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MEXICO www.globalbusiness.uk.com
Global Investment
Magnet Rises
Comprehensive economic and legislative
reforms are powering robust fiscal growth
and socioeconomic development.
T
he last two years have been historical ones for Enrique Pea Nieto, President of Mexico
Mexico, filled with critical changes to legisla-
tion and long-awaited reforms that have trans- According to the Ministry of Finance, and irrespective of lower
formed its economic and political landscape oil prices that the global recession has seen, the growth forecast for
forever. Expectations are riding high throughout 2015 is 3.3% to 3.6%, beating the world average of 2.9%, and
the country, and to truly realize its full potential showing the momentum created by Mexicos solid private sector,
while dealing with what have been immense changes to the business worldclass multinational firms, and reformed public sector.
environment may prove challenging to President Enrique Pea Nietos
government. Nevertheless, the Mexican moment has arrived, bring- A Tourism Magnet
ing with it a globally focused, economically driven population and a Over the past decade, Mexico has become a major player in the travel
business-friendly government that is ensuring that Mexico is at the and tourism industry, with the sector becoming the countrys fourth-
center of the global economy as it continues to recover. largest source of foreign currency and a real driver of economic growth
Although the government reforms may take time to unleash the and employment.
countrys full potential, inequality and poverty need to be addressed Tourism now accounts for 9.4% of Mexican GDP and provides
quickly. The Pea Nieto administration therefore hopes that the new more than 7 million people with employment. With $12.7 billion in
reforms will allow for improvements in those areas as investment foreign exchange inflows arising from this sectora massive 10.5%
rolls in. Mexicos state-owned energy market has been opened up to increase from 2011tourism will continue its march onward as a
private investors and to international markets, meaning new technolo- key element of the Mexican moment. Visitor numbers look set to
gies will allow for even more output, once again increasing the Mexi- grow, with more arrivals from the U.K. and Europe, as well as Japan
can share of the global energy market. Restrictions have also been and China, adding to the revenues.
lifted in the telecommunications sector, which should help increase Mexico and its offer of high-quality services, originality and
competition in what is a very closed market, allowing for a reduction countless resorts, cultural wonders and colonial treasures scattered
in prices for both businesses and the population at large. throughout its beautiful landscapes show why some 22 million people
Add these impressive reforms to positive changes to the electoral chose the country as their holiday destination last year. And now, as
system, tax restructuring, and a reduction in the influence of the the reforms of the Pea Nieto government begin to take effect, the
teachers union, and it is easy to see why this is the moment for stable, open, and deregulated economy with some of the highest
Mexico to take on the world. proven levels of foreign reserves is ripe for investment.
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Corporativo Kamaji
Real Estate
Finance
Retail
Honesty, respect and
hard work are the values
that distinguish us
Fibra Inn is a Mexican lodging REIT specialized
+52 (55) 5003-4700 in serving the business traveler. FINN13 is
info@corporativokamaji.com.mx listed in the Mexican Stock Exchange.
www.corporativokamaji.com.mx
www.fibrainn.mx
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Quintana Roo
Mayan Magic
The state of Quintana Roo offers
visitors a wealth of natural, cultural, and
historic treasures.
Roberto Borge Angulo, Governor of Quintana Roo
Q
uintana Roo is more than simply beaches, luxury Of course, we cannot talk about Quintana Roo without mentioning
resorts, sun, and sea. It is a major center of tour- the world-famous destination of Cancn, a paradox of tourism with both
ism in Mexico and one that contributes huge wild nightlife for the young (and young at heart) contrasting with the
sums not only to government coffers in the form of regions many ecological theme parks. The lucky visitor to Riviera Mayas
foreign exchange inflows, but also to the countrys Xcaret eco park, for example, will be able to see nature as it is meant
reputation. Mexicos tourism sector is going to be, and be able to relax in splendor, perhaps while taking a swim in
through huge changes, and as part of President the parks very own underground river or in one of its many calm sea
Enrique Pea Nietos strategic national development plan, it will inlets. There are water sports aplenty to keep the most active of visitors
only become more important. Last year, total tourist arrivals rock- occupied and golf throughout the area if dry land appeals more.
