- Tipo: Press release
- Fecha: 15/04/2013
Comunicados de Prensa
- 8 out of 10 senior executives of the country expect improvement of the Mexican economy during 2013.
- 61% of senior executives rate the Federal Government’s performance as excellent and good.
- 51% commented that the decisions on investing in the country have kept despite of the current lack of safety.
- 74% survey respondents said that the Labor Reform did not meet their expectations.
- 72% survey respondents expect that in the near future, a tax reform is agreed upon; 21% expect the energy reform, and 7% from the political reform.
Mexico City, on April 15, 2013.
8 out of 10 senior executives of the country expect that the Mexican economy improves during 2013 in comparison to 2012, 75% expect a single-digit growth, and 18% a double-digit growth in their companies for this year, while 78% of senior executives consider that we will not
fall into a new economic recession or financial crisis, in accordance with the eighth edition of the survey Perspectivas de la Alta Dirección en México 2013
[Top Management Insights in Mexico 2013] that is conducted every year by KPMG in Mexico, a multidisciplinary firm that provides Audit, Tax, and Advisory professional services.
This time, more than 600 leaders of the main industries and regions operating in our country completed the survey giving their opinion. Respondents include CFOs and members of the Committee and Board of Directors, Directors, Subdirectors, and Managers. The survey Perspectivas de la Alta Dirección en México 2013
presents the priorities, challenges, and actions that the Top Management will undertake for productive and profitable entities in the years ahead.
Perception on the country’s economic situation and crisis effects
The overcoming of the crisis
- 78% of senior executives answered that we will not fall into a new economic recession or financial crisis against 60% for 2012, representing an 18% increase.
- 75% of respondents consider a single-digit growth, while 18% a double-digit growth in their companies for 2013.
- The three main effects of the financial crisis that made an impact in the large, medium, and small-size companies were: income slowdown (48%), cost increase (44%), and more lack of security (37%)*.
- The core actions that have been or are going to be taken by entities in a short term to counteract the crisis effects are: reducing costs (89%), strengthening internal control strategies (79%), and financial and operative restructures (74%)*.
Roberto Cabrera, KPMG Industry and Market Partner in Mexico, said: “There is no doubt that for the year 2013, entrepreneurs are very optimistic when being asked about their growth expectations for this year. 93% of them expect single to double-digit growths against 89% in the last year, while in 2010, only 84% did.” He added: “On the other hand, from the beginning of the real estate financial crisis in 2008, we have been asking entrepreneurs how they have been affected by the crisis, and its effects on their companies; for the first time, more than half of them consider that we have already overcome the crisis”.
Evaluation about the different government levels
- In regards to the question, How do you rate the authorities’ performance given the economic environment lived by the country? 61% of senior executives rate as excellent and good the Federal Government performance this year, against 53% in 2012, and 38% in 2011.
- Senior executives rate the state governments’ performance as bad and terrible with 60% in 2013 against 53% in 2012, and 48% in 2011; as for the federal congressmen’s performance, 24% considered it to be terrible in 2013, against 42% in 2012, and 48% in 2011. Regarding the Senators’ performance, 33% rated it as regular in 2013, against 22% in 2012, and 20% in 2011.
Approach to the new Federal Government
- 54% of survey respondents confirmed that the change of government will make a positive impact on their company’s competitiveness, while 38% said that there will be no changes, and only 8% consider that this will be negative.
- 47% of senior executives rated as good the Federal Revenue Law for fiscal year 2013, and 46% as regular.
- Regarding the rate assigned by survey respondents to the tax regime in Mexico, 52% rated it as regular, against 43% in 2012, and 30% in 2011; 30% rated it as bad, against 43% in 2012, and 38% in 2011, and 7% evaluated it as very bad against 11% in 2012, and 23% in 2010. Only 11% evaluated it as good against 3% in 2012, and 9% in 2011.
Government and competitiveness
- In reply to the question, How do you consider the government’s role as competitiveness driver? 24% of survey respondents answered that it is good (against 20% in 2012, 15% in 2011, and 9% in 2010); 57% considered it to be regular (against 50% on 2012, 44% in 2011, and 35% in 2010); while the government’s role is considered to be bad and very bad by 17% (against 30% in 2012, 40% in 2011, and 55% in 2010). On the other hand, 79% of the Top Management executives expect that the country’s economy improves in 2013, differently from last year, that was 57%.
