APPENDIX B: BEST PROSPECT SECTORS FOR U.S. EXPORTERS TO MEXICO (US$ millions, Except where noted) A. Rank of Sector: 1 B. Name of Sector: AUTOMOTIVE PARTS AND SERVICE EQUIPMENT C. ITA or PS&D code: APS 1993 1994 1995 D. Total Market Size: 8,781.9 9,634.3 10,705.3 E. Total Local Production: 6,772.0 7,309.9 7,849.8 F. Total Exports: 3,245.3 3,647.4 4,049.6 G. Total Imports: 5,255.2 5,971.8 6,905.1 H. Total Imports from U.S.: 3,485.5 4,108.2 4,933.8 I. Exchange Rate: 3.1 3.3 3.3 Comments: The Mexican market should provide good opportunities for American auto parts and accessories manufacturers. In particular, connecting rods; fuel injection tracks; valves; automatic transmissions, turbo-chargers; electronic engine management systems, power steering; anti-lock braking systems; suspension parts, emission/exhaust equipment/catalytic converters; steering wheels; plastic molded products such as bumpers, panels and gas tanks; auto alarms; auto stereos; luggage racks; headlights; sunroofs; rims; rear- view mirrors; moldings; and hubcaps. Production, domestic sales and exports of new vehicles grew dramatically in the 1989-1992 period, from 641,275 vehicles in 1989 to 1,083,091 in 1992. The original equipment market is estimated at 68 percent of the total market, the aftermarket accounts for the remaining 32 percent; accessories account for approximately 6 percent of the total market. During 1993, the economic deceleration had a strong impact on the automotive industry with auto parts the sector most affected. In spite of the difficult times Mexico is going through, the auto industry is confident of the prompt recovery and plans large investments to increase its production capacity to 2.5 million vehicles by the year 2,000. Mexico is highly dependent on imports of automotive service and repair equipment. 85 percent of the total market is imported products. Automotive service centers began modernization in 1989 with the limited circulation program driving the purchase of emissions testing equipment. The market for auto maintenance equipment has grown steadily since then. Another major area where growth is expected is equipment with ecological impact: car painting booths, hazardous waste recycling equipment and water treatment equipment for repair shops, which are now being required by Secretaria de Desarrollo Social (SEDESOL), (the environmental control agency). There are approximately 11.5 million vehicles circulating in the country, with 30 percent of them in the Mexico City Metropolitan Area. All of them must be tested at least once a year. There are around 1,100 new car dealers with service centers; 40,000 independent well-established repair shops; and some 40,000 small repair centers. Repair shops are divided by specialties as follows: 57 percent general mechanical services; 25 percent painting; 5 percent electrical; 5 percent carwash and lubricating shops; 5 percent tire repair, exhaust systems, radiators; 2 percent balancing and alignment; and 1 percent windshields. U.S. auto parts account for at least 69.4 percent of imports followed by Japan with 7.5 percent and Germany with 6.2 percent. NAFTA will eliminate barriers to trade in North American "automotive goods" within the free trade area, and eliminate investment restrictions in this sector, over a 10-year transition period. NAFTA should allow the U.S. to gain additional market share, since parts with 62.5 percent North American content for passenger automobiles, light trucks, engines and transmissions and 60 percent content for other vehicles and automotive parts will receive preferential tariff content. A. Rank of Sector: 2 B. Name of Sector: FRANCHISING SERVICES C. ITA or PS&D code: FRA 1993 1994 1995 D. Total Sales: 2,990.6 5,083.2 8,895.4 E. Sales by Local Firms: 1,789.4 3,041.4 5,322.6 F. Foreign Sales by Local Firms: 289.1 491.8 859.9 G. Sales by Foreign-owned Firms: 1,490.3 2,533.6 4,432.7 H. Sales by U.S.-owned Firms: 1,385.6 2,054.7 4,019.4 I. Exchange rate 3.1 3.3 3.3 Comments: This sector includes all types of franchises. Based on the number of franchisors, Mexico ranks eighth internationally. Until 1993, foreign franchises, overwhelmingly American, dominated the market, but the number of Mexican franchises has increased and now account for 52.5 percent of the market. Very few third-country firms are present--prominent examples are Movenpick (Switzerland, ice cream), Ceiling Doctor (Canada, cleaning services), and Nectar Beauty Shops (United Kingdom). Franchises are concentrated in (percent of total): the Mexico City Metropolitan Area (19.47); state of Mexico (8.02); Nuevo Leon (9.05); Jalisco (11.60); Guanajuato (7.31); Queretaro (8.19); Morelos (7.35); Coahuila (6.96); Guerrero (7.24); Quintana Roo (7.20) and Puebla (7.63). The most promising franchises are those for fast food restaurants, convenience stores, non-fast food restaurants, office and residential cleaning services, industrial and residential security systems and services, real estate, purified water, entertainment centers, automotive services, and child care services. Some Mexican franchises that have strong positions and even export franchises to Central America and Asia are: Helados Bing (ice cream), Taco Inn ("tacos", Mexican food), Vips (restaurant), Maseca ("tortillas"), Pollo Loco (chicken, fast food). Others growing fast are: Junghanns (bottled purified water), Nutrisa (natural food), Domit (footwear and clothes), Refaccionaria California (auto parts), Diversiones Moy (entertainment centers), Multivideo (video rental), Video Centro (video rental), Sushi Itto (Japanese food), La Tablita (restaurant- bar), Deportes Marti (sporting goods), PEMEX (gas stations), and Fester (waterproofing systems). A. Rank: 3 B. Name of Sector: POLLUTION CONTROL EQUIPMENT C. ITA or PS&D Code: POL 1993 1994 1995 D. Total Market Size: 2,000 2,250 2,645 E. Total Local Production: 400 420 600 F. Total Exports: 100 125 203 G. Total Imports: 1,700 1,955 2,248 H. Total Imports from U.S.: 1,000 1,150 1,323 I. Exchange Rate: 3.1 3.3 3.3 Comments: The government of Mexico has been increasing its budget to solve environmental problems. In 1993, Mexico's public investment for environmental concerns was a total of US $2.5 billion, 39 percent over 1991's public investment of US $1.8 billion and more than 2,000 percent over the US $95 million invested in 1988. The private sector has also been spending money in contracting services and buying air, water and solid waste treatment equipment. According to the present environmental authorities, the private sector will increase its expenditures more in the next ten years to comply with the existing environmental regulations. U.S.