conducted by marketingcharts.com, the most frequently used website is Yahoo! Mexico (mx.yahoo.com) at 30.5%; the second most popular is Google Mexico (google.com.mx) at 29%. Terra.com, UOL.com, and terespondo.com are also very popular among the general online population

Summary

Though the Mexican per capita income is relatively low, U.S. exporters should focus their global expansion on targeting the more affluent Mexican citizens by advertising online especially in the aforementioned websites. Opportunities abound for American companies seeking to expand to Spanish-speaking markets, of which Mexico is the most populous. Credit card availability remains high and Mexican consumer spending healthy. Moreover, American companies can export to Mexico free from import duties. On the other hand, Mexico suffers from consistently high unemployment and poverty rates that impact US export opportunities, so for all of the above reasons, GLOBALeMARKETER.com ranks Mexico as a Tier II market for global online expansion.

– With contributions from Michael Kuchta

Article Source: http://articlenexus.com

Brian Thomas holds an MBA from the Graduate School of Management, Rutgers University, and is the Principal and Founder of Global eMarketer (GeM). GeM is an international business development and marketing consulting firm that helps businesses expand globally from preparation to implementation. He can be reached at information@globalemarketer.com, or visit their website at www.globalemarketer.com Michael Kuchta is a Global Markets Research Analyst at Global eMarketer (GeM).

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