Choosing to Manufacture in Mexico Over China

June 12, 2013

Globally, companies want to remain on top, and in order to achieve that, they must sustain an advantage over competitors. Many companies have had to face the decision of changing the location of where their products are manufactured. Over the past decade, China has been the beneficiary of these decisions but the global manufacturing landscape is changing once again.

Companies from around the world, including China, have begun to make the move to Mexico, not only for its low-cost, highly skilled labor pool but also its location relative to the United States and South America. Manufacturing in Mexico has been in a competitive race with China to attract foreign investment and the numbers are beginning to prove that Mexico is gaining steam. Mexico shares a great relationship with the United States (and an array of other countries due to their connections with Trade Agreements), maintaining a loyal reputation for protecting intellectual property. As the Chinese Yuan begins to rise and inflation runs high, Manufacturing in Mexico is proving to be a better economic choice.

While logistically closer to the United States and South America than Asia, manufacturing in Mexico is not without its challenges. Site selection in Mexico, human resources in Mexico, accounting in Mexico, environmental and import/export compliance in Mexico are high-priority subjects that companies need to consider. Tackling these issues internally is one option when manufacturing in Mexico but unlike China, Mexico offers a niche administration and compliance management service sector (or “shelter companies”) to assist companies with their expansion and ongoing management.

Shelter companies have proven to be advantageous for companies who want to manufacture in Mexico but do not have any experience in the country. From feasibility through start-up and continuing into long-term production, shelter companies in Mexico allow companies to focus on manufacturing and quality control, while they handle everything else on the back end. North American Production Sharing, Inc. (NAPS), is Mexico’s leading shelter company with over 55 factories and 7,000 employees under management.  They have helped more than 100 companies expand to Mexico over the past two decades and continue to offer that support today.

Mexico has made a large effort over the last decade to become an attractive pawn in the manufacturing game. As Mexico continues to be seen as a viable place to manufacture, the relationship it shares with neighboring countries (mainly the United States and Canada) will only strengthen its value proposition and help attract more foreign investment.