Transcript Diapositiva 1

China: a Threat or an
Opportunity to Mexico?
Renato Balderrama
Institute of Asia Pacific
ITESM, Mexico
[email protected]
Where is Mexico Now?
!Mexico vs China¡
economías
laseconomies
tamaño
TheElsize
of de
the
1,600
Miles de millones de dólares
1,400
1,200
1,000
800
600
400
200
China
Mexico
Corea
Indonesia
Source: World Bank, 2004. www.worldbank.org/data
Tailandia
Malasia
Población
Population
1400
1288
1200
1000
800
600
400
214
103
200
62
48
25
0
China
Indonesia
Mexico
Tailandia
Source: World Bank, 2004. www.worldbank.org/data
Corea
Malasia
Crecimiento
económico
1980 a
Economic
Growth 1980
to2004
2004
Mexico
179,1
Japan
182,4
New Zealand
193,7
Canada
194,5
United States
209,8
219,8
Australia
288,8
Chile
294,4
Indonesia
401,8
Thailand
417,1
Malaysia
444,4
Vietnam
470,4
Singapore
881,5
486,7
Korea
China
100,0
200,0
300,0
400,0
500,0
600,0
Indice de crecimiento economico 1980 = 100
700,0
Economic Growth Index 1980=100
Source: World Bank, 2004. www.worldbank.org/data
800,0
900,0

The IMD WORLD COMPETITIVENESS YEARBOOK
2004, classifies factors and levels of competitiveness from
60 countries, locate Mexico in 56 place, measuring the
relation between the propitious environment to create value
in enterprises and the prosperity share to the citizens. In
just 5 years Mexico has drop drastically, from 33 place in
2000 to 56 place in 2004.
Mexican Competitiveness
2000
2001
2002
2003
2004
30
35
33
36
40
45
43
50
53
55
56
60
Ranking
Higher Labor Costs
Sueldos
mensuales
1995-2001
Monthly
Salary 1995-2001
400
379.49
350
323.20
300
264.12
Dólares
250
200
229.84
216.60
193.97
174.62
150
121.4
94.2
105.0
84.1
100
76.3
61.3
69.1
50
0
1995
1996
1997
1998
México
China
China
Mexico
Source: with OIT data, www.laborsta.ilo.org/cgi-bin/
1999
2000
2001
Coeficiente
de inversion
como %Formation,
del PIB
Coefficient
of Gross
Fixed Capital
% GDP
45.0
China
Sudeste Asiatico
China
Corea
40.0
Mexico
Singapur
35.0
30.0
25.0
Mexico
20.0
15.0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Source: World Bank, 2004. www.worldbank.org/data
Inversión Extranjera Directa
Foreign
Direct Investment
10
China
Indonesia
Korea, Rep.
Malaysia
Mexico
Thailand
China
8
% del PIB
6
4
2
0
Mexico
-2
-4
1990
1991
1992
1993
1994
1995
1996
1997
Fuente: World Bank, 2004. www.worldbank.org/data
1998
1999
2000
2001
2002
China is number one attracting FDI, competing directly
with Mexico…
IED directed to Mexico*
IED directed a China
(Thousands millions of USD)
(Thousands millions of USD)
16
55
52.7
15
50
14
13
45
12
40
11
10
37.5
9.5
9.4
35
9
8
30
2003
2002
2001
2000
1999
1998
1997
1996
1995
2003
2002
2001
2000
1999
1998
1997
1996
1995
* Excluding Banamex-Citigroup operation in 2001
Source: INEGI, Ministerio de Comercio de China
The Economy of Knowledge
Científicos
e ingenieros
dedicados adedicated
la investigación
y desarrollo
Scientists
and Engineers
to R&D
2500
Per each million persons
Por cada millón de personas
2000
1500
1000
500
0
1995
2002
México
Corea
Source: World Bank, 2004. www.worldbank.org/data
China
The Economy of Knowledge
El reto
de la I&Dof D&R
The
Challenge
the GDP
R&D of
investment
of gastos
%
% de
en I&D in
respecto
al PIB
3.5
3
2.5
2
1.5
1
0.5
0
Japon
Corea
China
Source: World Bank, 2004. www.worldbank.org/data
Mexico
Malasia
The Economy of Knowledge
Exportaciones
con alto
contenido
Exports with
High
Techtecnológico
content
40
35
31.3
34.2
30
29.1
26
25.6
GDP
%%ofdel
PIB
25
26.2
23.7
22.4
22
21.7
20.3
18.8
20
18.4
17.1
15
13.4
14.5
16.7
15.3
12.1
20.4
15
12.7
10.1
10
8.1
5
0
1994
1995
1996
1997
China
1998
Corea
Source: World Bank, 2004. www.worldbank.org/data
1999
Mexico
2000
2001
Research and Development as a Share of GDP
China
1.40%
1.20%
Percent of GDP
1.00%
0.80%
New, More
Comprehensive,
Definition
0.60%
Old Data
Definition
0.40%
0.20%
0.00%
1989
1990
1991
Source: Barry Naugthon
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
How many companies in Mexico do research and
development?
6%
94%
Sí
No
Source: INEGI, National Survey of Employment, Salaries, Technology and training in Manufacture
Sector, 2002.
Why Chinese
Competitiveness is a Huge
Threat to Mexico?
MEXICAN EXPORT GEOGRAPHY
Non oil Exports
Year Total Exp
(musd)
1980 $ 18,000
Oil Exports
% Value (musd)
58% $ 10,441
42%
$
2005 $ 200,000
10%
90%
$180,000



