From tacos to tech: Mexico and Israel ready for business

No longer the land of wide-brimmed hats and stone-ground tortillas, Mexico has come a long way in a short time — just like Israel, according to Mexico’s ambassador to Israel, Benito Andion.

“Forget the stereotypes you think you know,” Andion told The Times of Israel in an exclusive interview. “Mexico is a completely Western country today, a member of the OECD, just like Israel. We have the 15th-largest economy in the world, and we’re growing all the time. That means there are great investment opportunities in Mexico, especially for Israeli high-tech firms, which have a lot of great technology that fits hand in glove with our needs.”

For various reasons, Israelis, Americans, and indeed many people in Europe and Asia tend to have negative associations of Mexico — whether it’s the “traditional” negative stereotype of backward laziness, or the more modern perception of the country as a source of illegal aliens that are stealing jobs from Americans, and the source of a major drug and gang culture transplanted to the US.

“Mexico has done a great deal to combat the drug trade in recent years,” claimed Andion. “Today, for example, the city of Juarez, across the border from El Paso, is as safe as many big cities in the US, whereas not long ago it was one of the most dangerous in North America. And, today, the vast majority of illegal immigrants who enter the US from Mexico are not Mexicans, but residents of other Central American countries who use Mexico as a route north.”

In fact, added Andion, Mexico itself has significantly stepped up enforcement on its own border — to the south, in an effort to keep Central Americans out of its territory, and thus away from the southern border of the US.

What Mexico does have today is a modern, bustling economy, with strong activity in manufacturing (electronics, automobiles), food and beverage production, textiles, mining, and many other heavy industries.

Mexico, of course, represents one-third of NAFTA, the North American Free Trade Agreement, in which Mexico, the US and Canada built a trilateral open trade pact. But NAFTA is just one of Mexico’s free-trade agreements; in fact, it has more FTAs with more countries and regional trade groups than any other country in the world.

Andion spoke to The Times of Israel at a special event at the Israel offices of DLA Piper — the world’s largest international law firm — where investors, attorneys, and business people gathered to hear more about investments in Mexico, and how Mexican investors could work with Israeli companies both in their own country and here. Among its FTAs is one with Israel, but “unfortunately it’s been severely underutilized,” said the ambassador.

“In 2014, two-way trade between both nations amounted to $776 million, making Israel Mexico’s 42nd-biggest trading partner globally. But given Mexico’s burgeoning industrial, financial, and even consumer sectors, the time is ripe to grow that figure significantly. “That’s why we’re holding this event,” continued Andion.

One of the reasons there’s been relatively little trade between the two countries, said Rubi Suliman, a partner and technology leader at the Israel offices of international business services firm PriceWaterhouseCoopers, could be the fact that both Israel and Mexico are in the same “business” — the export business, with manufacturing and production geared towards foreign markets.

“That’s one reason Mexico has been so keen on free trade agreements, and they’ve succeeded greatly in building up export markets, as Israel has. While Israel and Mexico are not in competition, as they produce different things, there just wasn’t much opportunity or need for large-scale trade.” In addition, said Suliman, “Israelis are generally interested in countries from where they can get investments for local growth. But Mexican investors — with the notable exception of Carlos Slim, one of the world’s richest men — tend to keep their investments in the country.”

That’s changing, though, as Mexico’s economy becomes more sophisticated — and as the quickly modernizing country faces the same tech issues faced by advanced economies. “A lot of Israeli cyber-security firms, for example, are moving into Mexico,” said Suliman. “In addition, as large enterprises move substantial operations there, Israeli firms that produce software and systems for business — database tech, enterprise software, etc. — are also making deals. There are actually several large ones that are under negotiation right now, and we expect good news in the near future.”

One area of the Mexican economy that Israel has been deeply involved in is agriculture, which is still one of the mainstays of the local economy. Among the Israeli firms active in Mexico is Netafim, which supplies made-in-Israel technology for drip irrigation, water management and filtration.

In addition, while not an Israeli company itself, Desert Glory — North America’s leading grower of tomatoes and one of the largest tomato greenhouse operators in the world — is based in Mexico, and was started by a group of Israelis.

Expanding FTAs is all well and good, said Andion, but there has to be a business-friendly atmosphere in order for countries to take advantage of those agreements. That includes a system where disputes and problems can be quickly resolved in a fair and equitable manner.

“Mexico is a land of civil law, and all laws are codified,” said the ambassador. “There are many statutes on the books and all have been tested for constitutionality. In contracts with international companies, most local firms will include an option for international arbitration.” In addition, he said, the Mexican tax code was streamlined in 2014 to match those in most Western countries, and the government provides tax credits and other benefits to foreign entities that invest in the country.

For Israelis and others who want to invest in Mexico, it’s worth getting a good lawyer, said Manuel Rajunov, a partner at DLA Piper who specializes in the Mexican business scene. “Compared to other popular places for Israeli start-ups to set up shop, Mexico has a lot of advantages. For example, there are no restrictions on the movement of capital, as there is in, for example, Brazil — a country that Mexico is often compared to, and a popular destination for Israeli firms.”

In addition, he said, there was a great opportunity for Israeli companies to take advantage of NAFTA, trans-shipping products to the US, as well as taking advantage of credits provided by the Mexican government for exports.

And there are reasons beyond the economic ones Israelis and Mexicans should be doing more business together, said Andion. “We were one of the first to recognize Israel, in 1950, and Mexico is also home to the third-largest Jewish community in the Americas. Our Jewish community is well integrated and well respected, and it has wonderful ties with other Mexican communities, as well as with Israel. Many of our Jewish youth have spent time in Israel and served in the IDF. To me, Israel and Mexico are a natural fit.”

https://www.youtube.com/watch?v=3QjBjwnQ-vo