International Representative Spotlight: Mexico
International Representative Spotlight: Mexico
Interviewee Name(s) & Title(s):
Walter Heredia, Trade Representative
Georgia has had representation in Mexico since 1993. Walter has been Georgia’s Trade Representative for Mexico since 2013.
Where is the office based?: We are based in the heart of Mexico City, Mexico.
Who are the team members?: Walter Heredia and Carlos Julián, the operational lead. In total, the team has 4-5 members.
How did you enter the world of exporting/trade and how long have you been working in this field?
Walter: I started working in trade and investment around 2010. I lead a business team at PwC, dedicated to helping companies from abroad invest or export to Mexico. I worked there for several years and part of that job entailed answering specific questions that companies had, even before deciding to enter the market. I wrote a few publications about the Mexican market, entering the Mexican market, and the different risks and opportunities the market presents.
I began working for GDEcD in 2013, so I’ve spent over 8 years directly supporting Georgia companies exporting to the Mexican market. Many of them are already keen on entering Mexico, while others are still exploring and trying to make a decision about whether to enter the market. So in the process of assisting them, we’ve also learned about opportunities and challenges in different market segments. We’ve been learning not only about our market, but about the Georgia market as well, to better help these companies succeed.
What typical services do you provide for Georgia exporters interested in your market?
W: We do research and provide insights about the market, and help Georgia exporters find distributors or partners, or connect them with key contacts that can help them in their decision-making process. If they are already keen to enter the market, we’ll support that process and provide information and contacts that can help the company with the process.
Usually, we try to help companies understand the market for export, do market research, or generate insights. Once the company understands whether Mexico is a good market for them, we can go ahead and reach out to potential partners, distributors, or clients locally. We normally present the Georgia products or services to these entities and if they’re interested, we’ll set up an introduction.
We also work on very specific requests like tax information, import-export duties, legal trends or changes, or specific industry information, often by connecting Georgia companies with English-speaking Mexican service providers like attorneys, accountants and customs brokers. We support companies that want to do trade shows in Mexico with logistics, arranging key meetings with potential distributors or clients, and overall, doing our best to help them be successful while participating in a show.
What do you consider the biggest challenge(s) to exporters interested in your market? What about the greatest opportunity?
W: If I were to define challenges that companies could face, I’ll have to do it by specific industries rather than Mexico in general. For example, the pharma, medical devices, and health industries can be a challenge, due to the registration process for products. You have to be a registered company in Mexico to complete this process. A Georgia company would need a local partner to do this for them, and it can be slow and bureaucratic. If you’re ready to sell in the market, doing registrations will take a bit of time.
The defense and security industry is also strictly regulated in Mexico, with few private customers. You would most likely end up with one potential client, the federal government. This is a very narrow market, so if the initial conversation doesn’t go very well, the market is pretty much over. There are some exceptions, like private corporate security and car security, but in general, defense companies would be looking to partner with the government.
Agribusiness is a very large export market of both Georgia and Mexico, and there is a lot of exchange in this industry between the US and Mexico. However, it is a very cost-sensitive industry, so that might be a challenge. While there is a lot of exchange, the products being traded have been the same since NAFTA. If a company wanted to change this and export a product that is usually provided by Mexican suppliers, there is a lot of competition.
Industries that I’ve seen to have fewer regulations are services, or the financial industry in general. Those challenges are related more to the demand of the product’s solution in the market. We would need to do deeper research for these companies, or their potential partners would need to be more specialized. The energy sector has been facing challenges as well, due to reforms in the past few years. This especially applies to the clean energy industry. It’s a bit difficult to start and sell parts for renewable energy. In general, many challenges are connected to regulations, price sensitivity, and market readiness.
In regards to opportunities, Mexico and the U.S. have known each other very well for a long time, so doing business in Mexico as a U.S. company is fairly easy despite the challenges. There’s a lot of trust between Mexico and the U.S., so Mexican companies, potential distributors, or even final consumers trust U.S. products. The USMCA is also the trade agreement with the most trade activity in the world. For many exporters, Mexico is a natural market. We are also a developing economy, so we’re constantly looking for new technologies and novelty products to upgrade what we already have as local consumers with international options. There’s always demand for innovation.
What is the trade relationship between the U.S. and your market like?
W: Depending on the year, Mexico has been either the main or second largest trading partner with the U.S. In 2021, we were the second destination for U.S. goods after Canada. Some sectors have been growing a lot over the years, such as agriculture, which has grown about 43% since 2020. We’re the largest importer of U.S. dairy and poultry products, which is very advantageous for Georgia, as a large poultry exporter.
The State of Georgia is a key partner for imports from the United States. Mexico was the third largest export destination for Georgia products in 2021. We are also the second largest trading partner for Georgia. The main exports to Mexico are agriculture, vehicles, and aerospace products.
