Mexico Opportunities for the Korean Animation Industry

Mexico Opportunities for the Korean Animation Industry

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Photo credit: #puppetsontour during Puppet Animation Festival 2013 by Puppet Animation Scotland

The Korean animation industry is one of the largest in the world, coming in behind the animation industries of Japan and the United States.  At present, there are well over 260 animation studios in the country, with countless free-lance animation specialists who will provide material for the animation studios, many of whom do not have the computational capacity to produce feature-length animation films in-house.

In the past, animation was mostly geared towards children, however, as computers have become more and more sophisticated, animated films are now geared towards adults as well, some of whom have become fans of Korean produced anime-type shows.

The major animation markets are the United States, Canada, Japan, China, France, Korea, Germany, and the United Kingdom.  Animation companies in those countries are increasingly taking advantage of the talent that is available in Korea and outsource their work to highly skilled freelancers.

Another reason why companies are choosing to outsource animation work to Korea is the availability of inexpensive computer animation platforms such as cloud computing-capable supercomputers.  Making the case for outsourcing animation work to Korea even more interesting is the fact that workers in the animation industry receive lower wages than their counterparts in the United States and Europe.

Opportunities for Mexico in the Korean animation industry

Thanks to the tremendous computing capacity that’s available in Korea and necessary for modern, cutting edge animation, many companies from the U.S. and Europe will outsource their animation work to artists and animation specialists in Korea.  While at first glance a person might think that there would be no opportunity for Mexicans in this arena, the truth is that there are possibly infinite opportunities.

The first opportunity is for Mexican animation specialists.  Because the animation industry in Korea is so decentralized with even the main animation producers using cloud computing rather than in-house hardware and software, most of the outsourced work from abroad gets “re-outsourced” – some sections of a project will be given to local freelancers, and other sections of a project may be given to animators from India or China.  If a Mexican freelance animation company has the skills a Korean producer wants, chances are highly likely that he or she will get hired.

The second opportunity for Mexico in the Korean animation industry is for local Mexican work to be outsourced to Asia.  In other words, if a Mexican broadcaster wants an animated television show, they can hire a Korean company to do it.  Along with all of the technical expertise in the hands of a Korean animation firm, they’ll also get the internationally recognized talent of Korean animation specialists.

The third opportunity for Mexico in the Korean animation industry is providing the necessary computational power.  At the moment, there are several supercomputers operating in Asia such as the EKA computer that provide cloud computing capabilities, which eliminate the need for expensive hardware. If Mexican companies can provide the same levels of cloud computation and provide the same animation talent, they could very well take over all of the outsourcing work from the United States and Japan that is currently going to Korea.

Finally, Mexico has recently passed the telecom reform to open free-to-air TV to foreign investment and increasing caps on CATV and data networks. Competitive content, like Korean animation, will be needed. Licensing, production-on-demand, localization, VOD and broadcasting businesses will be on the rise.

Growth in Mexico’s Auto Manufacturing:  Opportunity for Auto Part Suppliers

Growth in Mexico’s Auto Manufacturing: Opportunity for Auto Part Suppliers

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Photo credit: Factory in the Mirror by Ruthanne Reid

To anyone who’s been watching Mexico’s economy for the past few years, it will come as no surprise that it’s growing by leaps and bounds compared to other countries in the world that have been effected by the global economic downturn. Because of the Spanish-speaking country’s prowess in automobile manufacturing, both German and Japanese automakers are in a rush to build new factories and plants to take advantage of one of the world’s most efficient and skilled workforces, favorable tax laws and almost innumerable free-trade agreements.

Despite the global downturn in financial affairs, Mexico is doing well thanks to its automobile manufacturing industry. German automaker Audi has recently announced that they will probably be doubling production in their new Puebla plant, which will be operational by 2016. Honda recently invested $800 million in a new plant in Guanajuato, and announced in May of this year that an additional $470 million will be invested in a new transmission plant in the same state.

Mazda and Nissan have also heavily invested in manufacturing plants in Mexico recently, and all major auto firms that are manufacturing in the country are planning on increasing production. All of this means that there are plenty of opportunities for auto parts suppliers.

The opportunities

Honda, as seen above, decided in 2013 to invest $470 million dollars in a new transmission plant in order to meet their own auto manufacturing needs. The plant is expected to produce over 2 million transmissions, more than the 1.92 million they will be needing. The company explained its decision: it was simply more cost effective to manufacture the auto parts in the same country rather than transport them from elsewhere, even if the labor costs abroad were cheaper. Shipping costs are now incredibly high, and in order to save money and guarantee quality, it’s just best to make the parts in Mexico.

