The Business Year

Carlos Méndez

MEXICO - Economy

Trust Amidst Risks

Assurance Leader and next Territory Senior Partner, PwC Mexico

Bio

Carlos Méndez is Partner and Assurance Leader of PwC Mexico. He worked in PwC USA (Los Angeles) for two years, as part of the global network’s exchange program, participating in several multinational projects. He has more than 36 years of professional experience working with several national and international companies from the following sectors: industrial, consumer products, financial, services and construction. He has been acknowledged as a distinguished student of the Instituto Politecnico Nacional, and Alumni of the Trade and Management Graduate Association. PwC Mexico recently elected Carlos Mendez its new Territory Senior Partner from 2012 to 2016; he will take office on July 1, 2012.

What were the principal findings of the 16th Annual Global CEO Survey? The results of PwC’s 16th Annual Global CEO Survey indicate that at the global level, the short-term scenario […]

What were the principal findings of the 16th Annual Global CEO Survey?

The results of PwC’s 16th Annual Global CEO Survey indicate that at the global level, the short-term scenario is not pleasing for CEOs; however, the results for the medium term are a bit better. The CEOs of companies based in countries and regions facing a less-than-favorable business environment are those who reported the lowest percentages of trust, as in the case of the EU, where only 22% of CEOs acknowledged feeling confident, and also from the US, with only 30% of CEOs in that condition. Furthermore, this year’s optimism has not created contagious excitement among the CEOs of China (40%) and Brazil (44%), two countries that in the last few years have experienced growth rates above the world average. In the survey, the most noticeable deviation were the opinions of CEOs from Russia, India, and Mexico, since 66% of Russians, 63% of Indians, and 62% of Mexicans said that they were very confident in meeting their objectives within their business in the short term. The optimism and confidence of our CEOs manifested in the Global CEO Survey, in its fourth year in Mexico, and it is not the first time that trust is almost equal in the short term (62%) than in the medium term (61%), yet it is really something that had not been registered before. High levels of confidence from our CEOs should not be a surprise to anyone, since they are consistent with the general tone of expectation surrounding the Mexican economy.

What is Mexico doing right?

If you ask this question to the authorities of the Secretary of Finance or the Banco de México, they will most likely answer by focusing on highlighting the virtues of fiscal and monetary discipline, which has ensured the country’s macroeconomic stability and secured the wellbeing of the national banking and financial system. In the last two years, the Mexican economy has sailed with favorable winds. The decelerated economy and exports of China—our main competitor—are creating spaces that are opening larger opportunities for Mexican products, and not only in NAFTA markets, but throughout the American continent, Europe, and Africa. But beyond global, regional, and national levels of macroeconomics, the Mexican situation has other favorable elements, such as having one of the strongest, orderly political transitions and a new correlation of power in legislative positions.

What factors have helped to build the trust exhibited by international firms that choose to locate regional head offices here in Mexico?

The trust is based on export activities and direct investment to operate in diverse, regional markets. For example, the companies in the automobile sector, like Nissan and General Motors, the Mexican platforms of which export hundreds of thousands of vehicles every year to more than 100 countries, have far exceeded the slowing NAFTA markets. Some global Mexican companies, such as Bimbo, Gruma, and others, also have a presence in dozens of countries throughout five continents. For companies of this magnitude, as tested, solid business models, the slow growth of the Mexican economy, the stagnation of nations in the eurozone, and the slowing US market will always mean bad news and can be alarming, yet it is not a reason to become disappointed and give up on growth objectives.

As part of the Survey, 18 in-depth interviews were conducted with the CEOs of large domestic companies and multinationals with operations in Mexico. What were the outcomes of these interviews?

Some were skeptical in regards to the new Mexican “boom,” and they warned us about the risk our country is facing as a result of its overexposure to international financial markets and getting caught in a trap. Others see that the Mexico brand is exaggerated; that the macroeconomic fundamentals of our country seem very good now, but not because they have really improved, but because the fundamentals of the rest of the world have fallen. The new PRI government recognizes the qualities needed to govern this country such as ability, resourcefulness, pragmatism, political skills, and determination, but it’s also concerned about history. Our CEOs perceive that this situation is one of the best our country has showed in a long time and it would be unforgivable to waste it.

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