Learn more about Mexico's prospects as a new manufacturing center, why investors move their businesses there, and why Mexico can become a new China.
As the global economy is rapidly transforming, Mexico is likely to become the next global manufacturing hub in the near future. And here’s why.
China has been the main US trading partner until recently. However, due to the trade war with the States, COVID-19 ramifications that caused supply chain chaos, the conflict in Ukraine that rerouted marine and air cargo, and some other unwanted circumstances, China is no longer at the top.
Plus, because of the rapid economic growth over the last few decades, China’s quality of living has increased significantly, wages have risen, and manufacturing costs have followed suit. The local workforce is less and less willing to gain low wages for their labor. All these factors made the country even less attractive to investors.
China has been knocked off the top 1 US trading partners.
Who has seized the number-one position? Mexico.
Its immediate proximity to the biggest economy in the world, a growing population of over 128 million people, lower labor costs, and almost no greater opponents nearby have made this country the most lucrative trading partner for the US and a potential global trading center.
The border between Mexico and the US extends over 1,954 miles (3,145 km). It enables easy and fast import of goods between the two countries.
The World Trade International Bridge over the Rio Grande River connects the Mexican state of Nuevo Leon and Texas in the US. It is one of the most essential ports, with fourteen lanes for commercial traffic. About 6,000 trucks cross it daily in a northbound direction.
In 2023, Port Laredo took 1st place among all US airports, seaports, and border crossings, with a trade value of about $300 billion annually. Its international trade rose 9.88 percent during the first half year of 2023, compared to the same period in 2022.
The US Port Laredo's top trading country is now Mexico, which accounts for 97% of its total trade.
Another advantage of Mexico as a future manufacturing hub is its large young population, with a median age of 29.8 years.
Apart from that, young people strive to get an education as it grants them more chances to attain career success. The share of 25-34-year-olds with tertiary education in Mexico has been increasing through the past decades and is now at 27%.
The number of young, educated specialists is expected to grow. In 2022, almost 40% of 18-24 year olds were enrolled at either upper secondary or tertiary education institutions.
The young and skilled workforce in Mexico has a strong long-term potential for the local manufacturing industry development, especially considering relatively low labor costs.
The other major trading partner of the US is Canada. It has the same advantage as Mexico, which is the common border.
However, the population in Canada is more than 3 times lower (about 39 million), and the labor costs are much higher, not taking into account the local cold climate that results in higher electricity expenses.
Apart from that, Canada does not have as many young professionals as Mexico. According to Wordometer data, the median age of the population in Canada is 40.6 y.o., and it is getting older every year. This fact makes the country even less attractive for foreign business investors.
In 2017, a private Chinese-Mexican partnership set up a new project – Hofusan Industrial Park in Salinas Victoria, Nuevo Leon. This enormous 200-acre complex is supposed to attract more Chinese manufacturers into the country.
One of the largest electronic companies, Hisense, as well as Chinese furniture manufacturers Kuka Home, Man Wah, and Sunon, intend to settle in the new complex, among many others. Man Wah is about to invest around $300 million into the project and Kuka Home – more than $250 million.
The Chinese Daye company, which produces garden power tools, will also build its plant in Hofusan Industrial Park, employing about 2,000 workers and investing $120 million.
It is planned that there will be 35 companies established in the Park that will offer approximately 15,000 jobs.
Major international corporations also choose Mexico as one of their bases. Lenovo, one of the largest personal computer manufacturers in the world, has had its production in Monterrey for more than 10 years now.
In 2022, more than 40 Asian companies opened their spaces in Mexico, too.
Taking the lead in the trading relationship with the US and partnering with China, Mexico has all the chances to become the world’s top manufacturing hub in the next few decades.
In Mexico, foreign direct investments (FDI) from different countries rose 48% over the year, accounting for $18.6 billion in the first 3 months of 2023. By the end of the first half of this year, the FDI amount had already reached $29.04 billion.
The United States is Mexico's top 1 FDI source, with approximately $110.7 billion in investment made in 2021. Spain, Germany, Argentina, the Netherlands, the UK, and Japan are among the top list of investing countries.
Chinese investment in Mexico has been steadily growing during the last few years. In 2021, Chinese and Hong Kong companies together invested $606.3 million in Mexico, 76% more than in 2020.
In the first months of 2023, the states that received the most investments from China were Mexico City ($96.6 million), Chihuahua ($66.4 million) and Nuevo Leon ($39.7 million).
