Why Mexico is one of the hottest spots for Canadian exporters right now

by Mai Nguyen (feat. Colin Robertson)

Canadian Business
January 5, 2017

Jason Greenspan hadn’t thought of Mexico. The Toronto-based entrepreneur behind Whoosh!, a line of screen cleaners for electronic devices, wanted to expand beyond Canada’s borders last year but focused on the United States and Western Europe. But when he started getting calls about Mexico, he couldn’t ignore the country’s huge potential. “Given the growth in cellphone use in Mexico, it made perfect sense for us to export there too,” says Greenspan. Indeed, the country’s emerging middle class is gadget obsessed—and has money to spend.

Whoosh! now relies on international markets for 80% of its revenue; 20% comes from Mexico alone. To prepare for expansion, Greenspan reviewed import regulations to make sure his product’s ingredients were compliant. He redesigned his bright orange packaging to have both English and Mexican Spanish on the label. And he hired commission-based sales representatives in the market. “It’s important to have people on the ground so you can understand the local customers better,” says Greenspan.

Mexico’s middle class now boasts more than 40 million people, surpassing the total population of Canada. Moreover, households in that demographic will increase their spending by 7% annually through 2018, according to a report from the American firm Boston Consulting Group.

These consumers are particularly focused on education, food, and health care products that will improve their standard of living. “Mexico’s middle class is looking for better, high-quality brands from the Canadian market,” says Colin Robertson, vice-president of the Canadian Global Affairs Institute.

Canada and Mexico have shared a strong economic relationship, thanks to the 1994 North American Free Trade Agreement (NAFTA). The combined GDP of the three member countries has nearly tripled since the deal, but its potential renegotiation by the new U.S. administration under President Donald Trump could put trade relations on wobbly ground. Still, Teri Nizzola, chief representative for Export Development Canada (EDC) in Mexico, says it doesn’t change the fact that there are big opportunities for Canadian companies to serve Mexico.

Mexico’s newly liberalized energy sector, for example, has started welcoming private companies interested in investing in everything from oil production to storage. It’s also seeking Canadian expertise to help it expand its natural-gas pipelines. “A lot of Mexican players are looking to Canadians because of our historical strength in that sector,” says Nizzola.

Meanwhile, Mexico’s decade-long import ban on Canadian beef was lifted this October. Consumers’ impression of Canada is a land of blue skies and beautiful mountains, says Sven Anders, an agricultural economist and associate professor at the University of Alberta. “That reputation can be an asset to agricultural producers whether they export beef, poultry or grains,” he says.

Despite ample export ventures, companies may still shy away because of language and cultural barriers. Nizzola recommends business owners start by visiting the country and meeting with other Canadian companies already in the market. “Once you’re here, you’ll see that Mexico wants to work with Canadian brands,” she says.