eted to 19.3 million up to August, with air, land, and sea arrivals And a trip to Cancn would not be complete without a spa visit,
showing increases of 10.8%, 32.6% and 26.3%, respectively. where a traditional Temazcal steam bath or a treatment with natural
With an expected $8.2 billion of investment being plowed directly
into tourism projects over the next three years by private companies, a
figure more than matched by the governments plan to spend $23.3 The occupancy rate of Quintana
billion on infrastructure throughout the economy, future growth in the
sector looks like an investors dream. And nowhere encapsulates the Roo in 2014 was 77.7%8%
possibilities of that dream better than Quintana Roo, with its full-house of
sun and beach tourism; cultural, eco, and adventure tourism; and health,
higher than in 2013.
sports, special interest, and luxury tourism. The average occupancy Roberto Borge Angulo, Governor of Quintana Roo
rate of Quintana Roo in 2014 was 77.7%8% higher than in
2013, Quintana Roos governor, Roberto Borge Angulo, says. body wraps made with local plants and flowers will take you to seventh
Among the many delights is Cozumel, which at every turn offers heaven.
something to explore or discover in its beautiful, natural, and surprisingly Playa del Carmen, right at the heart of Riviera Maya, is the regions
underdeveloped landscape. From archaeological sites at San Gervasio to shopping and dining destination, with its stylish beach clubs, private
the church that is being reclaimed by nature at El Cedral, the 1,800-year beaches, and the famous Quinta AvenidaMexicos equivalent to Fifth
history of the island calls out to be discovered by the intrepid visitor. Avenueand the place to see and be seen. Quintana Roo perfectly en-
Niether is the offer limited to the way in which humans have changed capsulates all that Mexico has to offer and more. A place of pure relaxa-
the landscape either, with the magnificent Mesoamerican Reef on the tion, and heavenly for investors looking to build a solid tourism business
doorstepa place that teems with hundreds of species of tropical fish, thanks to the big conglomerates that operate many of the hotels. The
including the queen angelfish and the elusive toadfish. With an abun- possibilities are almost limitless: from InterContinental Hotels Group,
dance of frigate birds, brown pelicans, olivaceous cormorants, and others the second-largest hotel group in Mexico, which owns and operates the
on land, if scuba-diving or and snorkeling do not appeal, the almost Presidente InterContinental Cancn, and its sister on Cozumel, to the
limitless activities Cozumel offers surely will. superstar of the region, Apple Leisure Group.
We Deliver Health
International logistical specialists, shipping and distribution over land and air.
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Pure Luxury
use these multiple touch points to really get
to know our customers and craft meaningful
luxury experiences that resonate with travelers
long after they return home.
Complete customization is the key As part of their effort to cater to upscale
North American travelers the group launched
to one hospitality groups industry reign. AMResorts in 2001. At a time when most
luxury all-inclusive providers catered to the
A
European market, says Zozaya, we created
Alejandro Zozaya
ll-inclusive luxury resorts are commonplace in the a portfolio of high-end resort brands featur- CEO of Apple Leisure Group
worlds most spectacular sun and sand destina- ing familiar U.S. food and beverage brands in
tions. Very few hospitality companies, though, pro- restaurants and U.S. television channels in the guest rooms.
vide the distinctive touches that elevate the leisure AMResorts signature Unlimited-Luxury vacation experience com-
experience from one-size-fits-all to a personalized pleted the transformation. Offering everything from exquisite gastronomy
paradise. And only one has the robust distribution to fine furnishings as standard, the concept not only revolutionized the
network to meet guests individual needs throughout the entire travel industry, but it also earned AAAs coveted 4- and 5-Diamond Awards in
lifecycle. Apple Leisure Group (ALG) is comprised of four distribution the process. Today, AMResorts operates a rapidly expanding portfolio of
companies: Apple Vacations, Travel Impressions, CheapCaribbean.com 37 luxury all-inclusive resorts under six brands in Mexico, the Caribbean
and Unlimited Vacation Club, plus AMResorts and destination manage- and Latin America. Another 23 resorts are in the pipeline, which will
ment company, Amstar. Global synergies between the sister companies extend Apple Leisure Groups resort brand footprint to 23,412 rooms in
have made ALG the worlds #1 provider of American leisure travelers to 60 resorts throughout eight countries by 2019.
Mexico and the Caribbean. So what drives Apple Leisure Group to achieve so much success and
CEO Alejandro Zozaya discusses how customization made Apple yet aspire for more?
