THE importance of supply chain diversification was brought to the fore last year, as connectivity was disrupted due to the pandemic.
While this significantly impacted global trade flows, the Embassy of Mexico and Enterprise Singapore (ESG) quickly mobilised efforts to ensure a steady flow of essential supplies between Mexico and Singapore.
This was made possible because strong bilateral ties established through the years provided a firm foundation for business collaboration.
These unprecedented times also demonstrate Mexico's potential as a reliable source partner, be it in goods or services.
Mexico's proximity to the US and supply chain integration within North America, supported by a skilled workforce and strong trade networks, has made the country an attractive manufacturing base.
In 2020, Mexico's manufacturing exports totalled US$374 billion - 90 per cent of their total exports.
Similarly, Mexico experienced 7.1 per cent revenue growth in electronics manufacturing in 2020, reflecting the resilience of its manufacturing sector amid the pandemic.
With the nearshoring of US companies back to North America, Asian manufacturers such as Foxconn and Pegatron have made increased investments into Mexico to tap its strategic location and access the US market.
Likewise, Singapore companies supplying aerospace, automotive, electronics and medical technology to the US and Latin America can meet Mexico's increased demand for such goods.
Given Singapore's position as a leading manufacturing hub in Asia, Singapore manufacturers are increasingly leveraging new technologies and solutions via the Internet of Things, big data, artificial intelligence, robotics, and additive manufacturing.
Singapore can complement Mexico's manufacturing ecosystem, where companies from both countries can collaborate to strengthen Industry 4.0 capabilities in Mexico's manufacturing sector.
Mexico's quality talent pool and competitive cost base also offer opportunities for private investments and public-private partnerships.
An example is Singapore precision plastic engineering company, Sunningdale Tech, which entered the market in 2003 and has been manufacturing in Mexico for 18 years.
Leveraging Mexico's strong trade networks to access new opportunities, Mexico's competitive advantage is strengthened by strong trade networks with Singapore and the Americas, including free trade agreements such as the United States-Mexico-Canada Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, whose first ratifying parties were Mexico and Singapore.
Through these networks, Singapore companies keen to enter Mexico and Latin America can benefit from tariff concessions, preferential access to sectors such as e-commerce and wholesale trading, faster entry into markets and intellectual property protection.
Some Singapore companies are already utilising these established networks to access new opportunities.
For example, with the USMCA, cross-border supply chain platform company, GeTS, is able to store goods in a special, tariff-free bonded warehouse in Tijuana along the border and provide daily drop-off services to last-mile carriers in the US, achieving efficiency and cost savings for clients.
Negotiations for the upcoming Pacific Alliance-Singapore Free Trade Agreement have also successfully concluded, with Singapore becoming the first Associated State of the Pacific Alliance.
The Pacific Alliance - comprising Chile, Colombia, Mexico and Peru - has a combined GDP of over US$1.8 trillion, presenting opportunities for Singapore to explore trade and investment collaborations with the eighth-largest exporter and economy in the world.
There are many opportunities for Singapore companies beyond manufacturing and logistics.
In real estate and hospitality, for example, Banyan Tree Group is planning to open 2 more resorts over the next 2 years in Mexico, on top of their current 3 in Cabo Marques, Mayakoba and Puebla.
Mexico remained in the top 10 visited countries in the world with international visitors for the first 8 months of 2021, rebounding 27 per cent from 2020.
In e-commerce, unicorn Shopee launched in Mexico this year to tap the growing consumer base there. In fact, Mexico saw 81 per cent growth in 2020 in e-commerce market value compared to 2019.
This presents opportunities for companies to provide new offerings in digitalisation, track and trace, warehousing IoT solutions to serve industry giants like Amazon and Mercado Libre.
Likewise, consumer companies can leverage the growth of online platforms and explore Mexico as a market.
In infrastructure, GIC, with infrastructure firm Abertis, finalised the acquisition of the largest Mexican toll road operator Red de Carreteras de Occidente, which was recognised by LatinFinance as the Latin American deal of the year for 2021.
Increasing global demand for digital and green solutions has also seen Mexico attract foreign direct investments in innovation and sustainability.
In the past year, we saw a surge in interest from Mexican corporates seeking innovative solutions internationally to develop products and solutions.
For example, Sigma Alimentos, one of Mexico's top producers of refrigerated food products, selected Singapore-based companies Sophie's Bionutrients, which develops plant-based sustainable proteins, and Aegis Packaging, which manufactures high-barrier coatings for flexible packaging, for their accelerator programme.
Singapore companies keen to explore business opportunities in Mexico may encounter language barriers, cultural differences and regulatory challenges.
To navigate these challenges and manage potential risks, the Embassy of Mexico in Singapore and ESG can support companies in their market entry by introducing them to suitable partners and networks.
These have resulted in many successful partnerships between Mexico and Singapore companies.
ESG's Latin American office based in Mexico City, and the Embassy of Mexico, also assist Singapore companies in their expansion into Mexico through business missions, meetings and events, including virtual modes of engagements amid the pandemic.
While Latin American companies are accustomed to cultivating relationships through face-to-face engagements pre-pandemic, virtual engagements are now the new norm.
When international travel resumes, we will complement these virtual engagements with physical events and meetings.
Forging positive connections are essential in building strong business ties and we aim to connect Singapore businesses with in-market partners in Mexico, including corporates, innovation partners, government agencies and business associations, to drive partnerships.
For instance, the Singapore Week of Innovation & TeCHnology (Switch), held last November, included sessions on opportunities in Latin America and a platform for virtual networking.
Partner programmes launched during Switch have also garnered good initial traction - Leap2LatAm, a programme co-organised by venture capital studio Latin Leap and ESG to help Singapore startups expand into Latin America, has attracted interest from over 30 local companies.
We encourage more Singapore companies to ramp up their diversification efforts and take advantage of growing business opportunities in Mexico.
- Agustin Garcia-Lopez is Ambassador of Mexico to Singapore. Tan Soon Kim is Assistant CEO (Global Markets) of Enterprise Singapore.
Source: The Business Times © Singapore Press Holdings Limited. Reproduced with permission.