Lack of security and investment
- Regarding how the current insecurity environment of the country is affecting the investment decisions made by senior executives, 51% commented that these have continued, 42% that these have decreased but not suspended; only 5% consider that these have been put on hold, and 2% that have moved to other countries.
Expectations on the Labor Reform
- 74% of the respondents answered that the Labor Reform did not meet their expectations.
Competitiveness in the Mexican environment
- The five variables that Mexico requires for increasing its competitiveness, according to senior executives are: conduct structural reforms (79% in 2013 as well as in 2012 against 53% in 2011); fight corruption (76% in 2013 against 71% in 2012, and 82% in 2011); public security (67% in 2013 against 64% in 2012, and 74% in 2011); economy stability (66% in 2013 against 63% in 2012, and 54% in 2011), and simplify and reduce bureaucratic proceedings for the opening of new businesses (44% in 2013 against 51% in 2012, and 54% in 2011)*.
- For those selecting the structural reforms, priorities were as follows: tax (72%), energy (21%), and political (7%).
In this respect, Agustin Vargas, KPMG Partner in Charge of the Tax and Legal Practice in KPMG in Mexico, said: “The insights of entrepreneurs in Mexico for this year are different from previous years, not only because a new federal and some state and municipal managements were set for the first time, but also because the Labor Reform was agreed upon, and some other more demanded are expected. This has brought about some very interesting changes in figures and opinions against previous years”.
Entities’ competitiveness strategies
- The five primary strategies which entities will focus their efforts on to improve their competitiveness in the next three years are: reduce costs and maximize capabilities (76% in 2013 against 83% in 2012, and 81% in 2011); increase client satisfaction (75% in 2013 vs. 78% in 2012, and 74% in 2011); improvement of processes and performance (75% in 2013 vs. 72% in 2012, and 75% in 2011); innovate and develop new products (59% in 2013 vs. 57% in 2012, and 53% in 2011), and expand to new markets (51% en 2013 vs. 52% en 2012 y 49% en 2011)*.
- The three core factors Top Management consider that will contribute to the generation of more profits for their entities in the next three years are: further demand (61% in 2013 vs. 62% in 2012, and 81% in 2011); improvement in innovation (54% in 2013 vs. 58% in 2012, and 65% in 2011), and better use of assets (51% in 2013 vs. 55% in 2012, and 52% in 2011)*.
- 73% of senior executives agree that they have a formal cost reduction strategy. Additionally, 70% achieved the expected cost reduction; 41% achieved 1% to 5% cost reduction, and only 5% achieved more than 20% reduction.
- Regarding the question, how would you range the primary obstacles faced by your entity on cost structure optimization –excluding interest rates or input and energy increases? They range them as very important in the following order of relevance: inappropriate processes refraining the cost reduction; lack of incentives to encourage saving costs; difficulty to measure cost saving, and lack of transparency in the entity.
- As a consequence, from the opposite view, among factors considered to be useful and effective for reducing costs, and very important for 63% of the respondents, is business process optimization, which may involve investing in technology, design, innovation, and transparency. Cost reduction is also included in the supply chain and tax planning. As noticed in other similar questions, outsourcing and layoff are not anymore priorities in a cost management process.
- Executives attribute cost reduction to Information Technologies (IT): 82% consider that IT is very important for transparent and timely information in decision making, while another 82% uses or provides value to automate repetitive operations, which do not provided added value, particularly in the administrative, sales, collection, and other areas. This reveals a very positive approach to the business software, the information cloud, and the automation of the vendor-client relationship.
- The survey reveals that a significant proportion of leading companies in Mexico (63%) has a comprehensive plan for Risk Management in their entity.
- In the following three years, senior executives expect their investment and resources levels in relation to risks and controls in their entity to increase as follows: 28% significantly, 50% slightly. On the other hand, 19% expect no change, 2% expect that it decreases slightly, and 1% that decreases significantly.
- For entrepreneurs, the primary objectives of risk management are: increase profitability of business units (58% in 2013 vs. 62% in 2012, and 14% in 2011); ensure continuance throughout time (55% in 2013 vs. 54% in 2012, and 2% in 2011), and provide security to employees and clients (53% in 2013 vs. 59% in 2012, and 2% in 2011)*.
