In 1993 Mexico joined the Asia-Pacific Economic Cooperation (APEC) Forum. Within this framework, Mexico has sought to strengthen its relations in the region, especially with Australia, India, Japan, China and perhaps South Korea.
For many years Korea has been looking for the opportunity to sign a Free Trade Agreement between our two countries in order to increase bilateral commerce, and in this way takes advantage of the APEC and also to multiply Korean Capital to be invested in Mexico. The negotiations have been suspended for a year. This is mainly because of opposition from Mexican entrepreneurs, according to the Korean Embassy in Mexico.
At the end of last year (2009) commerce between the two countries was almost three times what it was in the year 1999. The Trade Balance between Mexico and the Korea is shown in Exhibit 1.
The Trade Balance between Mexico and the Korea reveals that during the years from January 1999 to December 2009, total exports from Mexico to Korea rose a significant 88.7%. Also, imports to Mexico from Korea showed an impressive 293% growth during the same period.
Reciprocal actions brought in US$11.4 billion during (2009) in business between us. Compared with the previous year (2008), total commerce between Mexico and Korea retreated for the first time in over a decade. During this period statistics have recorded an 8% decrease in total commerce between the two partners.
Currently, there are over 1,295 companies in Mexico on record with registered Korean capital. This is 3.2% of the total number of companies with direct foreign investment documented in-country. Companies which received Korean capital are dedicated mainly to the commerce sector (58%); next is the manufacturing industry with (29.7%). Obviously Korea is an important major investor in Mexico. Korea’s top investors include Samsung Electronics, LG, Korean Gas and POSCO.
The Korean investment took another level when in the year 1998; Samsung Electronics invested US$12 million in Tijuana to produce televisions. At this time, Samsung Electronics has invested over US$150 million in Baja California and now employs more than 3,500 Mexican workers in Tijuana.
Even with the economic recession suffered the last year (2009), the steel industry grew 30% in Mexico one of the main investments done in this industry last year, was done in Altamira Tamaulipas where the Korean POSCO installed their plant with an investment estimated of US$270 million. The inauguration was realized by President Felipe Calderon and the Governor of Tamaulipas Eugenio Hernandez, as well as the Ministry of the Economy Gerardo Ruiz Mateos along with the President of POSCO International, Chung Yang Chong and his counterpart in Mexico, Whan-bok Cho.
LG, one of the largest electronics companies in the world has a strong appliance manufacturing presence in Mexico to supply the foreign market. LG manufactures front-load washing machines and stoves mainly for the US market in their facilities in Monterrey, which will be fourth plant in Mexico of this Korean company.
Exhibit 2 shows Korean Investment in Mexico. During the period from January 1999 through December 2008, companies with capital from Korea invested an estimated US$843.4 million.
The distribution of economic areas received by Korean investment during the time period beginning in January 1999 until September 2006, shows that the resources go almost completely to the manufacturing industry (53.6%) and the commerce sector which obtained 41.3%.
The Mexican states receiving the largest Korean investment are the Federal District with (US$118.3 million); Baja California (US $79.6 million); Nuevo Leon (US $32.6 million); and the State of Mexico (US$16.3 million). The respective totals are from January 1999 to September 2006. Exhibit 3 shows the geographical distribution of Korean investment in Mexico.