Have you thought about expanding your business
Near-shoring has become a growing trend mainly for North American companies that wish to take advantage of Mexico’s comparative advantages, without crossing long distances or facing the cultural barriers offered
Mexico has positioned itself as one of the most attractive destinations to implement this commercial strategy, including operations
Why choose Mexico for nearshoring? Mexico offers unparalleled advantages with its strategic
This statement coincides with the calculations of the firm Deloitte
In this way, Mexico offers unparalleled advantages to companies, as they can enjoy a wide range of benefits, such as cost reductions, access to specialized talent, operational flexibility, and
If you are looking for a business opportunity, nearshoring in Mexico may be the answer you have been waiting for. Next, we will see briefly what is Nearshoring and which industries or sectors are more benefited and therefore with greater business opportunities.
Nearshoring: What is it and how does it work?
In the case of nearshoring in Mexico, companies choose to move part of their operations or services to this neighboring country of the U.S. This allows them to maintain closer proximity, thus facilitating communication and coordination with the external team.
Manufacturing is the main industrial activity in Mexico (and the one that has historically attracted the most FDI), and the main sectors that dominate the manufacturing industry are the construction of automobiles, trucks, and auto parts. However, we are beginning to see other sectors that concentrate FDI due to Nearshoring and they are:
- Basic metal industries
- Basic iron and steel industry
- Electrical accessories and appliances
- Electronic components
- Electrical generation equipment
- Machinery and equipment for the manufacturing industry
Mexico nearshoring advantages
Economic Benefits of Mexico Nearshoring
The main reason why many foreign companies choose Mexico as an investment destination is
Operating costs in Mexico are usually lower compared to other developed countries, allowing companies to reduce their expenses and increase their profitability.
Highly skilled and competitive labor force in various sectors. This means that companies can access specialized talent at a lower cost compared to other options.
However, what are the advantages and opportunities for entrepreneurs in Mexico who want to take advantage of
Integration into production and distribution chains
The various business opportunities that Foreign Direct Investment brings are reflected in the need for foreign companies to obtain local suppliers that can supply elements of the production chain.
To be part of these supply chains, it’s important to not only deliver the agreed-upon service or product on time, but also to meet the quality standards and guidelines mandated by governments, companies, and trade treaties, especially if the production is intended for export. This is essential for the smooth functioning of manufacturing and commercial operations.
As described above, the main sectors in which more investment arrives and therefore where there is more business opportunity is first of all the automotive sector, the basic metal industry, the iron and steel industry, electrical accessories and appliances, electronic components, etc.
If your company or economic activity is in any of these sectors, there may be a business opportunity where you can expand your operations.
Also consider that there may be business opportunities in infrastructure investment needed by companies such as industrial parks and warehouses, etc.
Taking advantage of the economic spillover opportunities.
FDI opens up business opportunities in Mexico not only in the direct participation in some nearshoring production chains but also in the business opportunities implicit in the significant economic spillover of large investments.
From offering subcontracted services to companies related to the production chains to the consideration of the growing purchasing power of the employees and workers of the new economic entities resulting from nearshoring in Mexico, to offer products and services that meet their consumption needs.
Analyze the opportunity to do business according to your sector, capital, and capabilities. Consult experts who can help you optimize and organize your economic and human resources to obtain the best results.
Some Foreign Companies have implemented nearshoring in Mexico.
The nearshoring process in Mexico has been slow but it has been a successful strategy for many companies looking for opportunities to increase their profits. Below, we will share some success stories of very important foreign companies that have opted for nearshoring and have experienced the benefits of this strategy:
BMW: This well-known luxury car firm based in Germany decided to outsource part of its production to Mexico. Thanks to Mexico’s automotive manufacturing tradition, access to the experience and highly skilled talent of Mexican workers, as well as lower operating costs, they were able to accelerate the launch of a new plant in San Luis Potosi Mexico, and expand their market presence.
Citic Dicastal: A major Chinese auto parts company chose to nearshore in Mexico in line with the Asian giant’s investments in the automotive industry. The geographic proximity to the U.S., Mexico’s multiple trade agreements, and lower operating costs allowed them to invest $100 million in an aluminum wheel plant in the state of Coahuila, Mexico.
These are just a few examples of the investments and projects that Nearshoring has brought to fruition, but many more companies have found nearshoring in Mexico to be an effective solution to expand their businesses and achieve their growth objectives.
Conclusion: Why Mexico Nearshoring is an ideal option to expand your business.
Nearshoring in Mexico offers numerous benefits and advantages for companies looking to expand and grow effectively. The combination of lower operating costs, access to highly skilled talent, geographic and cultural proximity to the United States, flexibility in communication and coordination, risk mitigation, and regulatory compliance make Mexico an attractive destination to implement this strategy.
If you are looking for an effective way to expand your business, nearshoring in Mexico may be the answer you have been waiting for.
At R&G’s Consulting Services, we are prepared to take your business to the next level. Our experts can take you step by step to increase the value of your company and optimize your investment, from legal to accounting aspects so that your investment sees unobstructed returns.
Take advantage of the benefits of this strategy and take your company to the next level, consult our experts!
At R&G’s we drive business success.
