China and Mexico share important priorities that have forged the basis for cooperative relations between the two nations. For Chinese investors, Mexico has become a desirable investment destination because of its wealth of natural resources, modern infrastructure, internationally qualified workforce, and predictable legal environment. The fact that Mexico has been blessed with natural resources so critical to the future development of China puts Mexico in a unique position to attract China as a trading partner. Still, China and Mexico have yet to satisfactorily understand the interests of their new relationship and to take full advantage of the opportunities presented by this relationship.
This article explains the latest investments opportunities for Chinese companies in Mexico and reports on what to expect over the months ahead.
In recent years Mexico’s economy has witnessed an increasing number of Chinese companies interested in trade and investment in Mexico. China and Mexico share important priorities that have forged the basis for cooperative relations between the two nations. For Chinese investors, Mexico has become a desirable investment destination because of its wealth of natural resources, modern infrastructure, internationally qualified workforce, and predictable legal environment. The fact that Mexico has been blessed with natural resources so critical to the future development of China puts Mexico in a unique position to attract China as a trading partner.
Mexico is China’s second largest trading partner in Latin America. Between 2000 and 2009, trade between the two regions increased nearly eleven-fold, from $ 3.1 million to 34.7 million. From January to March 2010, the exchanges amounted to $ 9.6 million, an increase of 31.2% over the same period last year. The main items of Chinese export to Mexico include electromechanical equipment, household appliances, textiles, as well as chemical and high-tech products. On the other hand, China imports synthetic fibers, steel products, raw cotton, plastics, and electromechanical equipment from Mexico.
Conducting business in Mexico poses several advantages for Chinese companies. One of the key advantages of doing business in Mexico is its strategic location. Mexico could serve as a door for China’s investment in Latin America and a region to produce goods for export. Chinese companies manufacturing in Mexico can have access to many countries’ markets without being required to pay any tariffs, since Mexico has a free trade agreement with up to 44 countries.
Mexico’s legal environment has also improved through its membership in international organizations and compacts such as the NAFTA, the Organization for Economic Cooperation and Development, the World Trade Organization (WTO), and the Asia-Pacific Economic Cooperation. Mexican membership in international organizations means that Mexico is committed to the development of a competitive field in trade and investment with internationally accepted rules. Mexican import controls have also been significantly liberalized in recent years. Most products no longer require prior import permits, and import duties have been reduced. Mexico offers an accessible, skilled and cost-effective workforce. The Mexican work force is young and can be amenable to new management techniques to which an older work force may be unable to adjust. In general, companies have found that with proper training programs, high quality work can be obtained from the Mexican workforce.
Still, China and Mexico have yet to take full advantage of the opportunities presented by this relationship. Looking forward, it is necessary for Chinese companies investing in Mexico to develop a clear understanding of the local market. It is also important for companies to analyze fiscal, legal, labor, trade, and regulation issues, as well as a strategy of optimum supply chain for their operations, to mention a few. Chinese companies that have already established their presence in Mexico must also seek advice from a local law firm with regional professional experience in order to make their operations more efficient and compliant. Today, Mexico stands as a gateway of opportunity for China.