-Mexico environmental cooperation is the most comprehensive and largest such bilateral effort the United States has with any country in the world. NAFTA, the environment supplemental accord on the North American Commission for the Environment, the newly created Border Cooperation Commission, and Border Environment Finance Facility create a unique framework for multi-lateral regional environmental cooperation. The North American Bank for Development will also help U.S. environmental companies to supply Mexico with more services and equipment to solve its environmental problems. The U.S. Trade Development Agency, the World Bank, the Inter-American Development Bank and the U.S. Eximbank have been very active in Mexico during the last four years. The environmental promotion campaign to sell services and equipment to Mexico will definitively continue in cooperation with the officials of the next Mexican administration. Local firms represent only 5 percent of the total market and no single foreign country other than the United States has an important share of greater than 20 percent in any media subsector. The countries whose companies have the most significant import shares are: Germany, Japan, Canada, France, and the United Kingdom. Companies from Germany are the chief competitors of U.S. firms. German companies have an 18 percent market share in the air and water subsectors. While the Canadian presence is not currently significant, companies from Canada have dramatically increased their market presence since 1990. A. Rank: 4 B. Name of Sector: CHEMICAL PRODUCTION MACHINERY C. ITA or PS&D Code: CHM 1993 1994 1995 D. Total Market Size: 1,300 1,800 2,200 E. Total Local Production: 70 90 170 F. Total Exports: 60 70 90 G. Total Imports: 1,290 1,780 2,120 H. Total Imports from U.S.: 903 1,246 1,484 I. Exchange Rate: 3.1 3.3 3.3 Comments: Mexico's chemical and petrochemical industries are among the country's most important economic activities, accounting for over 3 percent of the national GDP. It is linked to the industrial health of the nation, supplying 42 different sectors of the economy and receiving goods and services from some 31 sectors. Including parastatal PEMEX-owned operations, the Mexican chemical and petrochemical industry consists of over 400 companies operating approximately 468 plants. Analysts and government officials agree that NAFTA will have a positive effect on the sector. Mexican companies will need time to optimize the scale of their operations and technology levels to meet international standards. Investments will need to be made to upgrade several existing facilities. With the decision to privatize secondary petrochemicals two years ago, PEMEX will sell approximately 80 petrochemical plants to the private sector over the next few years. Recently a German company, BASF, announced plans to invest US $100 million in a new chemical plant in Altamira, State of Tamaulipas. Polioles, a joint venture between Mexican owned ALFA group and BASF, also announced a plan to invest US $ 25 million in a new plant. It is expected that at least 15 more national and foreign companies will also invest in the petrochemical complex in the state of Tamaulipas. Also PEMEX's officials indicated that of the 1994 budget of US $3.2 billion, 20 percent will be used to buy equipment for at least 20 plants that produce basic petrochemicals. A. Rank: 5 B. Name of Sector: TELECOMMUNICATIONS EQUIPMENT C. ITA or PS&D Code: TEL 1993 1994 1995 D. Total Market Size: 3,468.5 3,845.8 4,263.2 E. Total Local Production: 1,223.1 1,375.8 1,546.2 F. Total Exports: 250.4 275.4 302.9 G. Total Imports: 2,495.8 2,745.4 3,019.9 H. Total Imports from U.S.: 710.1 766.9 828.3 I. Exchange Rate: 3.1 3.3 3.3 Comments: Development of telecommunications infrastructure is one of the highest priorities of the Mexican Government. The Secretaria de Comunicaciones y Transportes (Secretariat of Communications and Transport - SCT) has continued to deregulate the telecommunications market. New concessions for radio, TV, cable TV, and value added services, such as paging, trunking and radiotelephony are now being granted. With the ratification of the North American Free Trade Agreement (NAFTA), investment restrictions in Mexico for U.S. providers of enhanced telecommunications services are being eliminated. The upcoming review of the Telefonos de Mexico (Mexican Telephone Company - TELMEX) privatization, will create more business opportunities for U.S. manufacturers of telecommunications equipment, as well as providers of service, such as long distance service. Homologation (which is testing required by the Mexican Government to assure that the products that are being imported into Mexico meet all the standards and will not damage the telecommunications network) approval must be obtained. However, the process is not difficult. Domestic production of telecommunications equipment is highly concentrated in a few ranges of products such as transmission equipment, cable, radio systems, parts for telephonic equipment and parts for TV and radio receivers. Major competition for U.S. products come from Japan, Sweden, France, Germany and Canada; mostly all of them are well known brands that have been in the Mexican market for a long time. A. Rank: 6 B. Name of Sector: COMPUTERS & PERIPHERALS C. ITA or PS&D Code: CPT 1993 1994 1995 D. Total Market Size: 514.5 591.7 680.5 E. Total Local Production: 116.8 134.3 225.9 F. Total Exports: 354.7 407.9 540.5 G. Total Imports: 752.4 865.3 995.1 H. Total Imports from U.S.: 578.0 664.7 764.4 I. Exchange Rate: 3.1 3.3 3.3 Comments: In this sector, exports are larger than local production due to re-exports mainly to other Latin American countries. The Mexican business community has been updating and expanding its installed base of computers. Also, the Mexican Government is investing in more computing equipment. The consumer preferences remain oriented to PC's. Regarding peripherals, U.S.-manufactured computer peripheral equipment is perceived as being of the highest quality; it also has a reputation for innovation and reliability. Among the most demanded computer peripherals are: laser printers; matrix printers; massive storage devices; modems; and routers. Competition for U.S. products mainly comes from Japan, Taiwan, United Kingdom, Germany, among others; nevertheless, the major manufacturers of computing equipment are already established in the Mexican market and have a very good reputation. Mexican consumers are very sensitive to price. There are no major trade barriers to imports of computers and peripherals. Imports of used or refurbished computing hardware require a prior import permit from the "Secretaria de Comercio y Fomento Industrial" (Secretariat of Commerce and Industrial Development - SECOFI), which is extremely difficult to obtain. Effective January 1, 1994, NAFTA has eliminated the Mexican tariffs for almost 70 percent of U.S. computer equipment, with the exemption of CPU's (central processing units) and some other peripherals such as impact printers. The remain current Mexican tariffs varies from eight to 16 percent and will be eliminated in equal annual stages over the five-year period. A. Rank of Sector: 7 B. Name of Sector: BUILDING PRODUCTS C. ITA or PS&D code: BLD 1993 1994 1995 D. Total Market Size: 1,270.8 1,382.4 1,515.4 E. Total Local Production: 701.7 756.2 819.6 F. Total Exports: 278.1 300.0 325.9 G. Total Imports: 847.2 926.2 1,018.7 H. Total Imports from the U.S.: 536.9 579.6 629.9 I. Exchange rate: 3.1 3.3 3.3 Comments: The building products market has grown rapidly in the last five years due to large public infrastructure investments. Two major programs are: 1) Highways: 60 percent of federal highways need repair and expansion. Annual investment of approximately USD 516 million is required for the next ten years. 