BRANCHING OUT
Mexican companies have become extremely successful in extending their operations overseas to the large markets to the north and south.
We started exporting semi-processed fabric to the US in 1986, before NAFTA. We were growing faster than the domestic market could absorb and had two choices: to pause our growth or export to foreign markets. We tried to look for markets in Central American and the Caribbean; however, they were too small and informal, which is why we decided to explore the US. Business was great even before NAFTA and with tariffs on fabric of 4.5-7%. Today, we have settled in that market. We have an office in New York with 20 employees and a distribution center in North Carolina with 40 people. We also acquired a Japanese company to distribute our products. In the 32 years we have been exporting, we have not had any products returned for bad quality. After NAFTA, we started producing denim. We approached Levi's, which agreed to have us produce its goods. A decade later, our American competitors began to produce clothing. We have around 20 clients in the US, four or five of which take 80% of what we export.
By the end of 2013 we had already consolidated our position in the domestic market of Mexico and were the second-largest Mexican carrier. Since 2011 we have started an intense internationalization, and in the last two years, 100% of our growth has been in the international market. We are now in the US with new bilateral agreements flying to New York, Miami, Orlando-Sanford, Houston, Dallas-Fort Worth, San Antonio, Las Vegas, Chicago, and Los Angeles. All across Latin America, Mexico has bilateral agreements with different countries, and we still have to deal with the existing terms of each agreement. Guatemala was our very first international operation. We opened our first service into Guatemala and then followed with Costa Rica. We then opened a route to Bogotá and now also fly to Lima. In the Caribbean, Interjet is the leading Mexican airline covering Cuba and serves Havana, Varadero, and Santa Clara. Once tourism picks up in Cuba, this will be a huge opportunity for us.
In 1999 we only had bathroom faucets and fittings and in 2010 we started building a chinaware operation and subsequently a mid-range segment for faucets and fittings as well as kitchens and closets and doors. This has been highly successful so far. In terms of international expansion, we have mainly focused on Spanish-language countries because they have a similar culture, a similar way of thinking, and similar tastes. It has been encouraging and we have found the way to enter those markets. We have a huge challenge to conquer the US and Canada, and we have a special strategy in order to get into those countries as well. At this point in time, our strategy has been to look south; however, we are starting to look north as well. We are still only focused on this continent because there are still many things to be done. It is far easier to export to the US and Canada and as long as we see a potential market to grow in we will continue to focus on this segment of America.
At the time of our founding, my father sought to become a distributor for other companies. Our main goal at that point was to have national coverage; in those days it was important. We had to open up locations everywhere in the country and establish distribution networks because one day we would have competition and the barriers of entry would be more difficult if we only had a distribution center in Mexico City. From Mexico, we moved to Central and South America a little more than 10 years ago, and today we are in Guatemala, Costa Rica, Panama, Colombia, and Peru. Recently, we just acquired a company in Canada. We started as a distribution company; however, we realized that we needed to manufacture certain products that we sell, mainly because of freight and other reasons, so we had to produce them in Mexico. We produce products under license agreements from the original designers or manufacturers, but the most important thing to is to understand the know-how of everything we build.
BRANCHING OUT
TABLE OF CONTENTS
Interview
Alicia Bárcena, Executive Secretary , UN Economic Commission for Latin America and the Caribbean (ECLAC)
TBY talks to Alicia Bárcena, Executive Secretary of the UN Economic Commission for Latin America and the Caribbean (ECLAC), on Mexico's structural reforms in line with the 2030 Agenda and maintaining consistent growth.
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Frederic García, President, Consejo Ejecutivo de Empresas Globales (CEEG)
TBY talks to Frederic García, President of Consejo Ejecutivo de Empresas Globales (CEEG), on making Mexico a more attractive FDI destination and promoting growth and development in the South and Southeast.
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Dr. Enrique Cabrero Mendoza, Director General, National Council of Science and Technology (CONACYT)
TBY talks to Dr. Enrique Cabrero Mendoza, Director General of National Council of Science and Technology (CONACYT), on investing more in science, technology, and innovation and positioning Mexico as a knowledge economy.
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Sergio Ayala, General Manager, GIFAN
TBY talks to Sergio Ayala & Alberto Rementeria, Directors of GIFAN, on identifying and capturing niche markets in Mexico, importing healthy and profitable solutions in the food industry, and working with forward-thinking, medium-sized companies.
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Carlos Morales Paulín, Country Manager, Telefónica
TBY talks to Carlos Morales Paulín, Country Manager of Telefónica, on how to provide the best customer service on the market, an ultra-competitive suite of products, and forcing the competition to improve customer standards in the process.
read articleFocus: Digital Television Transition
Digitalizati-ON!
Starting with the first analog blackout in Tijuana, Baja California in June 2013, Mexico has achieved an effective national transition to digital television. According to data from the Federal Telecommunications Institute, 95% of the population benefits nowadays from digital terrestrial television (DTT).
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