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 interesting demand prospects in the Latam region. 

Focusing 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 worth noting is the increase in foreign investment in the country: in 2022, it reached $35 billion, returning to the pre-pandemic levels of 2019. This figure stands in contrast to the global trend, which during the same period saw a 12.1% decline in investment flows, driven by multiple global crises, 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 people, Mexico is the second-largest country in Latin America in both demographic and economic size. 

Thanks to its strategic geographical location and numerous free trade agreements in force (such as USMCA with the United States and Canada), the country represents an advantageous market for many Italian companies that decide to sell abroad.

In particular, exports to the nation are also favored by’agreement of Economic Association, Political Concertation and Cooperation between the European Union and Mexico, which, in addition to promoting trade between the two parties, offers protection for European products, facilitates financial services, and streamlines participation in public procurement.

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

In 2022, with a historic record of 5.5 billion euros in exported goods, Mexico once again became the main destination for’Italian export in Latin America, with a 44.21% increase compared to the previous year.

By sector, the main products exported from Italy to Mexico include machinery, metal products, chemicals, and plastics, as well as electrical equipment, which account for 80% of the total. The remaining 20% includes products such as clothing, jewelry, furniture, and foodstuffs, for which demand is driven by economic growth and the rise of the Mexican 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 further elements that make the idea of entering the Mexican market particularly advantageous for those looking to sell abroad:

Economic stability

As we mentioned earlier, the Mexican economy stands out for its GDP growth and financial strength, supported by the increase in domestic consumption and the rise in 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 combined factors make Mexico an interesting destination for investment, offering ample opportunities for Italian companies looking to expand their business beyond national borders.

Important manufacturing hub in Latin America

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

Selling abroad: the best possibilities for entering the Mexican market

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

Specifically, we discuss:

• Machinery and EquipmentMexico continues to be an important buyer of technology, especially for metal processing. 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: In addition to the automotive industry, there is growing demand for other modes of transport, such as military aircraft, ships, and work vehicles. The naval industry, in particular, represents a great investment opportunity, with a significant impact on the economy and employment.

In particular, it should be emphasized that the food and beverage sector offers 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.