$ 20,000
% Value (musd)
7,559
Mexico has 12 Free Trade Agreements signed
between 1992 and 2005 with 43 countries. NAFTA is
the most important one.
One of eight formal employees is directly link with the
export sector.
From the 803,902 enterprises registered in Mexico,
just 35,111 export (4.4%). In 2004, their sells were
$188,500 mdd (37% of GDP).
THE SIZE OF THE ENTERPRISES
THAT EXPORT
Micro
Caract.
Annual Exports
inferior to
$200,000 usd
Small & Medium
Annual Exports
between
$200,000dls and
$20 m. of usd
Represents 80% of the total 12% of the total
export enterprises export enterprises
Biggs
Annual Exports
more than $20 m.
of usd
8% of the total
export enterprises
Contribute 0.5% of total
12% of total exports 87.5% of total
exports
exports
Sectors
90% manufacture 76.8% manufacture 89.2% manufactu

ENTERPRISES LOCALIZED PER
FEDERATION ENTITITY (From 31states)

Highly Concentrated: (US Border)
4
entities represent 60% of national exports:
Chihuahua, Baja California y Tamaulipas (border)
and Mexico City.
 7 entities represent 34% of national exports:
Nuevo León, Coahuila, Sonora (Border) Jalisco,
Edo. de México, Puebla, SLP y Querétaro.
 20 entities represent 6% the rest of national
exports
ORIENTATION OF EXPORTS PER SIZES
Size
Micro
Dependence of
Exports to USA
Diversification
Represent 65% of their
sells
Of their 30 main destinies, 19
are L.A. countries = to
23.8% exports value.
Small & Represent 75% of their
Medium sells
Biggs
Represent 90.9% of
their sells
Of their 30 main destinies, 16
are L.A. countries = to 11.7%
exports value
Of their 30 main destinies, 14
are L.A. countries = to 5.8%
exports value.
In the USA market, the Chinese
participation surpass Japan and Mexico,
and was already threaten Canada…
Participation in the US market
(% accordance with total imports)
25%
20%
Canada 17.8%
Japan 9.4%
15%
China 12.0%
Mexico 10.9%
10%
5%
0%
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
Source: Secretaría de Economía, U. S. Census Bureau
…and its penetration speed generates a
growing competition for the Mexican
products in US market.
Profit/Lose of participation in US Market
(% with respect to 1993 )
8%
China
7%
Profit
6%
5%
México
4%
3%
2%
1%
Canadá
Lose
0%
-1%
Japón
-2%
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
Source: Secretaría de Economía
Categorization of Manufacture Branches according with the type o f Trade
competition between Mexico and China In 2003
Branches of Mexican
Dominium (no threat
short and medium
run)
Chinese
competitiveness in
Branches of Mexican
dominium (red
warning)
(1)
(2)
Mexican
competitiveness in
Branches of Chinese
dominium (China is
growing)
(3)
Branches of Chinese
Dominium (due in part for
the EZZs and FDI)
(4)
Automobile
Industrial
Machinery
Home Appliances
Toys and entertainment
products
Automobile
Accessories and its
parts
Instruments of
Mesurament and
Control
General Equipment
Sintetics and cotton
Cloth and Textiles
New and second
hand Autobuses
Computers
Writing and drawing
devices
Computer boards and
Typewriting machines
Complete and
assembly trucks
Telecommunications
equipment
Sport Shoes
Computer appliances
Motors y its parts
TVs and VCRs
Kitchen tools and
devices
Furniture and home devices
Process products of
iron and steel
Electric Generators
and accessories
Electric Appliances
Textiles and cotton
Fuente: aregional.com
Stereos and Audio equipment



