C ALIFORNIA –M EXICO TRADE INITIATIVE April 1, 2014

ProMéxico Activities: FDI Exports promotion Mexican investment abroad

Fdi in mexico (Sectors) ( ) Source: Ministry of Economy

4 Mexico’s Number 1 pArtner as: exports destination Imports Total trade partner Potential Sectors: Aerospace Automotive and auto parts Medical Devices IT’s & BPO’s Energy Chemical Usa as trade partner

5 Source: SCT/ US Department of Transportation. 5 Mexico as part of north america México has: Nafta More than 50 border crossing points Value of NAFTA market= 18 bn usd

6 Germany South Korea China Mexico France A sophisticated economy Medium Technology (MT): Specialty Chemicals Machinery and Equipment Appliances Electrical Industrial Machinery Motor Vehicles & Parts Motorcycles & Transport Equipment Railroads & Equipment High Technology (HT): Aircraft & Spacecraft Advanced materials Computers & Office Machinery Communication Equipment Medical, Precision & Optical Source: ProMéxico with information of IHS Data – Global Insight. Data in USD Real terms, 2005, considering de G20 countries. No. Country GDP 30.4% 28.1% 17.2% 15.0% 13.2% Canada United States 7.3% 5.1%

According to KPMG, in 2012 Mexico had an average cost advantage of 21% (over 19 industries), compared to the US. Competitive costs for NAFTA market 7 The Alix Partners Manufacturing Outsourcing Cost Index ranks Mexico as the best country (better than BRIC’s). The most competitive country in terms of costs and taxes, according to Global Benchmark Report. Mexico UK The Netherlands Canada France Italy USA Germany Australia Japan Source: ProMéxico with information of Competitive Alternatives 2012, KPMG; Global Benchmark Report 2011, of the Danish Industry Confederation; Manufacturing Outsourcing Cost Index 2010, Alix Partners.

Young, trained and talented population More than 110,000 new engineer and technology professionals per year (CONACYT, 2011) In the next 20 years, 60% of the population will be available as work force (80 million). Labor force Fuente: Select Macroeconomic Indicators. International Monetary Fund

9 Source: ProMéxico with information of FEMIA/ GTA/ AMIA/ OICA. MEDICAL DEVICES We are the main supplier to the US. AUTOMOTIVE AND AUTOPARTS 8 th producer and 4 th exporter globally of new light vehicles in the world. AEROSPACE Mexico is the 6th supplier to the American aerospace industry. ELECTRIC-ELECTRONIC Leading flat television screen exporter in the world. We are leaders in key sectors

BUSINESS OPPORTUNITIES

Mexico: Your best option for Reshoring Mostly returning from China due to increase of labor and production costs BCG estimates reshoring a value of $120 bn usd with a 20% increase for the next five years Mexico’s advantages: Near shore Educated work force Competitive manufacturing costs Investment certainty Medium and advance manufacturing Source: BCG.

Punching and stamping 10 main opportunitie s Foundry Forging Machining Injection molding Die casting Other components Auto interiors Electronic assembly Cables and wires Main opportunities in the automotive global supply chain Source: ProMéxico with information provided by main automotive companies. +10 MORE bn USD 11.8bn USD 6.4bn USD 9.2bn USD 9.9bn USD 3.3 bn USD 2.2bn USD 2.5bn USD 3.9bn USD 2.7bn USD

Metal stamping 10 main opportunitie s Mechanical assembly Plastic injection molding Machining Metal fabrication Laminating Foundry Dielectric material Ceramic or porcelain Sintering Main opportunities in the electric global supply chain Source: ProMéxico with information provided by main automotive companies bn USD 1.6bn USD 0.6bn USD 0.8bn USD 1.0bn USD 0.4bn USD 0.1bn USD 0.1bn USD 0.5bn USD 0.2bn USD

Construction Main opportunitie s Power generation equip. Other sectors Main opportunities in the wind industry supply chain Source: Ministry of Energy bn USD 29.3bn USD 13.4bn USD 21.2bn USD 22.5bn USD 53bn USD 11bn USD Metal fabrication Machining and equip. Plastic industry IT equip.

Treatments Sheet metal Machining Electronics Castings Forgings Harnesses Main opportunities in the aerospace global supply chain Source: ProMéxico with information provided by main automotive companies. 7 main opportunities 15

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