Leisure Group the king of luxury leisure travel, from Aruba to Mexico and North American travelers will always seek luxury accommodations
everywhere in between: As Americas only vertically integrated travel offering authentic local experiences in unique destinations, says Zozaya.
company, we can accompany guests from the moment they book a Our unparalleled distribution network gives us the ability to be in those
vacation to the time they check out of the resort, Zozaya explains. We regions to deliver this and so much more.
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be amazed be Riviera Maya
Building
asked me to be CEO and now Ive been part
of the company for 15 years. Coconal had a
solid background, but its top executives were
a Country
close to retirement, making it hard for the
firm to adapt to the times. When I arrived,
I decided to restructure everything starting
from recruitment and personnel, creating
The Mexican moment sees local internal rules and working arrangements,
construction firms build a richer nation. working long hours; we created a new order,
Gerardo Ruiz Esparza
reforming the company almost from scratch. Minister of Communications
S
The Ovalle touch has resulted in an and Transportation
ince public-private partnerships were introduced in 18-fold increase in Coconals fortunes.
2012, Mexicos construction and infrastructure sectors Today it invoices 5,500 million pesos, with most of the staff college
have been running at full throttle, with megaprojects graduates who adapt to challenges and are people of results,
taking the country to new development heights across the company president explains: The team is made up of 3,500
the board. From pivotal bridge, dam, interconnect- people. Some 250 of them are professionals, mainly civil engineers,
ing highway and expressway projects to airport and they hold shares in the company, which has given us very good
terminals, container ports and a national broadband grid, Mexico results. Investing in our people is part of our advantage, so every-
has found a route to greater prosperity and an ease of business and body is in a win-win situation. We also have a great environmental
tourism connectivity that small and medium enterprise owners and programwe recycle materials and use photocells on the roads
big-business people could only have dreamt about five years ago.
Local firms are rising to the challenge of the new business
climate and embracing the immense opportunities that lie ahead. Coconal is a great partner for
Take Coconal, a Mexican construction firm that provides services in
heavy and industrial construction and power transmission sectors.
companies that want to invest in
Founded in 1950 and based in Mexico City, Coconal is part of a the Mexican construction sector.
consortium that will operate the 78.9-kilometer Salamanca-Len
Hctor S. Ovalle Favela, President, Coconal
highway in Guanajuato state, under a 30-year concession contract,
and Mexico Citys new airport, among many other works.
Its president, Hctor S. Ovalle Favela, told Global Business an and in our offices. The approved structural reforms means great
inspiring story of how a natural businessman who shined shoes, opportunities. During the first year of the current government, our
delivered newspapers, and sold gum at a grocery store to earn sales increased by 10%, and by 20% in the second year. We have
pocket money came to be running an empire: I was born in Gmez major projects in store such as road infrastructure, Jalapas airport,
Palacio, Durango, where I went to high school, until I headed to freeways, and water treatment plants, and of course Mexico Citys
Mexico City to study civil engineering at the National Polytechnic new airport. The new airport will have a terminal building, three
Institute. Fate led me to work at ICA for 25 years. I began as a runwaystwo of them civilian and one military. A work of such
project manager, the lowest position for an engineer in the company, magnitude can only be done through a consortium like ours, which
and ended up as vice president and member of the board. After 25 provides the strength, work, and talent to finish on time.
years working in ICA, I decided it was time to leave the company, Coconal stands as a great partner for companies that want to
which coincided with the opportunity at Coconal, which was in a come and invest in Mexicos construction sector, Ovalle adds: For
poor condition. A friend, who was the director and president of the investments to generate profits, you must work directly with local
company, invited me to work there. I refused at first, but then he companies. Costs negotiated in the market do not allow indirect
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Logistics: The
which is why Chihuahuas new San Jernimo
project is so exciting for the company.
We want to achieve a productive synergy
Key to Success
in the border area and to stop being seens at as
the backyard, Vallina says, thereby creating
chains to boost competitiveness and productiv-
ity in industry as well as commercial develop-
With its geographical position at the center ment.
of the Americas, Mexico is the leader for Which plays well into the hands of another
Eloy S. Vallina Lagera
logistics serving the hemisphere and beyond. of the groups businesses, Accel, the logistics President of Grupo Chihuahua
specialist and local partner for outsourcing solu-
W
tions for multinational corporations. By relying on state-of-the art infra-
ith more than 15 years of experience in the structure and technology alongside extensive experience in this dynamic
logistics sector and a vast portfolio of 52 market, and of course a highly qualified, trained and motivated staff,
national and international clients, together Accel is one of the major players in the sector. And as a front-runner, it is
with the most recognized global brands, fully up to date regarding legislation in Mexico.
