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The Canberra Business Podcast
A podcast about all things Canberra Business.
The Canberra Business Podcast
Unlocking Trade Potential Between Australia and Mexico
Join us as we welcome His Excellency Mr. Ernesto Cespedes, the Ambassador of Mexico, to the Canberra Business Podcast. Ambassador Cespedes offers a behind-the-scenes look into his fascinating journey from the vibrant streets of Mexico City to the peaceful ambiance of Canberra, revealing the cultural and geographical contrasts that shape his unique perspective. With both Australia and Mexico tied through powerful global organizations like the UN and G20, we uncover how these political connections can pave the way for robust economic collaboration. Discover the significant role of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in promoting trade, sustainability, and zero tariffs, and learn how Australian businesses can seize opportunities within Mexico's thriving manufacturing and services economy amidst shifting global geopolitics.
Explore the nuances of conducting business in Mexico as Ambassador Cespedes shares valuable insights on cultural differences and business etiquette that can influence success. Emphasizing the importance of personal relationships in business settings and the advantage of speaking Spanish, we delve into practical resources available for Australian businesses aiming to engage with the Mexican market. From trade shows to government initiatives, these strategies can help unlock potential in Mexico’s dynamic economy. As the festive season approaches, enjoy a glimpse into the ambassador's personal reflections on Mexico's rich holiday traditions, offering a heartwarming view of the cultural festivities he cherishes. Tune in to get inspired by the opportunities and insights that promise to strengthen business ties between two vibrant nations.
Welcome to the Canberra Business Podcast brought to you by the Canberra Business Chamber in association with the University of Canberra. I'm Greg Harford from the Business Chamber and I'm delighted to be joined today by His Excellency Mr Ernesto Cespedes, the Ambassador of Mexico. Mr Cespedes, the Ambassador of Mexico, mr Cespedes, took up his Canberra post on the 30th of January this year, so he's survived a winter Ambassador. Welcome to the podcast.
Speaker 2:Thank you very much. An honour to be here.
Speaker 1:Now, you've been here now for nearly a whole year.
Speaker 2:How have you found Canberra? Have you enjoyed yourself so far? We definitely. We my husband and I definitely have. It's a little bit different for us coming from immediately before Canberra, from Mexico City, which is a megalopolis, to a place so peaceful and so enjoyable like Canberra, where you can actually get places in minutes. That's. That's in itself is very humane, very enjoyable. The embassy and the residents we like a lot, and if we want much more of an urban environment, there's always Sydney, you know.
Speaker 1:It's not too far away. So tell me about your impressions of Australia more generally and about business connections between Australia and Mexico. Is there a lot of connectivity across that vast Pacific Ocean that separates us?
Speaker 2:Not direct connectivity, it is geographically. We are obviously very distant. However, we are a of international organizations, associations, where we share our principles, we share the way we view and want our countries to be our societies. You know, I'm talking about the UN, I'm talking about the OECD, I'm talking about the G20, apec groupings more restricted, like MIKTA, along with Indonesia, korea, turkey. So, yes, we have a very good relationship and well it's, let's say, in that regard, there are no problems. But we are far so trade investment is not the lowest hanging fruit in our bilateral tree, so that could be a little bit of a challenge, but we struggle.
Speaker 1:So a good political relationship, which is a really great starting point. But what are your strategies then to help foster the business relationship between Australia and Mexico?
Speaker 2:Well, certainly the best and the most effective strategy is to disseminate information about Mexico. For example, the listeners of this podcast may not know, for example, that Mexico is the 12th largest economy in the world, australia is the 13th GDP-wise in the world, australia is the 13th in GDP wise. That we are an open market economy, the ninth largest exporter in the world, the first trading partner of our neighbors, the United States, the third producer of automobiles worldwide. So these are facts that are little known. So we try to make this diffusion, this dissemination of information, so companies and individuals in Australia know and they think or consider Mexico to be either a trade or an investment partner. Currently, the trading is very modest between our countries, in value around US$2 billion, but it could be definitely more.
Speaker 1:So distance is obviously part of that and Mexico is a big manufacturing hub. But what's the current economic landscape like and what opportunities do you see there for Australian businesses and what opportunities do you see there for Australian businesses?
Speaker 2:Well, the landscape in Mexico is again. Mexico is basically a manufacturing and services economy, not a primary economy anymore. We do have, certainly, agriculture and mining and fisheries yes, we do but basically our bread and butter comes from manufacturing and services. And one example of that is what we trade with Australia. For example, with Australia we trade cars and trucks and cell phones and electronic equipment and whereas from Australia what we get is canola seeds, barley for a rather large beer industry in Mexico, iron ore and some minerals. So yeah, that's an example of what we're good at.