There is 81 countries that goes faster than México
entering the US market. México is the country that
has lost more presence in the US market among its
main suppliers.
China in just 12 months (2004-05) won 1.64
percentage points of participation in US market. The
strongest participation has been in the Automotive
and Auto parts industry.
Of the top 10 Mexican companies, half belongs to
the Automotive industry: GM, Daimler Chrysler,
Delphi Automotive, Nissan & VW. Together in
Mexico concentrate earnings of $38,145 musd, almost
¼ of the top 100 Mexican companies. This 5
automotive reported together global earnings of
$622,931 mdd, a number similar to Mexican GDP.
Exports to USA in 2005 (millions usd)
January
China
Canada Mexico
17,864
21,726 12,106
May
19.050
23,056
14,406
July
21,283
20,607
12,742
(% of change w/
July of 2004)
21.2%
3.4%
4.2%
Source: US Trade Department
… AND THIS THREAT IS
GOING TO INCREASE…!!!
Triangular Trade Flows 2003
US with China:
$120 B.
24
15
Bilateral Deficits
China with:
(US Dept. of
Commerce)
40
Taiwan $40 B.
Korea
$24 B.
Japan
$15 B.
Malaysia $8 B.
5
$120 B.
8
Thailand $5 B.
(Deficits are
shown according
to statistics of
the importing
country.)
Source: Barry Naughton
How is Mexico confronting the
Chinese “Phenomenon”?
Is there a Mexican “FOX”
Strategy?
LEGAL FRAMEWORK OF MEXICO-CHINA RELATION
Before and during Fox Administration (1973-2005)
Agreements
Before Fox, from 1973 to 2000 (27
years) were some agreements in: tourism,
Signed
Total 8
In to Force
Total 8
17/08/2004
24/01/2005
24/01/2005
24/01/2005
24/01/2005
24/01/2005
24/01/2005
Pending
Pending
Pending
24/01/2005
24/01/2005
24/01/2005
24/01/2005
trade, scientific and technological and
agriculture cooperation. 1973 (1), 1978 (1),
1986 (1), 1993 (3), 1997 (1) and 2000 (1)
Air transportation
Sea traffic and transportation
Mexico as a Chinese tourism destination
Sanitary Measures
Credit Lines for bilateral enterprises
Mexican avocado export to China
Chinese apple export to Mexico
Source: Ministry of Foreign Affairs Legal Advisory
VISITS AND MEETINGS DURING FOX ADMINISTRATION
DATE (8)
PARTICIPANTS
AGREEMENTS
Jun/2001
(In China) Fox & Hu Jintao
1st Official visit to China.
Oct/2001
(In China) Fox & Hu Jintao
IX APEC Summit at Shanghai, China
Jun/2003
(In France) Fox & Hu Jintao G-8 Summit at Evian, France.
Oct/2003
(Thailand) Fox & Hu Jintao
XI APEC Summit at Bangkok, Thailand.
12/dec/03 (In Mexico)
Fox and PM Wen Jiabao
After 32 year of diplomatic relations,
accordance to establish the 1st Binational
Permanent Commission (a dialog at the
highest level)
16 -17
(In China)
Aug/2004 Derbez and PM. Wen Jiabao
1st Binational Commission meeting Several
areas: trade, tourism, science, traffic, etc.
Jan/2005
(In Mexico) Fox and
V.P. Zeng Qinghong
Following up the agreements signed 2004
and discuss the Hu Jintao’s visit and
12-15
Sept/05
(In Mexico)
Fox & Hu Jintao
Hu Jintao’s visit to North America.
1st Visit to Mexico (and Canada)
 New consular office in Guangzhou
 Hu Jintao proposed to Mexico the
establishment of a “Strategic
Total Trade Mexico-China (millions of usd$)
Year
Total Trade
%
Export
Import
Balance
1993
431.2
-4.3
44.8
386,4
-341,7
1997
1,293.3
62.1
45.9
1,247.4
-1,201.5
2000
3,083.2
50.6
203.6
2,879.6
-2,676.0
2001
4,309.0
39.8
281.8
4,027.2
-3,745.5
2002
6,730.3
56.1
455.9
6,274.3
-5,818.4
2003
9,863.9
46.4
463.0
9,400.8
-8,937.8
2004
14,867.0
66.3
467.0
14,400.0
-13,933.0
2005
15,500.0*
34.7
500.0
15,000.0
-15,000.0
Source: SE and BM (* estimated)
Mexican most important Trade Partners (Total trade)
Comparison 1997 and 2003
1997
