International Business Managment

Objective:

Search and report opportunities for trade to a Mexican Company in Europe.

Procedure:

Look for trade stats from the auto industry between Mexico and the European Union, and develop the opportunities we have with in the significant trade deficit.

Results:

1. Do some research about current trade stats between Mexico and the EU regarding the auto industry.

In 1997, Mexico was the first Latin American country to conclude a Partnership for a cooperation agreement with the EU, this came into force in the 2000s.

In the file “trade of goods” made by joint council, in the chapter one, specifically on section two. They talk about the Industrial Products, they said that it applies to all products not covered by the definition of agricultural and fisheries products.

                                                                European Commission. (24/April/2018)

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During all this period, from 2000 to 2017, we could see that EU exported 30% billions in products than the ones they imported within 23.80%. From the percentage of importation 15% was automotive industry.

Mexico as one of the biggest manufacturing countries of light vehicles was losing a great opportunity in EU, because of the trade that offers open movement for all the industrial products. Following the stats from the trade, Mexico dismiss various opportunities of growing during his years.

In April 2018, the European Union and Mexico reached an agreement on the trade part for modernize the previous agreement from 2000.

What was in it?

• € 62 billion worth of goods were agreed in the trade
• € 15 billion of commercial services
• Both countries will simplify their customs procedures to make the trade in industrial products (Automotive, auto-parts, heavy machinery, chemical materials and hydraulic and mechanic tools) even smoother.
• Mexico will scrap its high import tariffs on European food and drinks.

1. Look for the specific benefits of that industry for Mexico under the current free-trade agreement with them.

Our country is an automotive world power. Nowadays, Mexico is going through a path to become a leader in the manufacturing and exportation of light vehicles. We are on the fourth place on exporting and the eighth place on manufacturing. Not for so long.

Nissan, Honda and Mazda started a new start-up operation and they will increase their production capacity by more than 650 thousand units per year.

The increase in the production capacity means that there´s going to be more supplies to meet the demand, as well as the increasing demand in the EU. Therefore, growth in the auto-parts production and exportation will be higher than expected for the light vehicles segment not just because of the production, but because of the trade that will simplify custom procedures between both countries.

                                                                        PWC Mexico. (September 2017).

1. Write a memorandum with your findings addressing the CEO of a leading Mexican auto supplier company; add a brief forecast about what you think might happen within the next six months (and why).

Business Memo for investing

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