Mexico comes from shopping in Spain: from floors to restaurants | Economy

Mexico comes from shopping in Spain: from floors to restaurants | Economy


The Mexican capital is in the ham slices Campofrío (Sigma group), in the works of FCC (Carlos Slim), in Panrico's sandwiches (Bimbo group), in the Yelmo cinemas (Cinépolis), in the Avanza buses (Mobility Ado ) or in the publishing company of this newspaper, PRISA (Roberto Alcántara). Also in the Vips restaurants, the Tagliatella, the KFC. All are, partially or totally, in the hands of Mexican companies that have seen in Spain their natural springboard to the rest of Europe. The largest private shipyard in the country (Barreras, in Vigo) is 51% owned by Pemex, the Mexican state oil company, which took advantage of the fat cows in the oil market and a series of policies to invest in sectors unrelated to its traditional business . Minera Los Frailes (the Aznalcóllar mine) is owned by tycoon Germán Larrea, protagonist of one of the biggest clashes with Manuel López Obrador, president of Mexico, during the last electoral campaign. And some of the most important financial investments in recent years in Spain (from Sabadell to Liberbank or to the ill-fated Banco Popular) also originated in Mexico.

There are no reliable statistics how many pesos are being transformed into euros in the Iberian Peninsula, beyond the data provided by the investment base of the Ministry of Industry voluntarily registered by the companies. Many capital injections are channeled through the Netherlands. But that platform gives some clues, such as that in recent years Mexico has become the first investor in the subcontinent in Spain ahead of Brazil. The capital accumulated in ten years reaches 19.180 million euros, equivalent to the GDP of Navarre or that of Extremadura. A lot of money, even more so if one takes into account the very low starting level, at the beginning of the nineties: Mexican investment in Spain, unlike the Spanish investment in Mexico, has been slow to take off. But when he has done it, he has done it with force.

Jerónimo Bremer, president of the executive committee of RLH Properties.
Jerónimo Bremer, president of the executive committee of RLH Properties.

"RLH was born with an international vocation. The decision to seek opportunities outside of Mexico was adopted a couple of years ago, and it does not mean that we do not continue to bet on our country, "Bremer says in the Villa Magna cafeteria. He wants to make clear that the victory of López Obrador, which in the campaign clashed with businessmen and that in the first days of his mandate, despite preparing a budget as social as fiscally prudent, has canceled the new airport in Mexico City, a of the greatest infrastructures in the recent history of the North American country – it has nothing to do with its decision to invest in Spain.

New president

López Obrador has taken a turn for the economic policy that has disturbed some Mexican millionaires, accustomed to the ultra-orthodoxy of the last six years: it raises more public investment -in historical minimums-, emphasizes social programs in a country in which 50 million people live below the poverty line, the minimum wage has risen – dented even by Latin American standards – and has hinted at its intention to limit bank fees, an idea that it has subsequently eliminated from its agenda, at least in the short term, before the market reaction. A push, real or not, so that the great local fortunes believe that they must "safeguard" their millions. "After the elections on July 1, many investors began to review their assets in the country in the face of greater political uncertainty," says Jesús Sánchez Arciniega, of the National Autonomous University of Mexico (UNAM). For Carlos Malamud, of the Elcano Institute, the "uncertainty of the arrival of López Obrador" has fueled those investments in real estate in recent months: "We will have to wait to see the future of the relationship between the Government and the private sector."

But the political moment is just one of the reasons why Mexican investment has renewed its interest in Spain, especially in the real estate sector. "In recent times we are reviving with Mexicans what happened years ago with Venezuelans. They do not invest just to live, but to establish themselves and generate business ", believes Carlos Zamora, director of Residential at luxury real estate firm Knight Frank. "With the change of the Government there is a sector a somewhat restless", supports from the real estate Barnes its director of Madrid, Jacqueline Ulrich. She is used to having her clients from that part of the world request luxury flats in Madrid's Salamanca neighborhood and, since she opened the Casa de México – a window into literature, art, cinema and gastronomy of the Spanish-speaking country. populated the world-, in the Chamberí area. "They want stately, very representative entrances, high ceilings, hallways and large rooms." As big as to get to pay two, four and even ten million for a floor, perhaps his third home after those of Mexico City, Texas or Miami. The greatest economic ties have also been felt in the demand of the airlines Iberia and Aeroméxico, which in the last year have increased the frequencies between both countries, a route that today is served by between four and five daily flights.

Although, after more than a year of negotiations, Mexico has managed to reissue the trade agreement with the United States and Canada (TLC, today T-MEC) that Donald Trump promised to liquidate, the arrival of the Republican tycoon to the White House with his Anti-immigrant and anti-Mexican discourse has also influenced the increase of interest in Spain. It is and, above all, it has been in 2017 and the first half of 2018 marked by the lack of definition in the future relationship between Mexico and the US – two of the most linked economies on the planet – an alternative that offers similar characteristics, such as income per capita high, legal security and institutional stability, in the eyes of Mexican investors. "In addition, if we compare the prices with those of other European capitals we see that the square meter in Spain is still extremely interesting, and as much as these people have fantastic levels of English cultural affinity is important," Ulrich endorses.

The businessman Antonio del Valle.
The businessman Antonio del Valle.

