A Mexican manufacturing boom is attacting Asian investors
As production and the Mexican manufacturing boom steps up, and is noticed by international companies from the world over, companies from China and other Asian nations are following the trend and pursuing investment opportunities in the country.
Mexico Manufacturing Hub
Mexico has been steadily increasing market share for global manufacturing and is swiftly becoming the partner of choice for many US and European manufacturers who might otherwise have invested in China. Indeed, many companies are reshoring their offshore investments from China, bringing them back home or even to Mexico to exploit the low cost of labor and decrease time to market. This is creating a Mexican manufacturing boom.
Surprisingly, many of the firms relocating their operations to Mexico include Asian nations, such as China, Japan, and others. Earlier this year, China’s Hisense Co. announced that it would be doubling its Mexican investment with an infusion of an additional $30 million USD. They and other electronics companies from Asia are taking advantage of improving infrastructure, lower labor costs, a skilled labor force, and Mexico’s numerous free trade agreements. It’s not just a few companies – many more Asian multi-national corporations are following a trend that is fueling the current Mexican manufacturing boom.
Asian Investment in Mexico
Interest in the energy industry is high. For example, a 2014 report from the Boston Consulting Group attributed a third of the investment in Mexico’s electronics manufacturing to Sharp, Sony, and Samsung – all Asian companies. These three only accounted for 8% just a decade prior. Indeed, Mexico’s second-largest exporter is Foxconn, an electronics manufacturer based in Taiwan.
Additionally, the automotive sector is arguably the most thriving sector in Mexican manufacturing. Automakers such a South Korea’s Kia and Japan’s Nissan have built assembly plants in Mexico for the purpose of supplying large consumer markets in the US and Canada.
Another of the primary sectors drawing suppliers in from Asia and creating a Mexican manufacturing boom is the plastics industry, which represents a major supplier to the automotive industry. Mexico’s plastics market increased in 2015 by 4.2%, and many international plastics suppliers based in Asia are vying for a piece of the pie. While Mexico’s domestic market doesn’t seem to be keeping pace with this growing demand for injection molding and plastics suppliers, executives from Asian companies have indicated they will supply these vital inputs for the requirements of Mexican manufacturing.