As the trade tensions between China and the United States escalated, Chinese companies sought alternative ways to maintain their access to the US market. One strategy that has emerged is “nearshore outsourcing” through Mexico.
Chinese companies are increasingly establishing operations in Mexico to take advantage of its geographical proximity to the United States and its trade agreements, such as the United States-Mexico-Canada Agreement (USMCA). This allows them to bypass tariffs and other trade barriers imposed by the US on Chinese imports.
Mexico offers several benefits for Chinese companies looking to enter the US market:
1. **Proximity to the US**: Mexico’s proximity to the United States reduces shipping times and costs compared to manufacturing in China. This proximity allows for faster delivery times and easier management of supply chains.
2. **Trade agreements**: Mexico’s trade agreements, particularly the USMCA, provide preferential access to the US market. Chinese companies can take advantage of these agreements to export goods to the US with reduced tariffs and trade barriers.
3. **Lower labor costs**: While not as low as in China, labor costs in Mexico are generally lower than in the US, making it an attractive location for manufacturing operations.
4. **Skilled labor force**: Mexico has a skilled labor force, particularly in industries such as automotive, electronics, and aerospace, which align with many Chinese manufacturing sectors.
5. **Reduced political risk**: Operating in Mexico helps Chinese companies diversify their production bases and reduce their exposure to geopolitical tensions between China and the US.
Chinese companies are setting up manufacturing facilities, assembly plants, and distribution centers in Mexico to serve the US market. Some are also partnering with local Mexican companies to navigate regulatory requirements and cultural differences.
By leveraging Mexico’s advantages, Chinese companies can maintain competitiveness in the US market while mitigating risks associated with the China-US trade war.