2) Housing: In 1993, 324,000 houses were built. The Government budgeted USD 1.5 billion in 1994 to construct 350,000 houses. Another project scheduled is the first elevated train in Mexico City, with an initial investment of USD 217.7 million in 1994. The first phase consists of 22 stations over 25 kms. The three major contractors are: Tribasa; Grupo Mexicano de Desarrollo; and Bombardier, which recently bought the local subway car manufacturer. Mexico will need to import wood products to meet demand. Mexico produces little hardwood; most production is softwoods. Deforestation and lack of a good transportation network within Mexico's woodlands also has affected production. Consumers prefer U.S. manufactured products; however, there is heavy competition from South American and Asian countries. Quality, price and delivery times are key factors. A. Rank of Sector: 8 B. Name of Sector: MANAGEMENT CONSULTING SERVICES C. ITA or PS&D code: MCS 1993 1994 1995 D. Total Sales: 1,259.3 1,423.0 1,636.4 E. Sales by Local Firms: 763.6 862.8 992.2 F. Foreign Sales by Local Firms: 40.1 45.3 52.0 G. Sales by Foreign-owned Firms: 535.8 605.4 696.2 H. Sales by U.S.-owned Firms 482.2 544.8 626.5 I. Exchange Rate: 3.1 3.3 3.3 Comments: The consulting services sector is growing in Mexico. Due to the privatization of the banks in 1993, the number of consulting firms and individual consultants increased significantly. The Camara Nacional de Empresas de Consultoria (CNEC- Management Consulting National Chamber) indicates that the sector has grown 38.6 percent since 1991. Participation by Mexican consulting firms in the market is growing due to partnerships with foreign consulting firms, mainly for specialty support, in order to meet Mexico's infrastructure needs and the efforts of firms to increase their competitiveness, particularly in the wake of NAFTA implementation. A. Rank: 9 B. Name of Sector: APPAREL C. ITA or PS&D Code: APP 1993 1994 1995 D. Total Market Size: 5,723.3 5,841.9 5,967.8 E. Total Local Production: 5,159.8 5,211.4 5,263.5 F. Total Exports: 132.4 135.0 137.7 G. Total Imports: 695.9 765.5 842.0 H. Total Imports from U.S.: 322.1 370.4 426.0 I. Exchange Rate: 3.1 3.3 3.3 Comments: Each person in Mexico purchases an average of 12-14 garments per year. With a national population in 1993 of more than 84 million and a growth rate of two percent per year, the Mexican market for clothes is large and growing rapidly. The reduction and even elimination of tariffs for many apparel products under the North American Free Trade Agreement (NAFTA) should help American apparel products to gain market share in Mexico. The Mexican Government published several resolutions on dumping investigations against products imported from the People's Republic of China. A mandatory certificate of origin from all foreign suppliers or exporters is required. Products must be labeled in Spanish. The lowering of tariffs and the sudden influx of products from around the world have forced a comparison between Mexican and foreign products. As a result Mexican products have lost market share. Domestic consumers learned that foreign garments could be better quality at similar or even lower prices. The Mexican apparel industry is estimated to be comprised of 17,000 companies which produce clothes for men and women, boys and girls. Of these companies 77 percent are small sized, producing 5,000 to 20,000 garments per month. Due to their size and small scale production, these companies are unable to receive financing support to acquire high technology equipment, to buy fashion designs and to train employees. They copy designs from clothes of prestigious stores and make their own adaptations with cheaper materials and hand labor. These companies lack quality control and standardization for size, style and finishing detail. Medium sized companies have more management but still have problems obtaining financial support for improving technology, training employees and buying good designs. On the other hand, big companies are successfully surviving the foreign competition. They are backed by strong financial support and advised by prestigious fashion specialists and designers from around the world. They have advanced technology for cutting, designing and manufacturing. They are producing good quality. These big companies represent four percent of the Mexican production of apparel. The U.S. has been the main supplier of women's apparel with a 49.2 percent share of the import market. The main products supplied are non-knitted garments of cotton and man-made fibers, including coordinates, dresses, slacks, blouses, swimsuits and stockings. In 1992 the main competitors were Hong Kong with 12.4 percent of the imports market and the People Republic of China with 10 percent. Their position is growing as they continue to supply inexpensive garments but there could well be more antidumping cases lodged against them. Italy has four percent of the market, Germany three percent, and France two percent supply a small volume of high fashion, good quality and expensive garments. These countries are expected to maintain their market position during the next three years. U.S. clothes for women and girls are considered good in quality, design and price. Geographical proximity and four seasonal lines give buyers more choice of clothes appropriate for Mexican weather conditions. European manufacturers produce two seasonal production lines, limiting the variety. Mexican domestic producers give the stores a wide range of services such as returning or exchanging the merchandise that was not sold. Factory representatives assist stores in arranging and promoting the products, pricing merchandise and price cutting when the merchandise is not sold in a timely manner. They supply additional merchandise when the previous order is sold out quickly and provide special bonuses when prices must be cut. A. Rank of Sector: 10 B. Name of Sector: AIR CONDITIONING AND REFRIGERATION EQUIPMENT C. ITA or PS&D code: ACR 1993 1994 1995 D. Total Market Size: 1,066.6 892.3 978.9 E. Total Local Production: 743.9 619.4 678.9 F. Total Exports: 50.6 39.4 42.6 G. Total Imports: 373.3 312.3 342.6 H. Total Imports from U.S.: 2715 226.6 253.9 I. Exchange Rate: 3.1 3.3 3.3 Comments: The Mexican market for imported air conditioning and refrigeration equipment should provide solid opportunity. Imports, dominated by the U.S., are expected to average fourteen percent annual increases over the next two years. The best markets will be for refrigeration for containers, truck trailers, warehouses, and residences and air conditioning equipment. U.S. products are considered of the highest quality and have good sales potential in Mexico. The proximity between these two countries is an advantage U.S. firms have over suppliers from third countries, since delivery and other services are done in shorter time