Last year Mexico commemorated 50 years of diplomatic relations with the Republic of Korea. Both countries are modern and democratic societies. During the last 50 years the relationship between Mexico and Korea has reached a new high level. Political dialogue, trade and investment have intensified and cultural and academic exchanges have dramatically increased.
Diplomatic relations between Mexico and the Republic of Korea officially began on January 26th, 1962. Since then there have been an increasing number of visits and contacts between high-ranking officials, entrepreneurs, scholars and students from both countries. This exchange has given substance and dynamism to the mutual agenda.
The Strategic Partnership for Mutual Prosperity in the 21st century (2005), for example, has established several accords and memoranda of mutual understanding regarding topics such as air freedom, technical cooperation, science and technology, double taxation, fiscal evasion, reciprocal protection of investments, tourism, nuclear energy, and climate change.
Mexico and Korea have been working as like-minded countries in outstanding organizations such as the United Nations, the Organization for Economic Cooperation and Development, the Asia-Pacific Economic Cooperation, the Forum for East Asia-Latin America Cooperation and the G20, among others.
Exhibit 1 summarizes the Trade Balance between Mexico and Korea. It shows that commerce between the two countries reached its maximum level in 2012. What really stands out is that since the year 2000 commerce between Mexico and South Korea has been evolving very satisfactorily, with the exceptions of the years 2001 and 2009. This was when the worldwide economy tanked and struggled.
There are several important factors in the trade balance between Mexico and South Korea that tell us a lot. Take, for instance, the fact that during the 12 year time span from January 1999 to December 2011, total exports from Mexico to South Korea quintuplicated. They rose from US$264.93 million to US$1.52 billion an impressive +474%. And at the same time imports from South Korea to Mexico also showed an impressive 391% growth.
Total commerce between the two countries and reciprocal action brought in US$15.19 billion during 2011 in trading between the two partners. Total commerce between Mexico and South Korea has shown important improvement, especially during the period since 2006. This was when, for the first time, the total commerce “stats” were available identifying the US$11 billion. In fact, the period 1999 to 2011 represents a 398% growth rate in total commerce between the two nations. And, in 2011 there was an 11.16% increase in commerce (US$15.18 billion) compared with (US$13.66 billion) in 2010.
Imports to Mexico from Korea are mainly for parts for TV’s, integrated circuits, Prosec, automobiles and phones.
Exhibit 2 describes the Korean imports by sharing sectors.
Exhibit 3 shows Korean Investment in Mexico. During the period from January 2000 through September 2012, companies with capital from South Korea invested a whopping US$1.72 billion.
Korean companies active in Mexico are mostly found in the manufacturing, commerce, mining and services industries. Exhibit 4 illustrates the Korean Investment by sector share.
Since January of 1999 through September 30th, 2012, 1,558 Korean Companies have invested in Mexico. The first Korean companies to enter Mexico were primarily companies that installed labor-intensive processes. Korea’s Goldstar, which is now known as LG, started its color television manufacturing plant at Mexicali in 1987. In 1988, Samsung set up its plant in Tijuana. Hyundai also invested in Tijuana in 1991. Daewood came to Mexico in 1993. Though the Korean steel company, POSCO, has had its liaison office in Mexico since 1981, not until 2006 did the company decided to build steel production and process plants in different locations in Mexico.