Rt Hon Hugo Swire MP is the UK’s Minister of State for the Foreign & Commonwealth Office and is responsible for UK relations with Latin America. The Minister recently accompanied HRH Prince of Wales to Mexico for the launch of the Dual Year – Mexico in the UK, the UK in Mexico. Minister Swire recently gave his insights and perspectives to KITE Invest on UK-Mexico relations, and main points of interest in terms of economic growth and potential in the tourism and education sectors.
KITE Invest: In September 2014, the UK Trade and Investment released a report entitled, ‘Mexico, A Destination for Growth: Market opportunities for UK retailers’, highlighting that “there has never been a better time to consider it as a business destination”. How do you see the potential for UK companies to enter the Mexican market, as well as, Mexico being an attractive market in its own right?
Rt Hon Hugo Swire MP: I see considerable potential for British companies to enter the Mexican market. All of the indicators look positive: Mexico is ranked higher in the World Bank’s ease of doing business report than its competitors; growth is forecast at nearly 4% for next year; it has a relatively young population; not to mention President Peña Nieto’s unprecedented reforms in telecommunications and energy. The UK has had a large UK Trade and Investment team based in four offices across Mexico for some time, but in May we took a step further by opening our British Business Centre in Mexico City, during a visit of the Lord Mayor of London. The Centre, which took only three months to reach capacity, offers short-term office space and facilities of briefings. During my visit in November, I was pleased to witness the signing of an agreement by one of the British companies who has used the Centre, Solar Century, to provide renewable energy to schools across the state of Nayarit.
KITE: Today, there are over a thousand UK companies within Mexico in numerous sectors. What are the growth prospects for British SMEs in Mexico?
HS: It’s important to remember that 99.9% of all British firms are SMEs, and they account for almost half of all jobs in the UK. So when I see potential for British companies in Mexico, small and medium size enterprises are at the forefront of my mind. We have a very good relationship with the Government and our countries have a strong history of doing business together. British companies invested heavily in Mexico during the nineteenth century, especially in ports, railways, mining and textiles. I accompanied Their Royal Highnesses, the Prince of Wales and the Duchess of Cornwall as they saw the legacy Cornish tin miners left in the central state of Hidalgo in the form of football and pasties. Perhaps most importantly, today the Mexican people really value the UK ‘brand’ and reputation for quality and there is a real appetite for British brands and goods in Mexico, as I saw when I launched LUSH Cosmetics’ in Mexico during my visit last year. The opportunities are out there, and I hope that our deliberate approach of promoting the success of British companies already in Mexico encourages new ones to enter the market.
KITE: In your estimation what is feasibility of doubling UK-Mexico bilateral trade and market share in 2015?
HS: Together with the Mexican Government, we have pledged to double trade between our countries to £4.2bn by the end of 2015. The latest full year figures, published for 2013, suggest we are making good progress towards this ambitious target, with trade up 34% since 2011. Our share of the Mexican goods import market has rebounded in recent years, but is still only 0.7%, while our 2 to 3% share of services imports looks healthier. Clearly there is huge potential for these figures to increase.
However, we know that if we are to reach our goal, and beyond, we can’t rely on the traditional tools of Government. We need to forge stronger ties between the UK and Mexico in the broadest possible terms. Initiatives like the 2015 ‘Dual Year’ of the UK in Mexico and Mexico in the UK will help to make that happen.
KITE: In terms of Mexico’s perception issue, what are your personal insights on how business and investments are affected by Mexico’s international image and how could it be addressed?
HS: I agree that it’s hard not to have seen the recent news coverage. I’m also aware from regular conversations with British businesses new to Mexico that concerns around security, ease of doing business and also language factors can be perceived as barriers to entering the market. However the consistent message that we hear from companies that have visited Mexico and started to do business there is that in reality they are not. Similarly, we know that Mexicans generally see the UK as rich in natural beauty but are less familiar with our interesting and exciting contemporary culture. It is important that businesspeople visit in both directions to fully understand the realities and opportunities of our countries.
KITE: Mexico and the UK came together and set the goal to try and boost bilateral trade and investment. Share your insight on the importance of economic sectors, such as tourism, and the aim to strengthen academic ties.
HS: You don’t build a relationship between countries, economic or otherwise, by Governments simply pressing a button. Achieving the ambitious targets we’ve set will rest fairly heavily on all sections of our society, building on what are thankfully already strong ties. The 2015 ‘Dual Year’ of the UK in Mexico and Mexico in the UK will go some way to making that happen. The State Visit to the UK by President Peña Nieto in March will be another high point, during which, a Business Forum, led by some of the most senior businesspeople in Mexico and the UK, will meet to identify ways to promote business links more effectively.
Tourism and education will be important, as you suggest. Last year, Mexican tourism to the UK increased by 28%, with approximately 100,000 visitors contributing £62 million to the British economy. We want to build on that, in both directions. The UK is already the second most popular destination for Mexican postgraduate study overseas, after the US and the biggest recipient of Mexican government funded postgraduates scholars, which we believe is likely to grow further. For our part, the British Government, through our work with private partners, will more than triple the number of Mexican Chevening scholars in the next academic year, who will join influential Mexican alumni from the last thirty years of the programme.
And there is excellent scope for building lasting relations between our academics and institutions. Mexican universities, funding bodies and its government are keen to partner with British institutions in a range of scientific and innovative fields. In December 2013, we announced that British and Mexican institutions looking to work together in this way would benefit from the newly established Newton Fund. We have allocated £4 million a year for the next three years specifically for such partnerships on a match-funded basis, working with a range of Mexican partners.
British companies have also been successful in winning contracts in the wake of President Peña Nieto’s primary and security education reforms, in English language training, educational software, laboratory equipment and student assessment tools.
KITE: What are your views on the strategic opportunities that Mexico offers to British investors and, particularly, new ones opened by the recently passed reforms?
HS: There has been a huge amount of interest in the unprecedented Energy and Telecoms reforms adopted by President Peña Nieto among international investors. His Government is committed to openness and transparency, and these reforms, particular in the energy sector, are clearly an excellent opportunity for Mexico to open up to the global market. And I am confident that with British expertise well positioned, both the UK and Mexico can reap significant benefits.
KITE: The Prince of Wales recently launched the Dual Year in Mexico City, could you highlight some of the activities developed by the Foreign and Commonwealth Office for 2015?
HS: I was honoured to accompany HRH Prince of Wales during his visit to Mexico, and to attend the launch of the Dual Year. 2015 will be about providing opportunities for the people of both of our countries to better understand one another, shatter outmoded stereotypes, create new connections and find new opportunities to work together.
We have developed exciting programmes of events covering culture, the arts, education, science, innovation, trade and investment in both countries in the hope that we build a legacy that will last well beyond 2015. The visit of President Peña Nieto to the UK, our tripling of Chevening scholarships available to Mexican students and the UK being the guest country of honour at the internationally renowned Feria Internacional del Libro in Guadalajara will all be high points, I hope, in our bid to achieve it.