periods. In addition, the NAFTA will provide great opportunities for this kind of equipments coming from the U.S. A. Rank: 11 B. Name of Sector: MACHINE TOOLS AND METALWORKING EQUIPMENT C. ITA or PS&D Code: MTL 1993 1994 1995 D. Total Market Size: 379.9 425.6 477.0 E. Total Local Production: 31.7 32.6 33.6 F. Total Exports: 30.6 31.2 31.8 G. Total Imports: 378.8 424.2 475.2 H. Total Imports from U.S.: 227.3 256.8 290.2 I. Exchange Rate: 3.1 3.3 3.3 Comments: Mexico represents a very promising market for U.S. machine tools industry. Metal cutting machine tools such as grinding machines, lathes and drilling and metal forming machines such as punching, bending, presses and forming machines will be among those offering the best opportunities to U.S. companies due to new investments underway during the next several years in various industries including the automotive, autoparts and steel products industries, as part of Mexico's plans to modernize and expand its industrial base. Demand for imported machine tools used in the automotive, gear, axles and other forged parts, steel products, pumps, compressors, hydraulic components, valves and fittings, electrical household appliances and consumer electronics industries will grow at an average of 12 percent per year during the next three years. According to official sources, 92.5 percent of the total imports is new equipment and 7.5 percent is used equipment. Expansion of the manufacturing industry in the absence of a diversified machine tool industry has created a strong demand for imports. Mexican tariffs on most machine tools have been eliminated when the North American Free Trade Agreement (NAFTA) was implemented on January 1994. Few tariffs will be phased out within five years. The Mexican National Import and Export Bank (BANCOMEXT) announced two months ago a new program to promote exports of products made in Mexico. The program includes financing to buy technology to manufacture goods for export. Mexican Official Standards must be obtained from the Mexican Secretariat of Commerce and Industrial Development (SECOFI). Products must be tested and approval is granted after five or six weeks from the date of request. Products must be labeled in Spanish. Mexican importers usually like to work on 60 to 90 days credit terms, good prices and good quality. Those elements seems to be the most important factors in selling machine tools in Mexico. However, large companies that order custom-made machine tools usually pay 20% of the total value when placing the order, 30% when the machine is completed and 50% when the machine is delivered and tested. They prefer working with very reliable machine tool manufacturers regardless of price. The U.S. machinery industry has historically exported to Mexico. However, in the last ten years, competitors from other industrial and developing nations have challenged the U.S. position as an export leader. Manufacturers from Japan, Germany, Italy and other industrialized nations provide more comprehensive post-sales service, while Brazilian and Chinese companies provide a less expensive product. U.S. machine tools are known to end-users for quality and not so much for the post-sales factor. U.S. companies should strengthen this area if they want to increase and maintain their leadership in this market. Also, their representatives should be aware of new investments that several large end-users are considering making during the next five years. U.S. made machine tools are considered more durable than the machines manufactured in Mexico and other countries. Seven out of 10 machines imported from the U.S. are allegedly not adjusted correctly, and it sometimes takes too much time for a technician to arrive in Mexico to adjust it to the needs of the customer. Foreign companies often have access to concessionaire financing terms. A. Rank: 12 B. Name of Sector: MEDICAL EQUIPMENT C. ITA or PS&D Code: MED 1993 1994 1995 D. Total Market Size: 444.2 510.8 597.6 E. Total Local Production: 111.1 122.2 136.9 F. Total Exports: 29.8 28.7 31.7 G. Total Imports: 362.9 417.3 492.4 H. Total Imports from U.S.: 217.7 262.9 320.1 I. Exchange Rate: 3.1 3.3 3.3 Comments: The demand for medical equipment is increasing due to the opening of the Mexican economy. This market currently displays a growth trend of 15 percent annually. U.S. manufacturers hold approximately a 60 percent share of total import figures, and are expected to reach 64 percent share by 1995. Public sector hospitals account for almost 80 percent of the medical services provided in Mexico. Their acquisitions of medical equipment are made only through government bids. Local manufacturers dominate the sales of medical disposables while foreign firms have a strong presence in specialized medical equipment used for diagnostics. Both government and private hospitals are investing in high technology equipment. The North America Free Trade Agreement (NAFTA) is motivating health oriented groups to invest and work together in new ventures. Positive factors such as privatization and financing are creating a good opportunities for U.S. firms in the health care system in Mexico. A. Rank of Sector: 13 B. Name of Sector: AIRCRAFT AND PARTS C. ITA or PS&D code: AIR 1993 1994 1995 D. Total Market Size: 458.3 529.2 583.1 E. Total Local Production: 155.9 121.7 133.8 F. Total Exports: 110.2 68.8 74.3 G. Total Imports: 412.6 476.3 523.6 H. Total Imports from U.S.: 206.1 397.0 444.6 I. Exchange Rate: 3.1 3.3 3.3 Comments: Modernization and upgrading of airports and aircraft is a priority for the Mexican Government. Mexican airlines are expanding and/or renovating their fleets. Mexican authorities support private (domestic and foreign) investment in this sector. The number of foreign airlines has increased in recent years as well as the number of flights to Mexico City and other major and secondary cities. Improvements to major airports are being made. NAFTA entered into effect on January 1, 1994 creating demand for cargo transport and since in Mexico there are no specialized air cargo companies this sector holds great potential in the next few years. The passenger/cargo fleet increased from 6,123 in 1991 to 6,676 in 1993 and is expected to grow at an average annual rate of 5.6 percent over the next three years. A tariff war obligated all airlines to lower their prices, to make their operations more efficient and to create alliances. The low increase in the aircraft fleet has its roots in the difficult economic conditions of the aviation industry in Mexico as well as in the rest of the world. Prospects for U.S. manufacturers are fair, especially for mid- range aircraft which are used to serve most Mexican cities. Long- range aircraft also hold business opportunities since the major Mexican airlines are expanding their international service. Foreign manufacturers are the only suppliers of passenger/cargo aircraft. U.S. manufacturers face strong competition from France which has 47.6 percent of the import market share for this kind of product while the U.S. only has 40.8 percent. It has been alleged that Airbus Industries used predatory