Are there any trends, be it in policy, culture, or consumption habits that exporters should be aware of when considering the market?
W: Recently, there has been a growing trend of not only wanting to export to Mexico, but also finding manufacturing partners, mainly with the purpose of near-shoring current operations from Asia to Mexico. From here, other Latin American markets can also be accessed. It’s another strategy of growth some companies are considering. Not only do they want to export to Mexico, but companies that are more mature and off-shoring to Asia are looking at getting closer to the U.S. market.
What advice do you have for companies looking to start exporting to your market?
W: The main advice I would give would be to gather insights on whether this market is a potential destination for your products. We’ve had several cases of companies being convinced their products would be successful in Mexico, but seemingly minor differences in the market might not make this true. For example, the construction industry might seem straightforward, but there are differences between the U.S. market and the Mexican market. Gathering these types of insights before even deciding to come to the market is very important. After gathering these types of insights and deciding to come to the market, I would suggest not coming to the market alone. Having a partner or distributor who already knows the market and has potential clients is beneficial. There are a lot of mature companies who are large enough to do it by themselves, but most of the companies we work with are SMEs, so they either have a few exporting experiences, or they’re just starting to have exporting experiences. It’s always good to have someone to help you enter the market.
Tell us about a memorable time when you were able to help a Georgia company avoid or overcome a major pitfall in your market? What was the situation and what do you want other companies to learn from this?
W: Many of the companies that come to us have been very cautious in their approach, so I can’t say there have been any that have experienced a major pitfall. We’ve had companies that are already familiar with exporting to Mexico experience problems at the border with customs, so they need specific information or contacts to help them resolve the issue. We have provided this support. I haven’t really seen a case where a Georgia company was going to make a huge mistake, and hopefully I don’t have to see it.
What has been your biggest export achievement?
W: We love hearing about companies who were able to make connections with partners or distributors, and learning that they were able to sell their products successfully.
What made the biggest impression on you when you visited Georgia?
W: If you go to a small city or town in Latin America, their economies are mostly based on tourism, and sometimes agribusiness. Every town that I’ve visited in Georgia has something that’s blown my mind. They have either a main industry or a source of industrial income, even as a small town.
Another thing that surprised me was that agriculture is not only growing food, but the whole value chain. It is very impressive to see the food processing, the packaging, and the branding. A lot of cities and towns we visited had entrepreneurship centers, incubators, and tech centers. Even if they don’t have a big university in town they have a connection to universities in cities that provide them with research centers, information, and support for entrepreneurs. There are many art centers as well, even in small towns.
In general, I’ve been very impressed with how development touches every part of the state. If you have been living in Georgia your whole life, that’s probably normal to you, but I can tell you that it is uncommon.
What do you enjoy most about representing Georgia in Mexico?
W: I love learning from Georgia companies, and I’ve learned a lot over the years working for GDEcD. The success cases of family businesses are really inspiring. Sometimes, I’ll hear from a small business selling at $10 million. That amount is considered a medium-sized company in Mexico, or as quite an important business. They’re always somehow nervous or scared to take that first step into the market, but they do it with confidence and write a new success story. I enjoy learning how each of the companies comes up with the idea for their business, or how to change or improve their technology.
I’ve also been very inspired by seeing the support programs that GDEcD offers for the companies, not only with the representatives, but the many other resources they provide. The connections between businesses, education systems, and government and how they come together to create success is inspiring. I think it’s a great story not only to learn but to replicate as well.
I also enjoy supporting the businesses. It’s really nice to receive thank you notes after a company’s meeting that we helped set up and learn that it was successful.
What do you think would most surprise Georgians to learn of Mexico?
W: One of the main surprises is when I provided statistics for companies about Mexico being one of the largest producers of aerospace, automotive, or agribusiness products in the world. We are one of the largest producers of some of the products Georgia exports, so in some ways, we are even competitors and have similar technologies. Many manufacturing plants in Mexico and Georgia are partner facilities. Some of the biggest aerospace companies in the U.S. that operate in Georgia also have a presence in Mexico and contribute to Mexico’s supply chains. We are fairly connected, and when companies start seeing that, they are surprised. As the country develops, it becomes more modern and equipped for doing business and that surprises people, as well. When they come to Mexico City, and they see the new areas and everything that is being built, it’s very impressive.
They also don’t always see how important the state of Georgia is. Georgia is the fourth largest producer of poultry in the world when compared to entire nations, which is about the same as Mexico.
Mexico has also always been known for its fun. We have great cultural heritage, architecture, archeology, beaches, and food that is recognized as a UNESCO heritage, so it always makes business more fun.
###
Are you a Georgia business looking for help growing your international sales? Find out how Georgia’s International Trade Team can help at www.Georgia.org/Trade.