NTA is the absolute leader when it comes It is a fact that structural reforms adopted by the government of
to logistics services in the pharmaceutical Mexico are an incentive for investment, job creation, and economic
industry. growth, Vallina explains. Many people expected to see the changes
As Rubn Vargas Loera, CEO of NTA Logistics, explains: Our service from the very first day that these reforms took place, when in fact it was
platform offers a wide range of services that allows us to cover the only the beginning of the transformation of key economic sectors, such as
most demanding requests of our clientele all across the nation. In the financial and energy sectors.
fact, our average delivery time over the country is only 48 hours.
A part of NTAs success comes from its strategically located delivery
centers in key cities such as Monterrey, Guadalajara, Tijuana, and We want to achieve a productive
Veracruz, allowing the company easy and efficient access to almost
everywhere throughout Mexico, whereas other logistics firms struggle to
synergy...and to stop being seen
meet market demands. as the backyard.
Our fleet includes the most modern and sophisticated vehicles from
Eloy S. Vallina Lagera, President of Grupo Chihuahua
regular trucks to refrigeration units, to dry and armored special units, all
of which are GPS-equipped, explains Vargas. We are the first Mexican
company with NORMEX certification, which means that we have some We see in these changes the opportunities to develop and to
of the toughest security processes in the pharmaceutical industry; we promote our business, and we are always focused on job creation and
have awards from airlines and the American Chamber of Commerce of growth throughout Mexican industry. Im a realistic person and I firmly
Mexico, and we pride ourselves on being a socially responsible com- believe that we have the opportunity to reach significant growth by defin-
pany. ing which areas have more potential.
The company is currently undergoing an aggressive expansion pro- And, as the plans for San Jernimo inevitably come together, Grupo
cess that includes building a 5,000-square-meter warehouse extension Chihuahua will become a real cross-border titan in all sectors, with its
in the industrial park of Tres Ros on the outskirts of Mexico City. NTA second-to-none logistical support and infrastructure, and all elements of
Logistics growth has taken place at a rate of 30-40% annually, he says, the groups businesses behind it.
and, thanks to the structural changes experienced in the country, which For instance, Chihuahua has a very strong aerospace industry, and
have generated a climate of trust and good prospects from investors, we over the last 10 years the state has been the most prolific investor in that
look set to continue our expansion. specific field in Mexico.
Looking to expand upon the successes his businesses have had over Therefore, if San Jernimo eventually specializes in the aerospace
the years, Eloy S. Vallina Lagera, president of Grupo Chihuahua under- industry, or we build a cluster for the sector, it will also boost the kind of
stands that it is vital to be close to both your customers and producers, development we are looking for for this project, Vallina says.
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Renewable energy sources will power the new smart city. Businesses can tap into a wide logistics network for easy transit and communications.
S
panning 47,000 acres, San Jernimo is a land reserve the developers have ensured there is land available for long-term growth
with all the characteristics of a new Mexican city; an and further expansion will come under the management of a single
ambitious urban development located on the U.S.-Mex- entity to ensure adequate controls are put in place.
ico border that will positively impact both countries and This innovative model will fuel competitiveness, provide a
give rise to new opportunities in global trading. greater productivity platform and ultimately generate higher quality
A Land Master Corporation, San Jernimo will set of life standards for its inhabitants.
the foundation for the sustainable development of a new Mexican
city, providing an economic, social and environmental balance for Worldwide Planning and Urbanism Standards
those who do business and live there. For the first stage, land will be divided by purpose, as follows:
Located at the center of the U.S. border, next to the state of 2,223 acres for industry;
New Mexico, the awe-inspiring Chihuahua-based development is 741 acres for commercial development;
well positioned for global business connections, providing commercial 2,965 acres for housing;
opportunities that are aimed at serving one of the largest markets in the 593 acres for services and equipment;
world. Conceived as a sustainable platform for development, fostering 518 acres for industrial use with access to railroad infrastructure;
industrial activity, job creation and attracting residents in an environ- 667 acres for highways, and
mental setting, San Jernimo allows the creation of diverse business 939 acres of green areas.