financial inducements to garner market share. A. Rank of Sector: 14 B. Name of Sector: FURNITURE C. ITA or PS&D code: FUR 1993 1994 1995 D. Total Market Size: 1 ,156.4 1,327.4 1,459.5 E. Total Local Production: 962.5 1,106.0 1,216.0 F. Total Exports: 62.3 61.2 67.3 G. Total Imports: 256.2 282.6 310.8 H. Total Imports from U.S.: 199.8 214.8 236.2 I. Exchange Rate: 3.1 3.3 3.3 Comments: Mexico is the second leading U.S. household furniture market after Canada. Although the household furniture industry has contracted due to the worldwide recession, it is expected that the market will grow as consumers have increased disposable income, and as NAFTA is implemented. Living room furniture sets have the largest sales in Mexico. Dining room furniture is the second most important and bedroom furniture is third. Individual pieces of household furniture that represent good sales opportunities are: living room center and side tables, queen-size beds, tubular bunk beds to be assembled with mattresses; bookcases to be assembled; tables for computers, complementary furniture (including small tables, bookcases or shelves for personal belongings.) The Mexican furniture industry experienced a very critical situation in the 1985-1989 period when 2,700 firms closed. The leading country suppliers to Mexico are the United States, then Japan, Germany, Italy and China. The proximity between Mexico and the United States, and now the NAFTA agreement, are important advantages U.S. firms have over third countries suppliers since it takes shorter time for delivery period and makes communications/travel easier between supplier and clients. Mexican buyers are very well aware of this circumstance and of the advantages of buying from U.S. sources. A. Rank: 15 B. Name of Sector: ELECTRONIC COMPONENTS C. ITA or PS&D Code: ELC 1993 1994 1995 D. Total Market Size: 569.5 637.8 714.3 E. Total Local Production: 388.8 441.2 500.7 F. Total Exports: 116.0 129.8 145.4 G. Total Imports: 296.7 326.4 359.0 H. Total Imports from U.S.: 165.2 181.7 199.8 I. Exchange Rate: 3.1 3.3 3.3 Comments: During the last few years, due to the liberalization of import regulations and now under NAFTA, many Mexican manufacturers of electronic components stopped producing and became importers and distributors. Almost all the local production is manufactured by the "maquiladora" industry. Electronic components are used in important growth sectors of the economy, such as computers, telecommunications, consumer electronics, office machines, as well as the entertainment industry. These rapidly changing industries demand technical improvements, quality, and reliability. Consumers prefer U.S. manufactured products. A. Rank: 16 B. Name of Sector: LABORATORY SCIENTIFIC INSTRUMENTS C. ITA or PS&D Code: LAB 1993 1994 1995 D. Total Market Size: 246.3 253.7 260.3 E. Total Local Production: 65.7 67.0 68.7 F. Total Exports: 31.0 32.3 35.1 G. Total Imports: 211.6 219.0 226.7 H. Total Imports from U.S.: 163.0 170.8 181.3 I. Exchange Rate: 3.1 3.3 3.3 Comments: Since Mexico is opening its economy, particularly under NAFTA, the need for modernizing laboratory equipment is a must. Nevertheless, the market is growing slowly at an average rate of 2.6 percent per year. The demand for imported equipment is growing. U.S. manufacturers hold a 75 percent market share, and they are expected to retain their position over the next two years. U.S. products are rated as high quality instruments with good after sales service. Presently, 60 percent of laboratory instrument acquisitions are made through government tenders in the health, education and scientific fields. Local manufacturers of laboratory equipment and instruments hold 25 percent of the market. Most of the local manufacturers are affiliates or branches of foreign firms. Germany and Japan are big competitors for the U.S. in this field. A. Rank: 17 B. Name of Sector: ELECTRICAL POWER SYSTEMS C. ITA or PS&D Code: ELP 1993 1994 1995 D. Total Market Size: 797.6 841.8 888.4 E. Total Local Production: 349.7 363.7 378.2 F. Total Exports: 110.3 113.6 117.0 G. Total Imports: 558.2 591.7 627.2 H. Total Imports from U.S.: 147.2 157.5 168.5 I. Exchange Rate: 3.1 3.3 3.3 Comments: New regulations allowing private investment in electrical generation will represent savings to the Mexican Government of $3 to 6 billion within the next three years. In addition, the North American Free Trade Agreement (NAFTA) is expected to generate business opportunities because import duties were lowered for these products. The Mexican power company is expanding installed capacity in order to meet demand, which grows approximately at an average annual rate of two percent. Several turnkey projects are now open to foreign investors, thus adding business opportunities. The National Commission for Energy Savings (CONAE) has identified many industries where cogeneration could be economically feasible, depending on future Federal Electricity Commission (CFE) decisions on purchase price for excess production. Project size ranges from one megawatt to well in excess of 100 megawatts, with most projects falling between 20 and 50 megawatts. Mexican Official Standards must be obtained from the Mexican Secretariat of Commerce and Industrial Development (SECOFI). Products must be tested and approval is granted after five or six weeks from the date of request. Products must be labeled in Spanish. In 1993, U.S. manufacturers had a 35.8 percent market share. Their main third-country competitors were Germany: 15.2 percent market share; Japan: 13.6 percent; France: 9.5 percent; United Kingdom: 9.3 percent; other third-country manufacturers had a 16.6 percent market share. U.S. manufacturers are expected to retain their position in this sector over the next few years. A factor working in favor for U.S. manufacturers is the fact that both the Japanese and the German currencies are appreciating against the U.S. Dollar. Manufacturers from those countries are forced to either reduce their revenues or increase their prices. U.S. will also enjoy a tariff advantage due to NAFTA. Quality, price, delivery times and after-sales service are important for success. A. Rank: 18 B. Name of Sector: COSMETIC AND TOILETRIES C. ITA or PS&D Code: COS 1993 1994 1995 D. Total Market Size: 433.8 479.4 536.9 E. Total Local Production: 247.3 272.0 304.6 F. Total Exports: 39.1 43.0 45.6 G. Total Imports: 225.6 250.4 277.9 H. Total Imports from U.S.: 135.3 150.2 169.5 I. Exchange Rate: 3.1 3.3 3.3 Comments: The Cosmetics and Toiletries industry registered an annual growth rate of 12 percent between 1992 and 1993. The industry is expected to grow at least 10% in the next two years. However, the market is revealing signs of saturation due to the many brands available in the market. Positioning in the market is now becoming difficult with the launching of many new products. Only twenty companies control 85 percent of the total market. U.S. products are considered to be reliable with good quality. United States firms are the most important foreign suppliers of cosmetics and toiletries to the Mexican market. U.S. exporters experienced a dramatic