Global Online Marketing Profile 2019 Forecast - Mexico

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Market Opportunity

Many economic analysts agree that the Mexican economy is closely linked to its American counterpart. As a matter a fact, more than a quarter of the country's GDP, 1.143 trillion in 2008 is estimated to be directly linked to exports to the U.S. Inflation (6.2% in 2008 est.) and the public sector deficit have been under control thanks to major macroeconomic initiatives launched by the Mexican government. Nevertheless, the country continues to face many challenges, the income distribution remains highly unequal. In 2008, over 14% of the population remained under the poverty line and the PPP per capita for 2008 was estimated to $14,200. According to a study conducted by BusinessWeek, the Mexican middle class is slowing growing due to the financial crisis and has an income between $7,200 and $50,000 a year. Moreover, the Mexican government still needs to upgrade the countries infrastructure, modernize its labor laws, and allow private investment in the energy sector. Currently, the president, Felipe CALDERON Hinojosa is focusing the government efforts into reducing poverty and creating jobs. In the foreign trade front, Mexican Imports are estimated to be $305.9 billion f.o.b. in 2008. Mexico's main importing partners are the US 49.6%, China 10.5%, Japan 5.8% and South Korean 4.5%.

Best Industry Segments

The Mexican economy is strongly linked wit the American economy. In fact, the US is the second largest trading partner of Mexico. The total value of American exported goods shipped to Mexico in 2008 was US$151.5 billion, up 11.4% from the prior year and up 36.7% since 2004. According to the U.S. Department of State, U.S. exports to Mexico include electronic equipment, motor vehicle parts, chemicals, building and construction material, energy and environmental technologies, and the finance and insurance service. As confirmed by the importance of trade between Mexico and other countries and the socio-economic affluence, Mexico can provide many opportunities to American exports in several sectors of the economy.

Regulatory and Tariff Landscape

According to the CIA Factbook, Mexico has 12 free trade agreements with over 40 countries. As part of the NAFTA (North American Free Trade Association) agreement between the United States, Canada and Mexico, American goods are duty free. In addition, the General Import Duty Law establishes the MFN rates. An annual directive determines the preferential tariff rates applicable to originating goods exported from those countries to which Mexico grants preference. Moreover, the WTO indicates that a ceiling of 35% must cover all tariff items but applied rates are much lower due to tariff preferential treatment granted in trade agreements. Customs authorities collect a value added tax (VAT) upon entry of the goods into Mexico. In addition, Mexican customs charges a customs processing fee (DTA) of 0.8%. Maquiladoras and PITEX companies pay a preferential fee.  Mexico regulates products in a number of areas, mainly for health and safety reasons. Goods subject to non-tariff regulations include hazardous materials, pharmaceuticals, food items, medical equipment, etc. Finally, in terms of standards, a NOM, a certification to Mexican customs regarding product safety must be presented to customs. In order to acquire such a license companies can import samples in order to be tested by approved laboratories. For more information, contact the Ministry of Economy Standards Division
http://www.economia.gob.mx/ (search for "Normatividad empresarial" / "Normas".)

Online Marketing Profile

According to eMarketer.com Mexico is one of the fastest Internet growing countries in Latin America. In fact, over 27 million people are connected through the Internet, which is approximately equal to one-quarter of the population of 110 million Internet users. Furthermore eMarteter.com predicts that the Internet penetration in this market will be of 82% by 2012. Since Spanish is the third most spoken and searched language in the world, advertising in this language could be profitable in Mexico as well as in other Spanish speaking countries.

Popular Spanish Search Websites

Mexico currently has 34 search engines.  However, the most popular search engines are Yahoo! Mexico with 30.5% and Google Mexico with 29%. Terra, UOL, and terespondo have also an important presence in the search engine market.

Summary

Despite the effects of the financial crisis on the Mexican economy, the country's economy continues to grow. U.S. exporters should focus targeting the more affluent Mexican citizens by advertising online especially in the previously mentioned websites. Moreover, American goods have a competitive advantage since they are free from import duties.  On the other hand, Mexico suffers from consistently increasing income inequality and unemployment. These could have an impact on US export opportunities.

For all these reasons, GLOBALeMARKETER.com ranks Mexico as a Tier II market for global online expansion. However, from a language point of view GLOBALeMARKETER.com ranks Spanish as a Tier I market for global online expansion.

Xenia Kolesnikov is a Global Market Research Analyst at Global eMarketer (GeM). GeM is an international business and marketing consulting firm that helps business expand globally from preparation, to implementation through global online campaign management.

For more information, contact information[at]globalemarketer[dot]com, or visit our website at [http://www.globalemarketer.com]

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