2003
Country
Trade
(MD)
USA
176,187
80%
USA
Japan
5,490.0
2.5%
China
9,547.28
2.8%
Germany
4,621.1
2.1%
Japan
8,306.67
2.5%
Canada
4,124.2
1.9%
Germany
8,076.27
2.4%
Spain
1,916.7
0.9%
Canada
7,124.75
2.1%
Korea
1,899.4
0.9%
Korea
4,119.32
1.2%
France
1,612.3
0.7%
Spain
3,770.42
1.1%
Italy
1,599.4
0.7%
Brazil
3,675.17
1.1%
UK
1,579.4
0.7%
Taiwan
2,797.46
0.8%
Brazil
1,572.3
0.7%
Italy
2,764.21
0.8%
%
Country
Trade
(MD)
%
252,640.42 75.1%
Subtotal
200,601.8
91%
Subtotal
302,821.97
90.0%
Total
220,045.0
100%
Total
336,302.50
100%
Source: SRE
Mexican most important Export Markets
Comparison 1997 and 2003
1997
2003
Export
(MD)
Country
Export
(MD)
USA
94,184.8
85%
US
Canada
2,156.1
2.0%
Canada
2,898.46
1.8%
Japan
1,156.3
1.0%
Germany
1,800.53
1.1%
Spain
939.0
0.9%
Spain
1,511.03
0.9%
Chile
842.3
0.8%
Switzerland
699.29
0.4%
Germany
718.7
0.7%
Aruba
685.58
0.4%
Brazil
703.0
0.6%
Holland
603.82
0.4%
Venezuela
675.0
0.6%
Dutch A.
567.93
0.3%
UK
664.2
0.6%
UK
556.82
0.3%
Colombia
513.3
0.5%
Japan
544.56
0.3%
Subtotal
102,552.7
93%
Subtotal
156,626.48
94.7%
Total
110,236.8
100%
Total
165,342.50
100%
%
Country
%
146,758.46 88.8%
Mexican most importan Import Markets
Comparison 1997 and 2003
1997
2003
Import
(MD)
%
Import
(MD)
%
USA
82,002.2
75%
USA
105,881.96
61.9%
Japan
4,333.6
3.9%
China
9,070.40
5.3%
Germany
3,902.3
3.6%
Japan
7,762.11
4.5%
Canada
1,968.0
1.8%
Germany
6,275.74
3.7%
Korea
1,831.0
1.7%
Canada
4,226.29
2.5%
Italy
1,326.0
1.2%
Korea
4,028.11
2.4%
China
1,247.4
1.1%
Brazil
3,250.06
1.9%
France
1,182.4
1.1%
Taiwan
2,692.10
1.6%
Taiwan
1,136.5
1.0%
Malaysia
2,644.09
1.5%
977.7
0.9%
Italy
2,506.68
1.5%
Subtotal
99,907.1
91%
Subtotal
148,337.54
86.8%
Total
109,808.2
100
Total
170,960
100%
Country
Spain
Source: SRE
Country
In Europe happened the same phenomenon:
Chinese participation is high and its speed of
penetration surpass Mexico’s
Participation in EU market (% with respect to
total imports)
10.0%
0.80%
Accumulate increment in the UE market
participation
(respect to 1993, percentage points )
6.0%
China
0.75%
9.0%
5.0%
0.70%
Mexico (Right
scale)
8.0%
4.0%
0.65%
7.0%
0.60%
6.0%
China (Left
scale)
5.0%
4.0%
0.55%
2.0%
0.50%
1.0%
0.45%
0.0%
México
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
Source: Eurostat
3.0%
FINAL CONSIDERATIONS
China as a potential Opportunity?!!!!
Chinese investment in Mexico (thousands of usd$)
Year
1994
1996
1998
2000
2001
2002
2003
2004*
* Until March
Source: SE
Annual
1,476.3
10,068.8
11,388.8
10,770.6
2,257.3
2,451.5
5,655.3
3,833.0
Accumulated
1.476.3
16,960.9
33,263.3
49,018.1
51,275.4
53,726.9
59,382.2
63,215.2
TWO MEXICAN VISIONS
The only solution for the Mexican Economic Problems is
to be more close to the North American Economy. J. Serra
Puche: “We have to increase our approach to USA”.
2. There are other solutions:
a) To take advantage of other Agreements in order to
diversify the Mexican Exports and bring more FDI. For
example: UE, Mercosur, etc.
b) Approach to Asia-Pacific: w/Japan: there’s already a Free
1.
Trade Agreement.





To China, offering:
The Mexican Geographical position
The NAFTA benefits: Tariffs and other benefits
BAASC: Anti-Smuggling and Contraband Certify
Mexican FTA’s with 43 countries (UE, Central America,
South America, Japan, etc).
More than 20 years in manufacturing experience.
THANKS!!!!!!




Dra. Lourdes Dieck at MEXICAN SECRETARY OF
FOREIGN AFFAIRS (SRE & SE).
Dr. Victor Lopez Villafañe at the CENTER FOR
NORTH AMERICAN STUDIES, ITESM.
Dr. Clemente Duran at the CENTER FOR
COMPETITIVENESS, UNAM.
Dr. Barry Naugthon, at the ASIA PACIFIC
CENTER, UCSD.