increase in sales, from US$50 million in 1990 to US$105 million in 1992. The market share for U.S. imports, however, fell from 42 to 29 percent over the same time frame. Nevertheless, the current market position of U.S. manufacturers is still very good, and will improve under NAFTA. French manufacturers hold a distant second place. Competititive advantages enjoyed by U.S. firms revolve around high quality products, reasonable prices, product variety, import novelty, and proximity to Mexico. Well-known Franch products enjoy fine reputations, but are expensive to the average Mexican consumer. Imports still enjoy substantial demand, owing to their novelty and quality. A. Rank: 19 B. Name of Sector: HOTEL AND RESTAURANT EQUIPMENT C. ITA or PS&D Code: HTL 1993 1994 1995 D. Total Market Size: 277.7 291.3 305.8 E. Total Local Production: 186.4 192.0 197.8 F. Total Exports: 42.8 44.1 45.4 G. Total Imports: 134.1 143.4 153.4 H. Total Imports from U.S.: 89.8 96.1 99.0 I. Exchange Rate: 3.1 3.3 3.3 Comments: Tourism is one of the highest priority sectors of the economy, because it supports directly and indirectly two million jobs and generates foreign income in excess of $3.8 billion annually. This industry is a source of significant domestic and foreign investment and second only to petroleum in foreign exchange earnings. The Mexican hotel industry is ranked eighth worldwide in number of rooms and is expected to grow five to six percent annually in the next four years as a result of increased private investment in the sector. 68 percent of Mexican imports of hotel and restaurant equipment and supplies are from the United States, followed by Japan, Germany and Italy which are increasing their market share more rapidly than the U.S. They offer more competitive financing terms and after-sales service. Mexican Official Standards must be obtained from the Mexican Secretariat of Commerce and Industrial Development (SECOFI). Products must be tested and approval is granted after five or six weeks from the date of request. Products must be labeled in Spanish. Quality, price and delivery times are key factors to be considered. A. Rank: 20 B. Name of Sector: COMPUTER SOFTWARE C. ITA or PS&D Code: CSF 1993 1994 1995 D. Total Market Size: 296.2 385.1 500.6 E. Total Local Production: 188.1 255.4 345.0 F. Total Exports: 0.0 0.0 0.0 G. Total Imports: 108.1 129.7 155.6 H. Total Imports from U.S.: 88.4 106.1 127.3 I. Exchange Rate: 3.1 3.3 3.3 Comments: Local production of software is mainly focused on administrative, accounting, education and training; domestic software manufacturers do not supply applications in more technical areas, such as statistics, computer aided design, word processing, spreadsheets, and communications. Although domestic production is significant, it does not represent a strong competition for U.S. software developers. U. S. software application packages are well accepted in Mexico due to the fact that the U.S. software developers still are the leaders in this field. In addition, most of the software application packages are designed to be used in a computer manufactured with U.S. specifications. The major competition for U.S. software comes from Japan. With the ratification of the North American Free Trade Agreement (NAFTA), the Mexican Government provides copyright protection for North American producers of computer programs; it also gives to the copyright owners of computer programs the right to prohibit the rental of their products. As of January 1, 1994, the Mexican tariff for software programs has been reduced to zero. A. Rank: 21 B. Name of Sector: FOOD PROCESSING AND PACKAGING EQUIPMENT C. ITA or PS&D Code: FPP 1993 1994 1995 D. Total Market Size: 117.9 147.4 191.7 E. Total Local Production: 21.6 24.8 29.8 F. Total Exports: 11.6 12.3 13.5 G. Total Imports: 107.9 134.9 175.4 H. Total Imports from U.S.: 86.3 101.2 136.8 I. Exchange Rate: 3.1 3.3 3.3 Comments: The industry is experiencing an average growth rate of approximately 25 percent per year. Mexican companies are becoming more aware of the new technologies developed for processing and packaging food. Additionally, the processed foods market has increased 8 percent in two years, and is expected to grow 10 percent in 1994. Opportunities for acquiring new equipment are real. The expectations are increases up to 30 percent each year for the next two years, and U.S. firms will benefit from NAFTA provisions. Companies are looking for environment-friendly packaging which will support the present government policy of protecting the environment. U.S. manufacturers are considered to offer good quality within the industry, although a major competitor is Italian equipment. A. Rank of Sector: 22 B. Name of Sector: PORT AND SHIPBUILDING EQUIPMENT C. ITA or PS&D code: PRT 1993 1994 1995 D. Total Market Size: 54.7 123.1 144.1 E. Total Local Production: 33.0 49.5 54.4 F. Total Exports: 22.1 14.0 15.4 G. Total Imports: 43.8 87.6 105.1 H. Total Imports from U.S.: 32.1 64.2 71.9 I. Exchange Rate: 3.1 3.3 3.3 Comments: The Mexican government created a new port organization called API-Administraci n Portuaria Integral (Integral Ports Administration). This program names the State as a regulator and supervisor of the ports activity; provides financial and administrative autonomy to each of the ports, and reduces norms and unnecessary regulations. The public sector plans to invest US 550 million in the decentralization and modernization of ports beginning in 1994. The private sector plans to invest US 380 million in the same process. By the end of 1994 it is expected that the main 24 Mexican ports will have been privatized. As of June 1 1994 there are only four ports operating under API administration: Manzanillo, Veracruz, Altamira y L zaro C rdenas. To make the Mexican ports more competitive, infrastructure projects are still underway. Some ports that are going through infrastructure upgrades are: Ensenada, Guaymas, Topolobampo, Manzanillo, Coatzacoalcos, Progreso, Mazatl n, Zihuatanejo and Quintana Roo. Under NAFTA, U.S. suppliers will enjoy a competitive advantage over other foreigners. A. Rank of Sector: 23 B. Name of Sector: RAILROAD EQUIPMENT C. ITA or PS&D code: RRE 1993 1994 1995 D. Total Market Size: 87.1 111.3 133.0 E. Total Local Production: 9.4 11.3 12.4 F. Total Exports: 5.9 5.1 5.5 G. Total Imports 83.6 105.1 126.1 H. Total Imports from U.S.: 30.5 49.8 56.3 I. Exchange rate 3.1 3.3 3.3 Comments: The railroad service in Mexico has been a strategic sector reserved to the government, but the government may make concessions to the private sector soon. Ferrocarriles Nacionales de Mexico is the government institution in charge of building, operating and maintaining federal railways and providing freight and passenger rail transportation. For many years the railroad system has been insufficiently funded. Much of the system dates from the late 1800's and the principal railway network increased only 1.5 percent in 10 years, from 20,121 km in 1982 to 20,425 km in 1992, while the number of locomotives and horsepower decreased. About 10,000 km of railways require urgent maintenance. The