Important manufacturers are moving to Mexico to generate millions of dollars
The COVID-19 pandemic has brought major changes to the world and how it works. But, as time has shown, we have found the way to adapt and keep moving forward. This has been the case for the industry too. Supply chains have started to migrate from Asia to Mexico, boosting the country’s foreign investment.
There are many contributing factors for the foreign investment in Mexico to be growing. “Mexico is one of the most ideal countries for companies to readjust, for their suppliers and supply chains.” stated Armando Cheng, Director of the Taipei Economic and Cultural Office in Mexico.
For this reason, Apple suppliers Pegatron and Foxconn, are investing in Mexico to generate millions of dollars in return. Incentivised by many factors, such as the ratification of the USMCA, they are betting on Mexico. Although these are not the only manufacturers considering this country for investment, as Luxshare Precision Industry Co is looking forward to investing in Mexico.
Exactly why is foreign investment in Mexico rising so steadily fast?
We have narrowed it down to 5 factors that contribute to the rise of the investment in Mexico, and these are:
- The ratification of the USMCA. Mexico has 13 FTAs with 50 countries, with the USMCA being one of the most important. It allows basically all trade to be tariff-free with North America. Furthermore, it is established in the USMCA that goods must have a higher percentage of locally sourced materials for them to not be charged tariffs when exporting. This is another incentive for companies to move their supply chain to one of the three countries.
- Stability. Foreign investment in Mexico has been constant and stable, even during these harsh times. This is a good sign for companies seeking to invest in a given country, as stability usually means there is good return on investment with relatively low risks involved.
- Supply Chains. As previously mentioned, most of the technological industry’s supply chains were Asian centered. But, as the pandemic has proven, it takes one disruption to completely stop the supply chain. Multiple studies on regional supply chains have shown that they can be more resilient and efficient. By being closer to the market, the transportation cost is lowered.
This means that the merchandise needs to travel less, making it fuel efficient and greener. Plus, regional supply chains can produce more efficiently by manufacturing only what the local market is demanding. Furthermore, this goes hand by hand with the requirements of the USMCA for products to be built with more locally sourced materials.
- Geography. Mexico has the perfect strategic geographical location to trade with North and Latin America. Not only is it the connection between the USA, Canada, and LATAM, Mexico has ports in both oceans. This opens the country for ease of trade, whether it is by land, air, or sea.
- Cheaper labor force. Mexico has one of the most competitive labor force costs. Whatever other countries can offer in lower salaries is compensated by its accessibility to trading with other countries. This means that, even though some Asian countries can offer cheaper labor force, Mexico can still be more attractive for the long run.
There are a lot of reasons to consider moving a company to a country. Its foreign investment history is a great indication on whether or not it is safe to move there. Thus, here at VYNMSA we would like to assist you in settling in Mexico.
We are fully equipped to assist you in developing your BTS projects, with lease and sale solutions that always have a win-win approach. With over 30 years of experience, we are one of the leading industrial real estate developers in Mexico and have delivered over 500 projects to fully satisfied customers. We also have around 20 inventory buildings ready for immediate occupancy, which means a total space of 2 million Sq.Ft. across Northeast and Central Mexico.
Contact us and set shop in Mexico with VYNMSA and enjoy the benefits of a country that knows what to do with its foreign investment.