Speaker 2:Now we are part of a supply chain of our North American region, along with the United States and Canada. So for us it is rather important to get new partners, to diversify the source of our investments but at the same time trying them to become part of the North American supply chain. We in Mexico we take advantage of a free trade agreement that we have had in two different versions with our North American partners since 1994. And since then the regional trade and regional manufacturing and regional investment schemes. They have grown exponentially, I would say, and I think it's a way to connect with Australia in that regard.
Speaker 1:Yeah, so NAFTA's obviously been huge for Mexico over the last 20, 30 years. But both Australia and Mexico are signatories to the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, or the CPTPP as it's known. Just rolls off the tongue. What's the opportunity that you see with the CPTPP for Australian businesses, and indeed Mexican businesses, to be working more closely and growing that trade relationship?
Speaker 2:Well, cptpp is a better version than NAFTA was. Now we have a second version of NAFTA, which is the USMCA in English, but CPTPP is next generation free trade and investment agreement that takes more into account sustainability, for example, sustainability issues. So, in addition to the traditional trade and investment content, you have this sustainability issue. The CPP, for example, brings the trade tariffs of what Australia sends to Mexico again, including minerals, but also LNG and all these products to zero. So it's a perfect, perfect scheme for allowing companies in Australia to do business in Mexico with, again, this sustainability provisions that we all want. We cannot forget that when former President Trump won, they pulled out the US pulled out of that agreement precisely because they didn't like some of the content and we were, in a way, forced to renegotiate NAFTA into the USMCA, with emphasis in other aspects of our relationship.
Speaker 1:So a zero tariff approach sounds certainly very attractive, I'm sure, for many businesses, but are there other initiatives that Mexico is implementing to attract foreign direct investment, or indeed trade from Australia and how can Australian businesses take advantage of those?
Speaker 2:Well, certainly, we are now taking advantage of the new geopolitics in the world and the fact that our most important trading partners in North America, in Europe, are considering to be more secure sources of intermediate goods, and that brings us to nearshoring, or French shoring, if you wish, and Mexico is given tax incentives, fiscal incentives, financial incentives, so we can actually attract investments from companies that relocate from Asia. In that regard, yes, australian companies would certainly benefit from those incentives. We have a new federal government, the president, we have our first female president, which is a source of pride for us, but she's also a scientist. So, yes, she has stated several times that our market economy, our open economy, would certainly continue giving incentives for foreign investors, international investors, to come to our country and become part of that relocation, that nearshoring, that investment phenomenon, if you wish.
Speaker 1:So if you're a little business here in Canberra and you're thinking about starting to export into Mexico or do business over there, what do you think are the key challenges that Australian businesses might face getting into the market?
Speaker 2:Well, I'm not sure that I'm the right person to ask about the challenges of my own country. However, I would suggest that, first, that you that that potential investors in mexico or companies are willing to to trade with mexico's top, to the australian companies that are already there. Um, we are dealing with energy issues. For example, we are, like everybody else in the world, transitioning from fossil by their own legislation. They need to trade with countries that use more renewable energies. That's a challenge in itself. Water in some parts of Mexico is a challenge in itself. So those are things that yeah, that they have to be taken into account, but depending on which is the field, on the investment, you can find some other challenges or some other advantages.
Speaker 1:So, given obviously there's significant interest in the sustainability journey here in Canberra and we've got many businesses and indeed a territory government that's focused on becoming more climate friendly, do you see much opportunity for Canberra businesses to be working in that sustainability space in Mexico?
Speaker 2:Yes, definitely. Well, pretty much like Australia, mexico is also composed by, I would say, around 90% of small and medium-sized companies, and I don't know precisely if that's the case of Canberra, but I assume it is of Canberra, but I assume it is and so it is possible, not as such as isolated companies, to do investments in Mexico by themselves, but to find partners. It is always useful to find partners with local companies, and I think that there's an opportunity there.
Speaker 2:There are around 280 Mexican companies with some degree of Australian investments in Mexico, of course, and that means that some of the companies can be as small or as big as this office, this room we're in, which is very small for Alistair Smith, which is very small and they settle there and they start looking around to what they can actually do in the terrain, you know, in the trenches, and they start that way and once they find their niche or their niches, they start really operating, either selling from selling or trying to sell there to manufacturer or to operate there.