José Luis Rivas, professor of the Autonomous Technological Institute of Mexico (ITAM), takes the crisis as a starting point. "After her, prices in Spain have been attractive in assets such as real estate, manufacturing plants … A second factor is the cultural similarity. According to our studies, it is the factor that most predicts business investment towards one or another country: the colony-colonizer relationship. Much more than the currency or the border sharing. This is the case of Australia and the United Kingdom, and also that of Mexico and Spain, "he says. Verónica Uribe, an analyst at Monex, adds that Spain is the most logical gateway to Europe. "In itself it is a very attractive country because it is a more mature market and also allows knowing the European market and knowing the consumer. And it adds stability in the income statements, due to the fact that the assets are not fully concentrated in emerging countries. "

Diversification

The Mexican investor, complete Alejandro Ramírez, professor of the University of the Americas Puebllas (Udlap), seeks, above all, diversification. "The renegotiation of the FTA was an amber focus, if not red, and before the doubts about what could happen, the Mexican capitals flew to Europe". There, beyond the aforementioned factor of language and culture, hides a less mentioned but true reason: "The Mexican and Spanish markets are complementary in many sectors, with very different return cycles of investment: and the Mexican investor prefers sacrifice the high profitability that your country offers for the long-term stability offered by Spain. The return is slower but also safer. "

In this attempt to minimize risks, eliminating the variable exchange rate of the investment puzzle – despite the fact that the peso is one of the most stable currencies of the emerging block, is constantly on a roller coaster – is key. Investing in a strong currency such as the euro is, for Mexican companies and individuals, an important added value over an investment project. Also the very low interest rates in the eurozone, which contrast with a price of 8% annual money in Mexico. This allows companies to finance their European operations at a better price and "with a natural cover: you repay the debt with income that you also have in euros," Uribe adds.

The Mexican businessman Carlos Slim.
The Mexican businessman Carlos Slim. EFE

The real estate market is no longer as cheap as the exit from the crisis – what paid for Villa Magna has broken all the records in Madrid. But, as Juan Carlos Martínez Lázaro of IE points out, the Spanish Stock Exchange is, "with many companies within a stone's throw of opa. Of course, there are still many possibilities for corporate operations. " Perhaps that was what the richest man in Mexico, Carlos Slim, thought in 2014, when he disembarked at FCC, a group that had many difficulties. Bleeding by the debt, the conglomerate of construction and services nevertheless contained a great potential that it took advantage of. The result is that, after five years of losses, in 2017 the group obtained 118 million in profits. "The Latin American multinationals are very big, with a very international management, and they have followed the strategy of the Americans", reflects Martínez Lázaro.

Marco Antonio Pérez works at Campofrío and has seen it. Delegate of CC OO in the works committee, says that since the entry of the Sigma group, chaired by businessman Daniel Servitje, many things changed in the meat company, which is now presented under the label of multinational food. "Shortly after landing, they brought their people, the pawns moved, and now the company's top executives are Mexicans, from the CEO to the finance officer." Varied the way of working. "Now it is much more meticulous, it is another work dynamic where communication prevails. Everything much more is supervised, we work in an integrated way, everything is monitored and anyone in Mexico gives a key and has the reports of a worker from Spain. " In his opinion, he has improved in terms of control, "that does not mean that people are comfortable. It's more work for human resources, we have to make additional reports that were not done before ". The salary conditions, however, remain similar, as does the negotiation on improvements. "What we feel is that we are no longer 7,000 employees, but more than 30,000."

US Rival

Could it be that Europe, through Spain, takes over from the US? For José Luis Rivas, yes, although partially. "It depends a lot on the company, the sector and the internationalization cycle. If you dedicate yourself to the components of cars, it is much more natural to look at the United States than Europe. " Jorge Riopérez, responsible for mergers and acquisitions of KPMG, abounds in the idea that Spain is perceived as a country where the relationship between risk, profitability and price "makes investment very attractive".

It is also true that, as Rivas and other analysts point out, "when you have subsidiaries in developed countries, your portfolio [cartera de inversiones] it is seen with greater certainty. When it comes to issuing debt and being qualified, it is important that not all of your portfolio is centered in emerging countries. " And it is also a good learning ground for future European adventures: "There is a common pattern: moving towards more demanding and more mature markets forces the company to develop other capabilities that can then be used in other countries. If you do it by buying a company [como en muchos casos citados] you access technology, brands and, above all, management and management skills, "adds Xavier Mendoza, from Esade.

The great Mexican groups are, recalls Malamud, in almost all sectors. "Banking, construction, food, steel, tourism, transport … the presence of SMEs may be less relevant". But, remember, the "called effect" is important, and after the big fish comes the boy. Íñigo Susaeta, director of Arcano's family office, who advises families on their assets, has proven this with their clients. "There are the great fortunes that invest around the world regardless of the geopolitical risk; there are those who seek refuge to their patrimony – we see it in the residential sector – and there is a third group of investors who join more and more to buy, develop and patrimonialize the investment ". And those families, he believes, are going to be a magnet for other types of bets in sectors such as restaurants. "There is a boom and a lot of interest in entering food chains."

Rivas, from ITAM, does not overlook a little known but true fact. "Spain is the second foreign direct investor in Mexico, after the US, but Mexico is the third most important in Spain. It is perceived as the poor country, but it is not like that, far from it ". Since 1993, with the entry into force of the antitrust law in Mexico, the professor emphasizes, many companies such as Bimbo or Cemex "had to look outside for not entering into competition problems" in the local market. The privatization of companies also played a prominent role, according to Jorge Mariné, economic and commercial advisor of the Embassy of Spain in Mexico, "with big players like América Móvil".

With the turn of the century, the trend accelerated and Mexican capital has matured. They do not want to have all the eggs in the same basket and their market, even being attractive, with 130 million consumers, they start to be small. And in a globalized world, Spain has become one of its favorite destinations. "Mexico has become a great global investment player. Their companies, definitely, have grown older ", closes Mariné.

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