connections in a second-to-none location. The Design Standards Platform for San Jernimo, for Industrial,
As well as having fluid communication links with the main U.S. sea- Commercial, Housing and Green Area Development, is based on inter-
ports, such as Long Beach and Galveston, and Mazatlan and Guaymas national Smart Growth new urbanism concepts and can be adapted to
in Mexico, San Jernimo is also close to three international airports and new trends in development and technology. It is, in fact, a platform on
intermodal station that will create easy business synergies. Whats more, which similar Smart Growth cities can build in the future. The aim of the
project is to achieve synergies in the border region, to enhance the area
and create links between the U.S. and Mexico to boost the competitive-
The Smart City Model
Focused on sustainability and energy savings. ness and productivity of the industrial and commercial sectors.
An energy efficient city. From the word go, the project took ecological and environmental
Ideal location for High Technology Centers and Laboratories. concerns into account, encouraging actions to preserve the natural state
Platform for Advanced Health Centers. of the area, meaning eco-friendly technologies will be implemented
Spaces for Large Commercial Complexes. throughout the project, as well as energy-efficient sources.
Traffic System Roads. Meanwhile, natural resources will be saved and smart-used, such
Industrial Areas designed to manufacture equipment and manage as water, its recovery and its reuse, also preserving areas with native
renewable energies.
vegetation through enhancement programs and improving green areas.
Urban zones suitable for installing and testing new technologies for the efficient
use of resources.
Housing zones planned for harmonious co-existence.
State-of-the-art technology to maximize communications and entertainment. contact@sanjeronimo.com
www.sanjeronimo.com
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Fueling Safer
one of the largest companies in the country
in the field of fuel distribution. We operate
in 26 Mexican states and have never had a
Investments
security problem that puts our investment in
danger.
Accelerating Ahead
Government reforms are driving both To avert any issues in the future, Karam
industry and safety standards even higher. Kassab is keen for Hidrosina to become a Enrique H. Herrera M.
linear business. CEO, TPS Armoring
F
Thanks to the openings allowed by the
amily firms are also making their mark on Mexicos energy reform, we can have storage terminals that are exclusive to
new business landscape. Hidrosina, for example, the government and our own distribution lines, not only for our own
now in its 23rd year of operation, is a 100% stations but to supply small fuel distributors who do not have the
family-owned business operating a string of infrastructure that we count on, he says. The secret to the future of
gas stations around the country, as Paul Karam the gas station industry is to have the most competitive price. Were
Kassab, director general of Hidrosina, confirms: confident that Pemex, as a Mexican company par excellence, will
Pemex performed a divestiture of some companies, includ- continue to have the strength to push the fuel sector in our country.
ing Codex; we acquired a network of 30 gas service stations and The fuel sector has sustained growth of 4% with open opportunities.
started the expansion of the company. This year will close with 185 This year, with Pemex and the Ministry of Finance due to free
operating stations. up gasoline pricing, Hidrosina pledges to keep within competitive
For more than 20 years, Hidrosina has based its development rates: Even though prices may fall, says Karam Kassab, we are
on three pillars: human resources, technology, and service. All pro- very clear where were going and our goal is to keep improving our
cesses, from accounting to customer service, are certified from 10 service. In 10 years I see a completely linear Hidrosina business,
years ago by the ISO 9000 standard. With the energy reform put in with storage terminals and the largest fuel distribution chain in the
place by Mexican businesspeople in the oil sector and its derivatives, country, giving service to a little over 15% market share. Being the
we have an historic opportunity to venture into business lines that head of a family business, I would like to be seen as a pioneer in my
were inaccessible in the past. Investment is welcomed from both
Mexican companies and foreign investors, because the country has
been fair and has always received both foreign and domestic invest-
ment with open arms, as it is the driving force for any country.
I cannot understand how some people see this reform as some-
thing negative. It creates investment opportunities and the possibility
of earning money for the country and of generating formal jobs.
Karam Kassab is quick to dispel any myths investors may have
about the safety of an investment in the country.
Mexico provides the certainty needed; that is very clear, he
says. That doesnt mean that we are not without some risk isola-
tion, however. There are some red flags that may appear to desta-
bilize the institutions and structure of the country but they are not
significant enough to have Mexico seen as a risky country. We are
More than
an armored car,
its a TPS
SALES, RENTAL,
MANUFACTURING,
SERVICE & MAINTENANCE
OF ARMORED VEHICLES
www.tps.com.mx
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