Companies that dare to go abroad find it easier in a crisis: they expand their radius and save costs. This applies to medium-sized companies as well as to large companies. Because going abroad can ensure savings in purchasing and production. Anyone who produces in a country where the customer is also present increases customer loyalty. In addition, production and transport costs are reduced.
Acquisition costs are considerably lower abroad
Companies can save considerable costs in the global procurement market. In addition, raw materials, simple but labor-intensive products or services, such as programming work, can be obtained at a lower price in Latam or Asia.
The establishment of purchasing companies abroad creates greater savings potential: fixed costs in purchasing are reduced, foreign exchange risks are lower through purchasing in foreign currency, and punitive tariffs can be avoided when importing certain raw materials and commodities, especially in countries such as Mexico because of its international treaties. New purchasing markets are also interesting for many companies because they can spread their risks.
Relocating production abroad is also usually cheaper.
In addition to purchasing, U.S., European and Asian companies have increasingly moved their production to Latin America. The reason: lower personnel costs. This includes direct wage costs as well as ancillary wage costs. Longer weekly and annual working times and thus longer machine running times have a positive effect on manufacturing costs. However, companies also open production sites abroad in order to distribute production capacities to the sales markets and thus achieve optimum utilization of total capacities.
Businesses can also save on location and energy costs. Land and construction costs are often significantly cheaper. Special conditions, such as special economic zones that promote the establishment of new companies, are also attractive. When looking for a location, many factors come together when making decisions. A detailed comparison of locations helps to find out where it pays to go abroad.
Shorter distances, lower transportation costs, closer to the customer
Logistical reasons can also speak in favor of going abroad: the proximity to major customers and the opportunity to open up new markets, but also the opportunity to save on customs duties. An overseas branch not only means lower transportation costs in strategically important destination countries and shorter distances to important customers.
Save taxes abroad
When deciding to outsource functions abroad, the lower tax burden also plays an important role. Optimizing the global value chain can result in valuable tax savings. For example, companies can consider structuring their activities in high-tax countries so that tax payments are limited there without restricting their business. At the same time, they can set up certain functions in locations with moderate corporate taxes. With the right strategy, companies can significantly reduce their overall tax burden, while taking into account the specific tax characteristics of each country.
VYNMSA is one of the leading industrial real estate developers in Mexico. In addition, we are able to develop your Build To Suit or custom projects. We actively work with industrial real estate brokers as business partners, we have around 20 buildings of inventory ready for immediate occupancy, which adds up to around 2 million square feet of built space in the northeast and bajio region of Mexico.
Contact us and find out why VYNMSA is your best industrial real estate business partner in Mexico.