Salinas administration has restructured management and tried to promote rail freight usage. The Mexican government will spend about US 330 million on railroad development during 1994. The main objectives of railroad system modernization include: opening several railroad services to private investment (maintenance workshops for locomotives and railroad cars and weighing services) with the private sector investing approximately US 65 million during 1994; allowing up to 49 percent foreign ownership of these services; investing around US 373 million during 1994-1998 to acquire 130 new locomotives with 34 projected for purchase in 1994; modernizing traffic control systems with an investment of US 450 million in the next five years; reconstruction and replacement of about 6,330 freight cars in the next five years; etc. The main third country competitors for U.S. manufacturers of railroad equipment and parts are France and Germany followed by Canada and the United Kingdom. A. Rank of Sector: 24 B. Name of Sector: TOYS AND GAMES C. ITA or PS&D code: TOY 1993 1994 1995 D. Total Market Size: 202.6 150.5 165.3 E. Total Local Production: 137.0 99.6 109.3 F. Total Exports: 5.3 1.8 1.9 G. Total Imports: 70.9 52.7 57.9 H. Total Imports from U.S.: 28.7 23.6 26.4 I. Exchange Rate: 3.1 3.3 3.3 Comments: The Mexican toy industry has been in crisis in the last years mainly due to Far Eastern products that were introduced into the country through a black market at very low prices. The reduced costs of these imported toys and games made the domestic toys less afordable and market shares were gained by imported goods. Competition was very hard for local manufacturers. The Mexican government has taken some measures to prevent this ilegal practice and in some cases, has enforced countervailing duties, such as the 351% duty for Chineese products. Domestic production represents approximately 65.9% of the total market. Imports from from the U.S. are about 14.8% of total market representing 42.5% of total imports. Anti-dumping duties imposed on toys coming from the Far East have had an impact on total imports giving the best opportunities to toys coming from the U.S. which are expected to gain market share in the coming years, particularly under NAFTA provisions. A. Rank: 25 B. Name of Sector: SECURITY AND SAFETY EQUIPMENT C. ITA or PS&D Code: SEC 1993 1994 1995 D. Total Market Size: 173.4 182.1 191.2 E. Total Local Production: 168.8 178.3 188.5 F. Total Exports: 25.4 29.2 33.6 G. Total Imports: 30.0 33.0 36.3 H. Total Imports from U.S.: 23.3 26.8 30.8 I. Exchange Rate: 3.1 3.3 3.3 Comments: The use of personal protection equipment for workers is regulated by the Constitution and by Federal Labor Law which has been enforced more vigorously in recent years by the Government. As a result of these measures, some companies have started specifying the use of protective equipment as a work condition in collective contracts. Workers caught working without safety equipment can lose their jobs. These kinds of actions will increase the demand. Domestic production includes products manufactured under license from U. S. companies. Imports consist mainly of equipment not produced in Mexico, such as glasses, goggles, safety headgear for firemen, gas masks, professional security belts, lifesavers, and gloves made of plastic materials and vulcanized rubber. U. S. worker protection products are popular in Mexico because of their high quality, design and comfort at good prices. Main competition for U.S. products is from Italy, Taiwan, France and Germany, but the U.S. will benefit under NAFTA provisions for duty-free imports. A. Rank: 26 B. Name of Sector: SPORTING GOODS AND RECREATIONAL EQUIPMENT C. ITA or PS&D Code: SPT 1993 1994 1995 D. Total Market Size: 20.3 22.9 26.3 E. Total Local Production: 3.0 3.1 3.3 F. Total Exports: 0.1 0.3 0.8 G. Total Imports: 17.4 20.1 23.8 H. Total Imports from U.S.: 12.3 15.1 18.2 I. Exchange Rate: 3.1 3.3 3.3 Comments: This is a relatively new market in Mexico. The annual average growth rate is high, 13 percent, considering that this is an emerging market within the Mexican economy. The rate is anticipated to grow to at least 20 percent over the next two years. Fitness equipment for homes and gyms is in great demand since exercising regularly and staying healthy are becoming more important in Mexico. Hotels still lack health clubs and fitness centers. U.S. companies are known as the best promoters of sports within the industry, and NAFTA will inhance their prospects for sales. This type of equipment can be sold to health clubs, gyms, schools and homes. The number of major local manufacturers is around twenty. Their major activities are focused in manufacturing gym equipment, bicycles and soccer equipment. Competition from Europe accounts for 30 percent of the import market. A. Rank of Sector: 27 B. Name of Sector: FINANCIAL SERVICES C. ITA or PS&D Code: FNS DEC. DEC. DEC. GROWTH 1993 1994* 1995* RATE (US$ Billions) D. Commercial Banking 1 Total Credit Portfolio: (1) 145.1 166.9 191.9 15% 2 Corporate Loans: (1) 44.0 48.7 53.6 10% 3 Credit Card Balances: (1) 8.2 8.8 9.4 7% 4 Mortgage Loans: (1) 23.6 26.5 29.7 12% 5 Past Due Portfolio: (1) 10.5 9.5 8.5 -10% E. Leasing Portfolio Value: (1) 6.3 7.0 8.0 10% F. Factoring Portfolio Value: (2) 4.1 4.6 5.1 10% G. Insurance Policy Value: (1) 5.8 6.2 7.0 6% H. Stock Brokerage 1 Volume Traded, Debt: (1) 3,902.0 4,325.0 4,750.0 9% 2 Volume Traded, Shares: (1) 58.6 80.3 100.0 37% I. Mutual Fund Portfolio Value:(1) 24.3 27.9 31.0 11% J. Bonding Policy Value: (2) 219.8 236.6 255.5 8% K. Exchange House Revenues: (2) 91.2 97.9 105.7 8% *Estimated; (1) Figure in US $billion.; (2) Figure in US $million. Comments: Commercial Banking: The existing 18 commercial banks were sold to private investors in 1991-1992. Seventeen new banks have been authorized and seven others have submitted applications. Fifty-five foreign banks with representative offices in Mexico offer limited services. Twenty-four foreign financial companies (11 American) applied for authorization under April, 1994 regulations. Under NAFTA, U.S. financial firms will have increased opportunities in this market. Credit cards play an important role in Mexico's retail sector. Currently, there are about 130,000 establishments affiliated. In 1992, about US $10 billion in sales were through credit cards. The mortgage market has only recently begun to grow, as interest rates have moderated, making mortgages more affordable. The wealthy used to pay cash, while the rest built out of cash flow. Of about 17.8 million homes in Mexico, only 13 percent are middle- income and four percent upper-income homes. Six commercial banks offer mortgages but three (Bancomer, Banamex, and Serfin) have about 75 percent. Lack of a secondary market has hindered development, but the government is working to create one. Leasing. In Mexico, companies are subject to a minimum two percent tax on assets. This tax can be deducted for income tax purposes, but companies must pay it even if they are not profitable. The tax base for the tax on assets can be reduced by leasing