A joint project of HSBC and The Conference Board of Canada, the report—Reaching Out for Business Opportunities in Mexico—is meant to help Canadian companies be financially successful in the long run and sorts through which industries could do well in the current Mexican economy.
The financial services firm believes that “the more Canadian firms tap into the world’s opportunities—including those in Mexico—the greater the odds of ensuring our long-term economic health,” explains Linda Seymour executive vice president and head of commercial banking at HSBC Bank Canada in her foreword to the report.
Beauty benefits
The full report focuses on the industries that can best participate in Mexico’s manufacturing sector as well as the consumer goods sector.
Mexico’s growing middle class has emerged as a consumer economy with a viable demand for personal care products. This presents an opportunity for Canadian companies to locate manufacturing facilities in Mexico and to export finished goods to the country.
The reports points out that an “industry that could significantly benefit from Mexico’s rapidly growing middle class is 'other chemical manufacturing,' which includes the soap, perfumes, and cosmetic manufacturing segments.”
And it continues, “Canada’s presence in the Mexican market seems well-poised for rapid growth in coming years. Canada’s soap, perfumes, and cosmetic manufacturing exports to Mexico increased by two-thirds between 2010 and 2015, from $15 million to $26 million.”
The report suggests that now is the time for Canadian cosmetics and personal care makers to get into business in Mexico. Waiting could mean losing out to the competition: “Canadian cosmetics manufacturers’ competitive advantage in non-U.S. countries generally rests on companies’ ability to establish themselves at an early stage in fast-growth markets, and to commercialize new and innovative products.”
Business challenges
International business comes with added challenges as the Reaching Out for Business Opportunities in Mexico report makes clear. “Doing business in Mexico does not come without its challenges, particularly in the areas of security, border clearance, and corruption,” according to the conclusion. But though interviews with companies already active in the Mexican economy HSBC has found that “Canadian companies confirmed the importance of having a network of useful contacts on the ground, as well as an in-depth understanding of the market.”