Sectors that get the most benefits from the FDI inflows are manufacturing, transportation, and mass media. In the manufacturing sector, the most prominent industries are metals, chemicals, transportation and computer equipment, food products, and electrical appliances.
Chinese companies aren't the only ones betting on Mexico's prosperous future. General Motors, Ford, Honda, Fiat, Kia, Hyundai, Mercedes Benz, Toyota, Audi, BMW, Mazda, Nissan, Chrysler, and Volkswagen already have factories in Mexico. All those factories grant jobs to over one million people.
Tesla is planning to open its assembly facilities in the country. One of the biggest companies in Taiwan, Foxconn, has already established its headquarters there.
Among other foreign manufacturers that located their plants and factories in Mexico are Samsung, Procter & Gamble, Nestle, General Electric, Whirlpool, Honeywell, Saint-Gobain, Pemex, and many others.
The appeal can be explained rather simply: Mexico’s proximity to the US market, which has the largest number of vehicle consumers, the possibility to avail of duty-free import into the US, Mexico’s free-trade agreements with 50 countries worldwide, and reduced export costs.
If you are planning on getting a residency or a second passport, book a call with our expert team to discuss the details.
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Getting a residency and citizenship in Mexico is a relatively fast and straightforward process. Expats wishing to stay in Mexico for more than 6 months can do it through a financial path.
There are 4 general options to obtain temporary residency and 2 options for a permanent one. Among them are proof of substantial income or savings, holding a share in a local publicly traded company, or buying property.
The minimum monthly income for a temporary residency is only around $3,660, and about $6,000 for a permanent one.
Acquiring citizenship is possible after residing in Mexico for 5 years. However, other faster options, such as a 2-year track, are available for certain applicants.
The Mexican passport is one of the most powerful ones, providing easy access to over 160 countries worldwide without a visa or with a visa on arrival.
Book a call with us if you need help with residency or citizenship programs, their requirements, or advice on the best investment strategies.
The Mexican climate is perfect for those who wish to have year-round warm weather, access to sea and ocean, beautiful beaches, natural diversity, and lots of sunshine.
You can spend time by the beach engaging in various water activities, go on a hike to mountain tops of volcanoes, watch sea turtles and sea lions in the wild, or explore sumptuous tropical forests.
Comfortable weather is one of the reasons why numerous Canadians, Americans, and even Europeans are moving to Mexico.
People in Mexico are amiable and welcoming. You may often find yourself smiled at in the street and greeted by locals or sellers.
Local cuisine is one of the most famous in the world. Those who follow a healthy or vegetarian lifestyle will gladly find a lot of suitable options among traditional Mexican dishes.
You can find plenty of traditional Mexican restaurants and cafes everywhere across the country, from big cities to small villages.
Apart from that, you will surely discover multiple places to try other national cuisines. Japanese, Chinese, Korean, Thai, European, Mediterranean, Italian, or any other gastronomic delights are there for you.
Living in Mexico is considered to be affordable, especially compared to other developed countries.
According to the Numbeo Cost of Living Index by Country, Mexico takes 75th place among the most expensive places to live. It is on par with such countries as Montenegro, Poland, Dominican Republic, Armenia, and Venezuela.
Life in countries like the United States, the United Kingdom, Australia, Norway, France, and Italy will cost you more.
Buying or building a luxury beachfront villa in Mexico usually will not cost you even half the price of the same property type in the United States or Australia.
And if you buy real estate for around $488,000, you will be automatically eligible to obtain a temporary residence card.
Wealthy investors who need to travel around the globe can do it conveniently from Mexico. It has over 50 airports that will allow you to fly to multiple destinations all around the planet.
Cancun International Airport is the country's most in-demand airport – it serves flights to and from 127 destinations and 30 countries. From there, you can fly to numerous cities in the US, Canada, the UK, South America, and Europe.
International Airport in Mexico City has over 45 domestic flights on the schedule and to 99 destinations worldwide, including Japan, South Korea, the US, Canada, the UK, Europe, and several countries in South America.
If you want to travel inside the country, you will also find plenty of options. The Cancun airport serves domestic flights to 25 cities, such as Veracruz, Acapulco, Mexico City, Guadalajara, Monterrey, and others. Plus, flights inside Mexico are very affordable.
Want to learn more about Mexico? Check out our articles about Why Millionaires Are Moving to Mexico.
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