Selling abroad: discover the opportunities in Mexico

Mexico represents, along with Brazil, the main destination market for Italian companies that want to sell abroad, with special focus Latin America. 

Currently, these two countries offer the most attractive demand prospects in the Latam region. 

Dwelling on Mexico, the reasons for this trend stem from GDP growth and manufacturing activity, along with inflation control, as indicated by the’IMF In his report last October.

The strengthening of its international position is also due to the recent phenomenon of nearshoring, which is providing the nation with important development opportunities. 

Also noteworthy is the increase in foreign investment in the country: it reached $35 billion in 2022, returning to pre-pandemic levels in 2019. A figure that differs from the global trend, characterized in the same period by a 12% decline in investment flows, influenced by multiple crises worldwide, including the war in Ukraine, inflationary pressures, the risk of recession, and the debt burden of the world's major economies. 

Italian exports to Mexico, the prospects of a growing market

With a population of 130 million, Mexico is the second largest country in Latin America in both population and economic size. 

By virtue of its strategic geographic location and the many free trade agreements in place (such as the USMCA with the United States and Canada), the country is an advantageous market for many Italian companies that decide to sell abroad.

In particular, exports to the nation are also favored by the’agreement of Economic Association, Political Consultation and Cooperation between the European Union and Mexico, which in addition to promoting tariff-free trade between the two sides, offers protection for European products, facilities for financial services and facilitates participation in tenders.

Thank you to these factors, Italian merchandise exports to Mexico have grown significantly over the past decade.

In 2022, with an all-time high of 5.5 billion euros in exported goods, Mexico again became the leading destination of the’Italian export in Latin America, an increase of 44.2% over the previous year.

At the sector level, the main products exported from Italy to Mexico include machinery, metallurgical, chemical and plastic products, and electrical appliances, accounting for 80% of the total. The remaining 20% includes products such as clothing, jewelry, furniture and food products, whose demand is supported by economic growth and the rise of Mexico's middle class. 

In detail, here is the commodity composition of Italian exports to the country:

• Materials and appliances n.e.c. (36.2%)
• Means of Transportation (12.9%)
• Basic metals and metal products, excluding machinery and equipment (33.4%)
• Products of other manufacturing activities (8.3%)
• Substances and chemicals (6.4%)
• Textiles, clothing, leather and accessories (6.3%)
• Other (20.5%)

Exports of intermediate goods, particularly in chemicals, rubber and plastics, and metals, are expected to increase in 2023-2024, in line with the expected strengthening of the local manufacturing sector. The mechanical equipment sector also shows good growth, registering +3.7%.

Factors favoring exports to Mexico

Let's take a closer look at additional elements that make the idea of penetrating the Mexican market particularly advantageous for those wishing to sell abroad:

Economic stability

As we mentioned earlier, the Mexican economy is distinguished by GDP growth and financial strength, supported by increased domestic consumption and rising investment and exports.

Young population and skilled labor

Mexico boasts a young population, with an average age under 28. The labor force is skilled and competitive, with low costs.

Industrial and technological infrastructure

Industrial parks and highly specialized technology centers are present in the country, giving infrastructure to support businesses. In addition, local institutions offer incentives for investment and development of projects related to the area.

These factors combined make Mexico an attractive destination for investment, offering ample opportunities for Italian companies looking to expand their business beyond its borders.

Important manufacturing hub of Latin America

Mexico is proving to be the alternative to China for the United States. Due to its geographic proximity, more and more U.S. companies are seeking partners or investing in Mexico in order to redesign their global supply chains, dividing themselves more from China.

Selling abroad: the best options for entering the Mexican market.

Looking forward, Mexico will continue to be an important outlet market, offering numerous business opportunities for Italian companies.

Specifically, we discuss:

• Machinery and Equipment: Mexico continues to be a major buyer of technology, especially for metalworking. Growing sectors such as automotive and aerospace require specialized machinery, offering significant opportunities for Italian companies.
• Luxury clothing: Mexico's luxury market is growing, with increasing demand for products Made in Italy. 
• Food and beverage sector: the country is a key market for the food and beverage sector. Growing health awareness has prompted the Mexican government to introduce regulations, providing opportunities for high-quality Italian products.
• Shipbuilding and transportation sector: n addition to the automotive industry, there is a growing demand for other means of transportation such as military aircraft, boats and work vehicles. The shipping industry, in particular, represents a major investment opportunity, with a significant impact on the economy and employment.

In particular, it should be noted that the food and beverage sector provides particularly promising prospects, especially when considering the update of the’EU-Mexico Free Trade Agreement. 

This act further boosted Italian exports by safeguarding typical geographical indications and reducing tariffs on imports.

If you wish to undertake internationalization in the country, please feel free to contact us.  

Thanks to the experience and knowledge of our professional team, Octagona can provide you with information on how to sell abroad successfully, and give you support in any activities needed to expand your business significantly.