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Headline: state of flux
Mexico has become a modern nation with an export-driven economy. Who will benefit?
It’s inescapable. Mexico has joined the likes of Japan, the US and several European countries on the world map of trading. For one, there is the constant reminder of the North American Free Trade Agreement (NAFTA) and encroaching Americanism, with Coca-Cola, Sony televisions, Nike shoes or Wal-Mart stores all over the country.Add to that 30 plus Other trading agreements and there you have it – central and Latin America’s strongest economy and one of the world’s most prolific trading nations.
When NAFTA was signed in 1994, it was in dire straits – the stock market had collapsed and the peso went into freefall. The deal aimed to encourage an easier flow of goods across the US/Mexican border while a free market was supposed to boost investment, bringing prosperity and jobs.
It hasn’t quite worked out like that, at least not for everybody. Instead, as in any competitive free market, a kind of Darwinesque survival of the fittest scenario has emerged. True, more than $132 billion has been invested in the country since NAFTA, but at a cost. Many small family businesses have not been able to withstand the international onslaught and have gone under, unable to compete with the size, range, price and distribution capabilities of their often US competitors. As a result, phenomenal affluence and extreme poverty continue to rub shoulders.
transformation
The office products industry has also been transformed as a result of Mexico’s coming of age. Exact figures as to the size of the industry are difficult to come by (an industry association valued the OP market, including computer products, at $500 million in 2000). One thing is certain, however – the power is shifting towards the power channel, much like it did in the US.
The office supplies sector has boosted overall Mexican retail figures in the first nine months of this year. Retail sales rose 2.7% during the period and stationery was quoted as a prime driver. According to the Mexican National Statistics Institute, stationery sales rose while a decrease was seen in the clothing and footwear sectors.
Office products continue to represent a fragmented industry sector and there is a considerable amount of channel blurring. A large proportion of sales is still generated by small family-run businesses called papelerias. Most of these are based near schools or residential districts rather than in wealthy business areas.
However, NAFTA has endangered the very existence of papelerias as well as other local players as they have had to lock horns with larger US equivalents in the battle for supremacy or, in many cases, plain survival.
Of course, the global invaders must be doing something right, otherwise they wouldn’t be so successful. Joining forces with a local firm has often been the answer.
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