If we misjudge either the market for our merchandise or our customers' purchasing habits, we may experience a material decline in sales or be required to sell inventory at reduced margins. We could also suffer a loss of customer goodwill if our manufacturing sources or stores, do not adhere to our quality control or service procedures or otherwise fail to ensure satisfactory quality of our products. These outcomes may have a material adverse effect on our business, operating results and financial condition. There are risks inherent in doing business in international markets, including: .
Tariffs .
Custom duties and other trade barriers .
Difficulties in staffing and managing foreign operations .
Political instability, expropriation, nationalization and other political risks .
Foreign exchange controls, technology, export and import restrictions or prohibitions .
The difficulties of compliance with foreign laws and regulations .
Delays from customs brokers or government agencies .
Seasonal reductions in business activity.
Act of terrorism .
Economic and financial forces and economic indicators.
It may seem that Mexico has a very strong economy but one must remember that Mexico is still growing as an industrialized country. Mexico's economy has been growing since NAFTA took effect; the work force has become greater than ever before. Mexico has also benefited from producing oil and is now benefiting from collecting natural gas in a new zone recently found in the Gulf of Mexico. .
Mexico's economy grew by 7 % in the year 2000. Mexico also has a strong export sector, in the year 2000 the services sector lead the way by expanding 6.2 %, manufacturing grew by 4.6% (CountryWatch.com 2002). Mexico textile sector has grown by 25 % since NAFTA went into effect (apollolibrary.com). Mexico's private consumption was a leading driver for the strong growth in the economy. .
The only threat our company sees is that there are many companies already having their products manufactured in Mexico.