New users can click on "International Business Daily" to pay attention

In Monterrey, a major industrial city in northern Mexico, Highway 85, which runs through the city and connects Mexico and the United States, carries about 80% of Mexico-US trade and is known as the "artery" of the Mexican economy. In recent years, there have been some new changes on this "artery"—more and more products from Chinese overseas factories are reaching the world through this route, and investing in Mexico is becoming a popular option for many Chinese companies to go global and seek win-win cooperation.

Chinese companies spark ‘gold rush’ to Mexico

In October 2015, the Hualing Group and the Futian Group jointly invested in the construction of the first Chinese Industrial Park in the local area near Highway 85 - the North American Hualing Futian Industrial Park. After years of development, the former wasteland has become an industrial base with nearly 30 well-known enterprises, including Hisense, Minhua, Saint-Aou, New Coordinates, and Yinlun.

As one of the Chinese companies entering the park, Saint-Gobain Construction Products China Co., Ltd. signed an investment agreement with Huashan Industrial Park in August 2021. In 2023, Phase I of the Saint-Gobain Mexico factory, covering an area of 130,000 square meters, was completed and put into trial production. In the same year, Saint-Gobain's export sales increased by 46% year-on-year.

The North American market is one of the world's largest markets for office furniture industry, and with the orderly advancement of the Mexican factor, the Saint O brand's internationalization process will be further accelerated. Shi Yinqiao, general manager of the international marketing division of Saint O, said to the reporter of International Business Daily that the company hopes to achieve localized service and design while localizing production through building the Mexican factory, and to create an integrated supply chain delivery with partners to solve the warehousing and distribution problems for clients so that they can enjoy high-quality office furniture products and responsive services.

Saint-Gobain's factory-building experience in Mexico is a microcosm of the recent wave of Chinese companies investing in Mexico. Data shows that close to 3,000 Chinese companies have entered the Mexican market to date. China is the third-largest source of investment in Mexico from Asia, and Chinese direct investment in Mexico has maintained a growth trend since 2011, increasing from $264 million in 2011 to $1.302 billion in 2021, an increase of 3.9 times in nine years.

Through investing in Mexico to open factories, many Chinese enterprises realized international development, greatly improved their international competitiveness as a result and in turn, gained more orders. “The new factory brought great incremental orders to Yinlun.” The person in charge of Yinlun Machinery’s Mexico factory said, “Benefited by the new orders from the overseas factory, Yinlun’s domestic factories will also earn new mold production and development orders worth about 200 million yuan.”

Advantageous policies help businesses seize more opportunities

Why Mexico has become a "gold mine" favored by Chinese companies? According to industry insiders, there are three main reasons:One is that Mexico has a relatively complete industrial system; two, as a member state of the North American Free Trade Zone, it has tariff advantages; three, its geographic location is very good and it has an abundant labor force.

"China-Mexico economic and trade cooperation has strong complementary advantages." Yue Yunxia, director of the Economic Research Office of the Institute of Latin America, Chinese Academy of Social Sciences, said in an interview with a reporter from the International Business Daily that China's advantage lies in its rich industrial categories and occupies an increasingly important position in the global trade of intermediate products. Mexico is in North America. It also has an important position in the value chain, which creates favorable conditions for both parties to achieve complementary advantages. As the largest white goods producer in Latin America and the fifth largest automobile producer in the world, Mexico has relatively complete industrial supporting facilities and industrial categories, laying a solid foundation for home appliance companies such as Haier and automobile companies such as Nezha to invest in Mexico.

As a member of the North American Free Trade Area, Mexico's tariff advantages are also important factors in attracting Chinese companies. According to the U.S. -Mexico-Canada Agreement, many categories of products exported from Mexico to the United States and Canada can enjoy low or even zero tariffs. In Yue Yunxia's view, Mexico's extensive free trade agreements have given it a relatively open trade and investment environment and a broad global free trade network, which is undoubtedly highly attractive to Chinese companies.

Mexico also possesses an important advantage in being adjacent to the world's largest consumer market, the United States. According to data from the U.S. Department of Commerce, in 2023, the total value of goods imported by the U.S. from Mexico increased by 5% year-on-year, reaching $475 billion, making Mexico the largest source of imports for the United States. At the same time, Mexico's lower labor costs can also reduce certain labor costs for Chinese companies.

Mexico is a crucial link in North America's value chain, while China serves as the hub for Asia's value chain. As the global value chain adjusts, industrial ties between China and Mexico will become increasingly tighter, according to Yue Yunxia. The deepening integration of the value chains, industrial chains, and supply chains between China and Mexico will be an important driver of the continuous growth of economic and trade cooperation between the two countries in the future. Chinese enterprises will also encounter more opportunities for investment in Mexico.