Speaker 2:The scope of Australian companies in Mexico is very, very big, from real estate, finance, mining, services. You know there are so many energy now Not a small company, woodside Energy From Western Australia. They announced a big, big investment in the Gulf of Mexico for deep water exploration. So there are other companies from Victoria that are doing big business in real estate and in road infrastructure, leatica for example. So yes, it's interesting to see that the scope is very big but that there are many small and medium-sized companies just looking around and seeing what they can do there.
Speaker 1:Now, obviously the language in Mexico is different. You speak Spanish at home, but are there big differences? Do you think in culture and business etiquette that business people might need to know about if they're looking to go abroad, to Mexico?
Speaker 2:Yes, I wouldn't call them big difference. I mean Latin America, I wouldn't call it a Western, but a Westernized society. So in that regard our cultural differences are not big. There are small things, small customs details. That makes us a little different. I was reading an Australian source which I recommend, by the way, doing business in Mexico by the Australian government recommending Australians to adapt to that etiquette. For example, your first meeting might be all about knowing your potential partner personally, in much more personal details that going into business, that in the first time, or that you know it could take longer than a very, very professional environment the first time, and then when you go into business, you go into business. That could be the second or third. That could be a cultural difference, if you wish, but not enormous. It's not a ditch that you have to. I mean those are small differences but there are several sources where the Australian companies can look into and certainly if you can talk to representatives of companies that are already there, that's the best source to do it Absolutely?
Speaker 1:And is English widely spoken, or do Aussies need to brush up on their Spanish before they head over?
Speaker 2:In the business community. Yes, it is widely spoken In. The bigger the company it's easier, but definitely having some knowledge of Spanish won't hurt, and Spanish is a language that is rather I'm not going to say easy, but it's less difficult to learn than other languages. Actually, it's probably one of the easiest languages to learn and the culture helps People help you. Even if they do not understand you very well, they will do as if they did there. That kind of people Very, very kind, very amicable.
Speaker 1:So if you were a business here looking to perhaps send some product offshore or look to take your consulting services business over to Mexico, are there, it's obviously really important to be building relationships. Business over to Mexico are there. It's obviously really important to be building relationships, getting to know people, understanding the market. Are there specific events or platforms that you'd be recommending business people look at? Going to trade shows, that sort of thing?
Speaker 2:Yes, For example, Data Mexico from the Ministry of Economy in Mexico is available. In that regard, the Department of Foreign Affairs and Trade of Australia has a website with two interesting documents in Mexico the Economic and Trade Information and the Doing Business in Mexico webpage. And lately and very recently, the Australian Embassy in Mexico commissioned a study on nearshoring in Mexico as well, which you may request from the Austrade office in Mexico.
Speaker 1:So always interesting enough, yeah, and always a good idea to check in with Austrade of course, if you're heading offshore, Absolutely no matter which market we're talking about. Ambassador Cespedes, we're coming up to Christmas, obviously. How will you be spending your first Christmas in Canberra, or are you heading away? And how does that differ from Christmas at home in Mexico City?
Speaker 2:Well, you know, I'm very, very shortly I will be heading to Mexico to spend Christmas there. And not only Christmas, but we have an annual ambassadors meeting every January. So I benefit and I take advantage of going home for the holidays. It is always interesting, to say the least, to have the uh seasons inverted. Mexico city is not ultra cold in december, but it can get cold I mean, from zero to 25 degrees in one day.
Speaker 2:So in that Bit like Canberra Bit like Canberra, yes, but that's January, whereas January here is warm. This in July 2024, it was the most weirdest feeling to attend this fair Christmas in July. I think for us, July would be beach time in Mexico, and certainly summer, summer.
Speaker 2:But yeah that's different when it comes to celebrating the holidays. I don't know, mexico can be very, very traditional in that, depending on your cultural background, but you know we have many Christian, our own version of Christian traditions for the celebration of Christmas the food, the family, the endless family gatherings, just like everywhere else with the Christmas traditions.
Speaker 1:Excellent, well look. I wish you all the very best for your travels and a safe festive period. Ambassador Ernesto Cispedes, thank you very much for joining us today on the Canberra Business Podcast. It's been great to learn a little bit more about Mexico and I'm glad to hear that you're enjoying your time here in Canberra.
Speaker 2:Thank you. Thank you for having me.
Speaker 1:Now I'm Greg Harford from the Canberra Business Chamber, and this podcast has come to you in association with UC, the University of Canberra, which produces some of Australia's most employable graduates, and your business can benefit from fresh ideas and perspectives by using student interns, and if you want to know more, just email careers at canberraeduau to learn more. Thank you so much for joining us on the podcast. Don't forget to follow us on your favorite podcast platform for more episodes, and we'll catch you next time.