Strategic plans or immediate actions
- 75% of the Top Management in Mexico has outsourced roles in the last three years, expecting to get the following benefits: cost reduction and efficiency (77% in 2013 vs. 68% in 2012, and 98% in 2011); administrative efficiency (48% in 2013 vs. 51% in 2012, and 1% in 2011); further responsiveness (39% in 2013 vs. 33% in 2012 and 12% in 2011)*.
- 35% of respondents answered that in the following three years, their entities will hire further outsourcing services; 41% will keep the current level; 8% will decrease the outsourcing level, and 16% will not require these services. The 4 main captions that have been considered for these activities are: personnel (42%), IT (32%), tax processes (22%), and business processes (21%).
Growing up and expanding
- Among strategies that entrepreneurs consider to be very important to drive their entities toward regional or global growth over the following three years are: build closest relationships with the existing clients (69%); develop new products and services (56%); loyalty program, and client service (50%); focus on current strategic products and services (44%); come into new geographic markets (40%); enter into strategic alliances (33%), and reach growth through Mergers and Acquisitions (16%).
- 56% of leaders in 2013 are planning to expand their operations in a state of the Mexican Republic in the following three years. The favorite states are: Nuevo León (24%), Federal District (24%), Jalisco (22%), Querétaro (20%), Guanajuato (19%), State of Mexico (19%), Veracruz (14%), among others*.
- 43% of senior executives are planning to expand their operations in another country during the following three years, standing out: the United States (34%), Brazil (23%), Colombia (22%), Guatemala (14%), Costa Rica (12%), Europe (12%), Peru (12%), Chile (11%), Panama (11%), and China (9%).
Víctor Esquivel, National Lead Partner of the Advisory Practice of KPMG in Mexico, said: “This year, survey respondents indicate us that despite of factors that may restrain initiatives and investments, such as the unstable and global situation being experienced, we notice that entrepreneurs are willing to continue with a global and regional growth given the economic market environment in Mexico”.
Banks and growth resources
- 54% of respondents agreed on the need of external support with a 4% decrease against last year. The financing resources that will be used by Top Management this year, against last year, are as follows: financial institutions (66% vs. 69%); strategic partners (49% vs. 39%), government entities (30% vs. 23%), placement of bonds and shares on the Stock Exchange (29% vs. 32%); equity funds (22% vs. 19%), among others.
- 66% of senior executives will use financial services from banks and entities specialized in these services during 2013. The more demanded services are working capital loans (54%); investments (51%) and capital investment loan (41%).
- Regarding the question, What is the perception of banks in Mexico? 8% of entrepreneurs said it is very good; 51% good; 31% regular, 8% bad, and 2% terrible.
Risks and opportunities
- According to respondents, the volatility in financial markets affect them primarily as follows: 32% consider that they are affected in the operative cost structure as a result of changes in the input prices; 23% in the decrease of revenues due to the lack of purchasers’ liquidity; 23%in the capital cost, and 22% commented that there is not a significant impact.
- Finally, they were asked which matters are perceived as an opportunity and which ones as a threat for their entities. The main opportunities are: requirements from new clients (59%); new technology (55%); sustainable development (45%), and emerging market expansion (40%)*.
- These are considered as a high threat: more competitiveness (31%) and regulatory changes (20%)*.
Finally, Roberto Cabrera indicated: “This survey shows our commitment with the business community to support and benefit their growth in our continuous search for achieving supported insights, and clear solutions for the market’s benefit”.
*Note: Some answers will not total 100% because more than one option could be selected.
About the survey:
Perspectivas de la Alta Dirección en México 2013 is based on a national survey made to 613 senior executives of large, medium, and small sizes established in Mexico. The answers were issued electronically between the months of December 2012 and January 2013. The profile of survey respondents is: 48% Director, 21% Manager, 11% Chairman, 5% Subdirector, 5% Member of the Committee, and/or the Board, 3% Vice President, and 7% other. The profile of industries: 16% financial services, 13% manufacture/industrial, 12% services, 7% food and drink, 6% automotive, 6% electronics/software, 5% consumer goods/retail, 4% chemicals/pharmaceutics, 4% construction/ infrastructure, 4% energy and natural resources, 3% hotel and tourism, 2% transport, 2% government, 2% non-profitable entities, 2% real estate, 2% media, 1% healthcare, 1% telecommunications, and 8% other.