Sweden in Mexico

Sweden in Mexico

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Mexico and Sweden have had a long exciting tradition of commercial trade between the two countries. In fact, this is based on a privileged commercial relationship existing between Mexico and the European Union. Since signing the Free Trade Agreement with the E.U., the Mexico and Sweden relationship has grown in a dramatic way.

Official diplomatic relations between Sweden and Mexico were formalized on July 29, 1885. Today the bilateral relationship is characterized by a strong mutual interest in intensifying the contacts and commercial interests of both countries.

Their mutual interest has been to strengthen the political relationship that led them to sign the "Memorandum of Understanding for the Establishment of a Mechanism for Bilateral Consultation on Themes of Mutual Interest between the Ministries of Foreign Affairs of Sweden and Mexico," in the first place. It was signed in the City of Stockholm in 1998.

Sweden began participating in the European Union in 1995. At that time the different positions and diverse themes from a broad multilateral agenda were finally brought together.

This has had a multiple effect, contributing to an increase in important political dialogue, commercial trade, and it also gave a push to the dynamic cooperation existing in scientific and technical areas shared by the two countries.

Exhibit 1 shows the Trade Balance between Mexico and Sweden. It shows that commerce between the two countries reached its maximum level in the year 2000, and since the recession of 2002 commerce between Mexico and Sweden has been evolving in a very satisfactory way.

Several important factors in the trade balance between Mexico and Sweden are revealing. Take, for example, the fact that during the span of 10 years from January 1999 to December 2008, total exports from Sweden to Mexico rose 284.78%. But, imports at Sweden from Mexico showed a non impressive 55.28% growth during the same period.

Total commerce between the two countries and reciprocal actions has brought in US$1.3 billion during the year 2008 in trade between the two nations. The total commerce between Mexico and Sweden showed important improvements, especially since the year 2005. In fact, the period 2007-2008 represents a growth rate of 69.43% in total commerce between the two countries.

Swedish investment in Mexico is shown in Exhibit 2. During the period from January 1994 through March 2009, companies with capital from Sweden invested around US$858 million. The European Union has invested US$41.3 billion in Mexico and Sweden ranks 10th as the EU country having the most investment in Mexico.

By September 2006, Mexico had listed 134 companies with registered Swedish capital. This is 0.4% of the total number of companies with direct foreign investment accounted for in Mexico (34,535). Companies which received Swedish capital are dedicated mainly to the manufacturing industry (35.8%); services (35.1%); and commerce (27.6%). In the manufacturing industry, the investment is directed primarily to the metal – mechanic, electronics and automotive industries. In the services sector the Swedish investment goes mostly into financial and specialized services.

The business area that receives most of the Swedish investment is the commercialization of non- alimentary products.

Among the important Swedish groups that have invested in Mexico are: AGA (medical) and Atlas Copco.

The latter is a leading world provider of industrial productivity solutions.

Their products and services range from compressed air and gas equipment, generators, construction and mining equipment, industrial tools and assembly systems to related aftermarket and rental concepts.

Regarding the telecommunications industry, the presence of the Swedish Group Ericsson is very strong in Mexico. Ericsson started operations in Mexico in 1904 by operating a telephonic-connected net in Mexico City. Samsung was also cutting edge in the telecommunications industry in Mexico by installing the first Intelligent Net providing advanced services such as 800 numbers, universal access accounts, and prepaid cards. All these were innovative services of the time.

By the year 2001 Ericsson installed the first GSM /GRPS net with a national range. In 2004 Ericsson celebrated its first century in Mexico. These are just a few examples of the main accomplishments credited to Ericsson in Mexico.

Recently, other Swedish companies have also brought important investment to Mexico. It's important to mention the AstraZeneca Laboratories. AstraZeneca was formed April 6, 1999 through the merger of Astra AB of Sweden and Zeneca Group PLC of the UK. They were two companies with similar sciencebased cultures and a shared vision of the pharmaceutical industry.

There are other groups investing in Mexico including: Electrolux (Home Appliances); ABB (Technology); Autoliv (Automotive); Haldex (automotive); Scania (Automotive); Tetra Pak (Packaging for Alimentary Industries); and Trellerborg (Automotive Components).

Other firms are: Volvo Commercial Credit (Financial); Volvo Trucks (Automotive); Avesta (Steel); Duni AB (Paper); Gambro (Medical); HIAB Foco (Industrial Equipment); Oriflame (Health Care); and Svedala (Construction).

Exhibit 3 illustrates the distribution among economic areas receiving Swedish investment during the time span beginning in January of 1999 and lasting through March of 2009.

It shows that most of the investment goes into manufacturing (37.7%); other services (25.10% and commerce (24%).