“We are establishing a production base with outstanding global competitiveness in CVT production in the same location as our new automobile plant in Celaya,” said COO of Honda North America Regional Operations Tetsuo Iwamura. “As we continue to advance our commitment to build products close to the customer, we appreciate the strong support we have received here in Mexico.”

Japanese auto parts suppliers are in a rush to set up operations in Mexico: along with selling their parts to the big auto manufacturers, they can also take advantage of the same things the auto manufacturers take advantage of: Mexico’s prized geographic location central to all markets in the Americas, free trade agreements with literally dozens of nations and trading blocs, and a business-friendly, tax friendly environment.

With German car makers, American car makers and Japanese car makers rushing to increase production capabilities, they will need car parts. While some suppliers are still relying on shipping to get their product to customers, they’d be much better off setting up shop in the same areas as their main customers in Mexico. The problem of shipping will be completely eliminated, and surplus items can easily be shipped to other markets in North, Central, and South America via Mexico’s excellent and reliable transportation infrastructure.

Audi Could Double Mexico Production to 300,000 Units

Audi Could Double Mexico Production to 300,000 Units

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Photo credit: Audi TTS by FotoSleuth

According to Audi CEO Rupert Stadler, Audi is on the path to strengthening already strong sales in the North American market with the laying of the foundation stone of automaker’s new plant in San José Chiapa, Mexico.  [This is] an important future element of the global Audi production network,” he stated recently in an Audi press release.

The new $1.3 billion Audi AG plant, set to become operational in 2016, will create 3,800 new jobs in the state of Puebla, where the plant will be located.   This will be the first factory in the Americas for Audi, and the vehicles manufactured in the plant will be the automaker’s popular Q5 SUV.

While the plant at first was intended to manufacture 150,000 units, executives at Audi have stated publicly that the plant will be large enough for 300,000 units, and there could very well be production of a Q6 SUV along with the Q5 models.

The goal of Audi AG is to make North America one of their top three markets.  Said Stadler at another press conference: “In 2020 every seventh Audi from our worldwide production will go” to North America, Stadler said in a speech at the groundbreaking ceremony in Mexico over the weekend. “Then we have reached our goal and strengthened America as a third pillar of our sales in addition to Asia and Europe.”

He further remarked at the laying of the plant foundation ceremony in Puebla“With the production of one of our most successful models here in Mexico, we will give significant impetus to our global growth and supply the extremely popular Audi Q5 from here to the world market.  By setting up a new car plant in North America, we are establishing a presence on another continent that is very important to us. In this way, we are strengthening our international competitiveness and consistently pursuing the Audi growth strategy.”

The plant will contain a paint shop, body shop, assembly line, and press shop.  The 400-hectare facility will be the Audi’s most modern and technologically advanced, and Mexico presented many benefits to the automobile maker.  The Mexican workforce is highly educated and famed for their strong work ethic, and the country’s well-developed infrastructure along with its numerous international free-trade agreements made it the ideal place for Audi to set up shop.

Furthermore, Mexico offers the best tax and business environment for automakers.  “With Mexico, Audi has made the best choice to help it develop and secure its growth,” emphasised Mexico’s Economics Minister Ildefonso Guajardo Villarreal in the same ceremony celebrating the start of the plant’s construction.

Rafael Moreno Valle, Puebla’s governor, further stated: “Our country and the new Audi location in San José Chiapa in Puebla offer the best conditions for the successful development of the entire American market. We are proud that with Audi México, the first international premium manufacturer in the automotive industry is at home in our federal state.”

On a separate occasion, Stadler mentioned that no jobs at the Ingolstadt factory in Germany would be lost when production of the Q5 shifts to Mexico; the additional demand for production cannot be met at the existing German plants.

Mexico Reforms Attract U.S. Investors

Mexico Reforms Attract U.S. Investors

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Photo credit: Senado Lleno… by Eneas De Troya

Mexico’s transformation from an inward-looking, oil-dependent country to one of the planet’s most dynamic and open economies in twenty years has been, according to experts, astonishing.   While U.S. investors have always been interested in playing a role in Mexico’s economy, reforms in traditionally “closed” sectors will be attracting even more interest, with international fund managers stating that investors should continue to put 30 percent of their Latin American allocation into Mexican stocks and bonds.

The reforms that are of most interest are those that have recently been announced in the education system, the telecommunications sector and perhaps most importantly, the energy sector, which has been dominated by, state-owned PEMEX (Petróleos Mexicanos) for decades.

