Who knows Carlos Slim Helu? Few people do, apart from readers of Forbes magazine, who have seen this 'anonymous' Mexican telecoms magnate, who heads a $49 billion empire, land in third place in the world rankings of wealthy individuals, just behind the much more media-friendly Bill Gates and Warren Buffet. Proof, if proof were needed, that there is still money to be made in the land of the Zacatecas mines. And that sharing it is not necessarily an equitable concept...
The astonishing rise of Mr Slim has the merit of highlighting the upheavals underway in a country often left in the shadow of its giant American neighbour, but also in that of its Latin competitor, the glamorous Brazil. Yet the figures speak for themselves: annual growth of 4.8 % in 2006 has bolstered Mexico's commercial strength, making it both Latin America's leading exporter and importer. This is a country whose ongoing fiscal consolidation policy is winning praise from international rating agencies and attracting foreign investors in a wide range of sectors, as demonstrated by the 400 or so French companies operating in Mexico, including automotive (Renault, Valeo), energy (EDF, GDF, Areva) and pharmaceuticals (Sanofi-Aventis), as well as a strong presence in banking, business services and the cosmetics and luxury goods sectors.
In the eyes of the world, however, the foreign presence in Mexico has only one face: that of the maquilladores, the special-status companies - no tax on imported inputs, no tax on exports - launched in the mid-1960s. In the eyes of the world, there is still a typical maquilla model: that of the low-cost textile factory run by American investors in border towns like Tijuana or Ciudad Juarez, where the dark side of the myth of the Wild West is reinvented every day...
Heavy dependence on the United States
But the cliché has outlived its usefulness, as can be seen from the list of companies compiled by the Maquilla Directory. It shows that behind the 100 largest maquilladores are not only American investors, but also Japanese, Finnish, Swedish, German and French funds. It also shows that textiles have given way to the automotive industry as the leading sector and that, far from being confined to border areas, the maquilladores have spread throughout the country. However, Mexico's trade performance is no longer limited to its 2,800 maquilladores, which still account for 55 % of the country's exports, but are no longer the main driving force behind trade, which over the last fifteen years has opened up other avenues to freedom. Starting, of course, with NAFTA (North American Free Trade Agreement), which has been active since 1994 and has tripled the value of trade in the region. A real revolution for the Mexican economy, extended by a dozen other agreements with third countries and groups of countries, in particular an "economic association, political consultation and cooperation agreement" signed in 2000 with the European Union. "Juan-Antonio Chelides of the Instituto Tecnológico Autónoma de Mexico confirms: "Whatever one's assessment of the collateral damage, in particular the heavy toll paid by farmers and the pressure exerted on wages, there is clearly a before and after NAFTA for the Mexican economy.
The country's transformation into an export economy has also changed the game for foreign investors, who can now use Mexico as an ideal platform for exporting to the North American continent: "The manufacturing output of subsidiaries of French companies in Mexico is, like Mexican manufacturing output, exported for the most part to the United States", notes the Mission économique in Mexico City. The Mission also notes that this new free trade route has also changed the situation for European exporters, who are now responsible for feeding the production machine: "Less than a third of French exports to Mexico are finished goods destined for the Mexican domestic market. Two-thirds of exports, on the other hand, are capital and intermediate goods that feed the Mexican production base, a large proportion of whose output is destined for the US market. Now topping the list is the automotive sector, which alone accounted for more than 29 % of total Mexican exports in 2006.
As a result, the strength of the Mexican economy, as well as that of French exports and investment in Mexico, depends to a large extent on trade with the United States, which alone accounts for almost 70 % of Mexican foreign trade. This dependence is not without risks, particularly those associated with the upheavals in the US economy, the aftershocks of which are bound to be felt beyond California, Arizona and Texas...
The threat of Chinese competitors
The other potential danger of this dependence on exports is the emergence of cut-price competitors in these vital markets. It is therefore understandable that the Mexican business press should report, with even greater concern than the European media, on the rise of China, which in 2003 overtook Mexico as the second largest supplier to the United States.
But the Chinese threat is spread very unevenly depending on the markets occupied by exporters flying the Mexican flag: "Of course, competition from Asian countries is quite fierce in textiles, including in the domestic market! Competition is also being felt in chemicals and electronics, but not in the automotive sector, which is still a market where Mexico enjoys a good image and recognised expertise", notes Juan-Antonio Chelides. So there are grounds for concern, but there's no need to panic.
