MEXICO - Economy
Senior Partner, KPMG in Mexico
Victor Esquivel has 25 years of experience advertising companies in industries such as private equity, telecoms, media and entertainment, energy, manufacturing, and automotive. Esquivel chairs the Executive Committee of KPMG in Mexico and is a member of the International Board of KPMG. His experience spans North, Central, and South America. Esquivel is a certified public accountant and is certified in finance by the Mexican Institute of Public Accountants and the Mexican Institute of Finance Executives. Additionally, he holds a master’s degree in finance.
More than half of our client base are SMEs right now. Many of them come to us because they are investing outside of Mexico, growing, professionalizing, and introducing corporate governance. Often they have been approached for a JV investment or are entering a project, in infrastructure for example, where there is a great deal of public and private participation while also requiring funds from international and multinational finance corporations. There is usually a turning point, though it may be the case that there is a succession issue or an open opportunity to enter the market. There is always a triggering event for all these companies that have been operating for several years. There is still plenty of room for growth in this segment in Mexico. Mexico has about 400 companies that have publicly listed equities or debts, compared to probably 12,000 in the US or 10,000 in Brazil.
Mexico has enjoyed a great period of macroeconomic stability in public finance and there are bumps here and there in the road; however, overall there has been a clear direction of where the government wants to take the country and the economy, which is currently challenged by the new administration in the US. Mexico continues to be supportive of open trade and free markets, and if it has to turn to different markets, that is an opportunity. For a long time, we have enjoyed the benefits of these policies. Sectors that have been closed for quite some time and are critical to a mature economy such as energy and telecoms have opened, making Mexico more competitive.
The biggest thing investors should remember is that there are cultural differences when operating in Mexico; not every country is the same. Companies need to understand this because it is extremely important. Secondly, companies need to be careful about the risks in general terms; they have to be cognizant of the fact that they may need a change in management to change the culture within companies, and this may require investment. They may need to invest in processes, corporate governance, and IT, which is also an opportunity for these companies to introduce best practices from all over the world to Mexican companies.
We have sought to be innovative with our clients; we provide audit, tax, and advisory services, but have realized that clients seek to solve an issue rather than just hire a consultant for a project. Thus, we try to be innovative with them and have technology solutions to improve the way we do things. We bring solutions from outside of Mexico and serve SMEs with the best practices from the US, Asia, and other parts of the world. Secondly, we seek to make things more efficient and try to differentiate the way we serve clients. Thirdly, we seek to improve the tools we use and are investing in artificial intelligence. We have, for example, an alliance with Watson to develop those tools for the delivery of services, namely robotic process automation. We are changing the way our clients demand services, and we have started to see clients request robotic process automation in their business processes, supply chain, and back office, and are bringing people from centers of excellence to improve and implement those strategies here. These companies will become digital, data-driven companies going into the future, and it is a challenge to also transform ourselves.
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