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Expectations are rising that President Park Geun-hye's upcoming trip to Mexico will speed up expansion of local companies into the relatively untapped yet highly potential market.
The four-day trip to the Latin American country is remarkable, as Park has formed the largest-ever business delegation to the country with more than 140 local business leaders. This reflects her strong will to forge a strategic economic alliance with the Mexican government.
Korea's technology giants such as Samsung and LG have been making continued efforts to extend their footing on the global stage. But generally speaking, Korean firms have put less importance on the Latin American market ― including Mexico and Brazil ― than other key markets such as China and the United States, citing their weak infrastructure for business operations and concerns over public security.
But it is time for local companies to focus on the massive potential that the country has in terms of its huge population and its will to invest in technology infrastructure of which Korean firms have expertise.
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Mexico has a 55 million-strong labor force out of its population of 122 million, twice as large as that of the Korean labor force. A cheap workforce is another merit Korean companies can enjoy in the emerging market. For example, the average annual salary for an unskilled worker in the automobile industry is $3,645, lower than China's $5,726, according to data from the Ministry of Trade, Industry and Energy.
In particular, the country has huge demand for electronic components and materials, while having enough mineral resources such as silver, copper and zinc of which Korea is short.
The complementary relationship is well-manifested in the growing trend of Korea's exports to Mexico, which exceeded $10.9 billion in 2015, almost doubling the $6.3 billion recorded in 2006.
To be more specific, Mexican President Enrique Pena Neito has drawn an economic development plan to reinforce its national competitiveness. Under the six-year initiative, the country is making huge investments in nationwide technology infrastructure and finding new revenue sources in the energy and medical sectors.
This will allow Korean companies to expand their footage into Mexico on not just the manufacturing business, but also the IT industry.
The Mexican government is also signing free trade agreements with a number of European and South American countries, serving as a beachhead for local companies to seek deeper penetration into the Americas.
The Korean government is planning to provide incentives and consulting services for local companies that will expand into the Mexican market.
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