equipment. Factoring. The very low current volume in this subsector should offer growth potential. Insurance. This segment holds opportunities because of current low volumes, inefficiencies in Mexican insurers, and government policies, such as obligatory car insurance. Stock Brokerage. This segment holds opportunities due to rapid growth of listings and volume, establishment of a second-tier market for mid-size companies, and placement of most government debt through the Mexican Stock Exchange. Mexican brokerage house commissions are high by U.S. standards. Mutual Funds. New regulations for managing mutual funds created opportunities for companies doing business in this sector. Bonding. The Mexican government requires a bond before awarding infrastructure projects, creating opportunities for bonding companies. Afianzadora Insurgentes has 25 percent of the market, and four firms total 65 percent of the market. Exchange Houses. Mexico's increasing foreign trade and investment offers opportunity at the wholesale level, while large and increasing tourist flows make retail operations attractive. BEST PROSPECTS - Agricultural Products A. Rank: 1 B: Name of Sector: Meat & Meat Products C. ITA or PS&D Code: 1993 1994 1995 D. Total Market Size 1,815 1,845 1,876 E. Total Local Production 1,720 1,730 1,740 F. Total Exports 10 5 2 G. Total Imports 110 120 130 H. Total Imports from U.S. 60 65 70 I. Exchange Rate 3.3 3.3 3.3 Comments: Opportunities continue to be very strong for fresh and specially frozen boxed beef. Exporters should be aware of new labelling and inspection regulations. Because of the everchanging regulatory environment in Mexico, exporters are encouraged to check with their importers for any new documentation or inspection requirements. U.S. exports were USD 337 million in 1993, and expected to grow signifacantly over next 5-10 years. A. Rank: 2 B. Name of Sector: Poultry & Poultry products C. ITA or PS&D Code 1993 1994 1995 D. Total Market Size 1,218 1,274 1,330 E. Total Local Production 1,090 1,140 1,190 F. Total Exports 0 0 0 G. Total Imports 128 135 142 H. Total Imports from U.S. 127 134 141 I. Exchange Rate 3.3 3.3 3.3 Comments: Opportunities are very strong for brand name products, further processed products, as well as raw materials for processing in Mexico. This is true for both chicken and turkey products. The commodity of poultry is limited under NAFTA, but good opportunities exist for joint venturing. U.S. exports reached a record USD205 million in 1993. A. Rank: 3 B. Name of Sector: Dairy (Milk, Cheese, Non Fat Dry Milk, Dry Milk, Butter) C. ITA or PS&D Code: 1993 1994 D. Total Market Size 721.1 723.4 E. Total Local Production 448.1 463.4 F. Total Exports 0 0 G. Total Imports 273 260 H. Total Imports from U.S. 273 260 I. Exchange Rate 3.3 3.3 Comments: U.S. Exports of Dairy Products to Mexico reached a record $244 million in 1993. There is an upward trend in the consumption of U.S dairy products. Confection, dairy, and bakery industry look for milk substitute ingredients to enhance domestic ice cream, yogurt, and cheese production. Consumers in the middle & upper income levels has become more selective and are willing to pay a premium for high quality products. A. Rank: 4 B: Name of Sector: Fresh Deciduous Fruit (Apples, Pears, Grapes) C. ITA or PS&D Code: (000 MT) 1993 1994 1995 D. Total Market Size 941 955 965 E. Total Local Production 793 795 795 F. Total Exports 50 50 50 G. Total Imports 198 210 220 H. Total Imports from U.S. 167 175 185 I. Exchange Rate 3.3. 3.3 3.3 Comments: U.S. exports to Mexico reached a record of $92 million in 1993. Mexico is US's number one market for apples and pears. The market is highly competitive with buyers knowledgeable of US varieties. Exporters need to complete on price and terms. Major distribution centers are the Central Markets in Mexico City, Guadalajara and Monterrey. A. Rank: 5 B. Name of Sector: Frozen Foods C. ITA & PS&D Code: 1993 1994 1995 D. Total Market Size N/A N/A N/A E. Total Local Production N/A N/A N/A F. Total Exports N/A N/A N/A G. Total Imports 102 125 150 H. Total Imports from U.S. 82 106 132 I. Exchange Rate 3.3 3.3 3.3 Comments: We have no hard data on "total" frozen foods as this category includes vegetables, desserts, meals, pastries, etc. Trade data is not available for a frozen food category. The data above is for vegetable, meals & desserts only. The key to selling is finding a distributor. Frozen foods is the fastest growing section in the Supermarket. A. Rank: 6 B. Name of Sector: Pet Food C. ITA or PS&D Code: 1993 1994 1995 D. Total Market Size 86 94 102 E. Total Local Production 65 68 71 F. Total Exports 1 1 1 G. Total Imports 22 27 32 H. Total Imports from U.S. 20 25 30 I. Exchange Rate 3.3 3.3 3.3 Comments: Mexican pet owners have only recently begun feeding prepared pet foods as opposed to table scraps the outlook for exports over the next 5 to 10 years is excellent. Supermarkets are the major retail outlet. Heavy promotional efforts are required to support new brands in market. A. Rank 7 B. Name of Sector: Snack Food (Mix nuts, Corn chips, Peanuts Potato chips, Popcorn) C. ITA or PS&D Code: 1993 1994 1995 D. Total Market Size N/A N/A N/A E. Total Local Production N/A N/A N/A F. Total Exports N/A N/A N/A G. Total Imports 38 39 40 H. Total Imports from U.S. 37 38 39 I. Exchange Rate 3.3 3.3 3.3 Comments: Mexico offers outstanding opportunities for U.S. snack food products. The U.S. is the dominant supplier to Mexico with 97% of the market. All items have exhibited growth rates over the last three years of more than 20% annually. A: 8 B: Name of Sector: Cotton C: ITA or PS&D Code: 1993 1994 1995 D. Total Market Size 165 168 172 E. Total Local Production 30 50 55 F. Total Exports 6 10 10 G. Total Imports 131 125 125 H. Total Imports from U.S. 120 115 117 I. Exchange Rate 3.3 3.3 3.3 Comments: All through the 1980's Mexico was a net exporter. Production has gone down greatly. Greater concentration in textile the industry will mean fewer buyers but ones who will buy greater amounts of US Exports which reached a record US$191 million in 1993. A. Rank: 9 B. Name Sector: Bakery (Sweet Biscuits, Cakes/Cookies) C. ITA & PS&D Code: 1993 1994 1995 D. Total Market Size N/A E. Total Local Production N/A F. Total Exports 12 13 14 G. Total Imports 39 40 41 H. Total Imports from U.S. 29 30 31 I. Exchange Rate Comments: During the last three years a preference of Mexican consumers for U.S. bakery products has increased as a consequence of the wide variety available in supermarkets. Opportunities continue to be very strong especially for frozen products. Exporters should be aware that a reliable distributor in Mexico is necessary. A. Rank: 10 B. Name of Sector: Distilled spirits (Brandy, Cognac, Rum, Scotch) C. ITA or PS&D Code: 1993 1994 1995 D. Total Market Size 182 186 100 E. Total Local Production 169 172 175 F. Total Exports 0 0 0 G. Total Imports 13 14 15 H. Total Imports from U.S. 1 1 2 I. Exchange Rate 3.3 3.3 3.3 Comments: Mexico represents only a fair market for U.S. distilled spirits. The best opportunityes is for Brandy. Bourbon is virtually unknown.