Mexico’s Dual Markets

Mexico’s economy has been climbing steadily over the last several years and with continual growth comes the attention of people that are in the business of making money.

Dan Restrepo, a senior partner at the Center for American Progress who served as special assistant to President Obama on issues related to Latin America, explains that companies are seeing enormous opportunity not only with the Mexican market but the growing U.S. Latino population.

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Shelter Companies

Restrepo says, “You’re seeing U.S. companies recognizing the value of being part of, in essence, two emerging markets: Both Mexico as an emerging market and U.S. Latinos as an emerging market.” He continued, “If U.S. Latinos were a standalone economy, we would be the world’s 12th largest economy, we would be a member of the G-20. That’s 55 million people, roughly a trillion and a half dollars in purchasing power. Companies are starting to realize that there are plays into Mexico that are also plays into this kind of shared economic space.”

With more than $5 billion spent on advertising in 2015, Mexico is the most important advertising market in Latin Americas Spanish-speaking countries, according to e Marketer.

You turn on your television and you see the T-Mobile ads about free roaming in North America or call packages that include the U.S. and Mexico as a single cellular market,” said Restrepo. “That’s an example of where we’re headed.”

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Nearshore Manufacturing Operation in Mexico Offers Many Benefits

When you’re talking about nearshore manufacturing operations in Mexico the key is location, location, location! The proximity to the US border can’t be beat, in Baja California alone, there are 6 border crossings, two of which are set up for major commercial traffic. And that’s not all.

Putting manufacturing operations nearshore in Mexico, Baja California, as opposed to offshore in China or other far flung countries, also gives companies nearby access to four airports, an international railroad line, and two commercial seaports that offer worldwide shipping capabilities.

 

And the region is well established with all the infrastructure and support systems needed to provide successful operations. In Tijuana and Mexicali alone there is over 83 million sq. ft. industrial space in Mexicali and Tijuana. It also has the added nearshore benefit of Mexico being in a similar time zone as the US and Canada unlike the 13 hour difference between the states and China.

Costs Are Lower When It Comes To Mexico vs China

There was a time when hands down, it was cheaper to manufacturer in China than almost anywhere else in the world. But times have changed and what was once a manufacturer’s paradise is now a land of cost overruns. One of the hottest countries right now for offshore or nearshore manufacturing is Mexico, and when you look at Mexico vs China, the reasons are clear.

According to Forbes, manufacturing costs in Mexico are now about 20 percent lower than in China. Industrial space leases are also a major cost factor with China’s rate being triple that of Mexico. And don’t even mention shipping costs which have risen from just under $3,000 in 2000 to $7,000 in 2014 for a standard shipping container.

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IVEMSA  – Nearshore Mexico Manufacturing Solutions

And while cost is a key factor in choosing a manufacturing location, Mexico offers other benefits over China as well. The culture is western and much more familiar to American and European companies. Travel time for both product development and product shipping is greatly reduced to Mexico vs China. The government and private sectors are very pro-business and have created an environment that welcomes foreign investment.

So if you are considering offshore or nearshore manufacturing consider lowering costs in Mexico.