The goal of the reforms is to allow competition in the market, allow affordable choices for consumers, and thusly allow growth.  The telecommunications sector, according to Daniel Castro, senior analyst at the Information Technology & Innovation Foundation, has cost the economy of Mexico 1.8 percent of GDP per year due to poor performance.

Castro further claims that according to OECD data, “much of this has been driven by unfortunate regulatory policies that restrict foreign investments and discourage competition from new entrants. The proposed reforms would create a new independent regulator charged with ending monopolistic practices and increasing competition within the telecom sector.  In addition, the current caps on foreign investment would be raised so as to encourage more investment in telecom networks.”

But it’s not only telecoms where foreign investors are interested; American oil companies along with other international oil companies are hoping for reforms in Mexico’s energy sector to go through.  Mexico is currently the world’s seventh largest oil producer and one of its largest export markets is the United States.  Proposed reform to the sector is to encourage private investment in order to increase production.  Investment in infrastructure and technology upgrades is sorely needed for the country to take full advantage of its vast oil and gas reserves.  Mexico is currently importing gas from the United States in order to meet the needs of its growing manufacturing sector.

Other factors contributing to American investment interest in Mexico include the cut in benchmark interest rates, which are now at a record low of four percent.  Standard and Poor’s´ has lifted the nation’s credit rating from stable to positive.   Investment and economic experts have stated that a stronger peso should not be of too much concern to investors unless it drops below 10 pesos per U.S. dollar.  Currently it is valued at 12.42 per dollar, and some international fund managers predict that by the end of the year, it will be worth 11.75 per dollar.  Most people involved in the financial industry say that it is highly unlikely that the peso will strengthen to the point where it will hinder Mexico’s growth.

Even without the reforms in the telecoms sector, Mexico is growing.  However, because the country wants to see as much growth as possible, politicians and businesses want the reforms to go through, which will be of as much benefit to American companies as they will be for Mexico’s citizens.

U.S. and Mexico Deeply Linked By Trade

U.S. and Mexico Deeply Linked By Trade

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Photo credit: WTC Ciudad De Mexico by Armando Argandar

When North Americans and people from other parts of the world think of Mexico, one of the first things that they may think of, sadly, is the security situation in the country caused by drug traffickers and associated gangs.  However, smart investors and businessmen know that Mexico is quickly becoming an economic powerhouse due to the Spanish-speaking country’s free trade agreements with 44 countries, economic policy reform, and highly skilled, talented workforce.  The ties that bind Mexico and the United States go beyond those of friendship; the two countries are deeply linked by successful trade.

In only twenty years, Mexico’s economy was inward looking and heavily dependent on oil.  Since the North American Free Trade Agreement (NAFTA) was signed two decades ago, the economy in Mexico has turned out to be one of the most open and competitive on the globe.  In fact, Mexico has become so competitive that when it comes to the measure of trade to GDP, Mexico is now surpassing China.

Many experts in the field of international economics say that this success story is mostly in part due to increased trade with the United States since NAFTA came into effect.  Regional supply chains between the United States and Mexico for different products have been flourishing since 1994; interestingly, the economic relationship between the US can be seen as a symbiotic one.  This is because for every article imported from Mexico, about 40 percent of it was actually made in the United States.

In many companies, there is a type of integration that crosses the border in a way that is basically seamless.  Research and development labs might be on one side of the border, while manufacturing will occur on the other, and both facilities may be only minutes away from each other.  In some cases, manufacturing, production and research may actually occur in both countries, meaning that industries in both the United States and Mexico are now permanently tied; the two economies are deeply linked in long-term relationships.

Both countries benefit by Mexico’s positive future.  What is particularly of interest to investors is the fact that even as the U.S. economy may have suffered in the past few years, the overall amount of trade occurring at the U.S. – Mexico border saw growth rates of around 7%.  By some estimates, if cross-border trade included services as well products, the monetary value of total trade would be well over half a trillion dollars per year.  The amount of trade could also increase exponentially if either partner were to increase free trade agreements with other trading blocs.  Negotiations are currently underway for a U.S. – European Union free trade agreement, and the Trans-Pacific Partnership could open up Asian markets to the Mexico-U.S. products manufactured in the border regions.

Mexico still has to get its security situation under control, but the economy is still growing in spite of it.  The United States and Mexico share deep ties when it comes to their economies; the United States is Mexico’s largest export market, and Mexico is the largest or second largest market for 22 individual states.  Mexico’s success also spells success for their neighbour and partner north of the border.


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