Decisions such as outsourcing or starting a new business in another country typically entail a lot of thinking and a bunch of considerations. Full awareness of the advantages and disadvantages at the destination country will help minimizing the risks involved and will, at the same time; ensure a safe business start abroad.
Are you not sure if starting a business in Mexico is a good idea? Here, we will give you an insight about the Pros and Cons posed by Mexico as a business location.
Pros
Economy: A relevant number of free trade agreements are part of Mexico’s economy. A total of 12 free trade agreements have been entered into with 46 nations. This represents attractive trade benefits for foreign corporations. Likewise, at macroeconomic level, the Mexican economy is regarded as highly stable.
Geography: Mexico’s geographical location in the American Continent is also a suitable advantage: Mexico is the link between Northern, Central and South America. Especially, the proximity to the United States benefits the export industry.
Demography: Mexico’s population is mainly integrated by young adults which, in turn, represents a great advantage for employment opportunities. Additionally, labor in Mexico is relatively cheap. This makes the country attractive for foreign companies.
Reduced production costs: Not only labor but also manufacturing is cheap in Mexico, thus implying significant advantages for companies that export products and goods produced in Mexico.
Education: Mexican workforce is highly skilled, especially in the fields of science, technology and engineering. Therefore, manufactured products “made in Mexico” are characterized by high quality standards that have gained recognition outside the country’s boundaries.
Cons
Insecurity: Mexico is currently dealing with severe insecurity issues in terms of corruption, violence and criminality – Drug trafficking for example. Those factors hinder economic development and complicate local companies’ operations as they are directly affected.
Nevertheless, insecurity problems can be seen in isolated regions along the country such as the State of Sinaloa. In fact, Mexico is pretty safe in most part.
Differences in legislation: Starting a business in Mexico implies a lot of paperwork and bureaucratic processes. As legal procedures in Mexico tend to differ a lot from the home country’s legislation, registration processes are one of the biggest challenges for foreign companies.
Cultural differences: A different country, a different culture – Cultural differences lead to misunderstandings and complicate business relationships with local partners and customers, which may lead to inefficiency and a reduction in productivity.
Nevertheless, if the differences in culture and legislation is what prevents you from expanding your business to Mexico, you can stop worrying. WMP Mexico Advisors assists you in the registration process of your company and supports you in every legal procedure. With more than 10 years of business experience in Mexico, our multicultural team perfectly handles cultural differences as well.
We guarantee a smooth start-up process in Mexico!
Contact us!
We serve our clients, who represent different industries, with over 100 employees at our offices in Queretaro, Mexico City, Puebla, Stuttgart (Germany), and Greenville (S.C., USA).
WMP Mexico Advisors
Pabellón Santa Fe
Anillo Vial Junípero Serra 2601 Office 201
Residencial Juriquilla Santa Fe
76230 Querétaro, Querétaro Mexiko
T: +52 (442) 209 6870
E-Mail: info@wmp.mx
Why we are your partner for building business in Mexico?
- Our long experience, insight know-how and extensive network of contacts and relationships
- Our full service
- We keep you uptodate – Read our Mexico-Blog
Doing business in Mexico – Start now!
Dicsover the most attractive economic regions located in Mexico
- Automotive and aerospace industries in the Bajío region
- Puebla – Automotive mecca since the early days
- Metalworking industry at the US border
- Jalisco – The Mexican Silicon Valley
- Headquarters and the chemical industry in the capital region
- Baja California – The gateway to the Pacific Ocean
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Automotive and aerospace industries in the Bajío region
Located in the center of the country, the states of Aguascalientes, Guanajuato, Querétaro, and San Luis Potosi are among the most popular regions when it comes to the location of automobile manufacturers. The new BMW and Daimler plants, which will open in 2019 and 2020 respectively, will also ensure an additional demand for suppliers. For the aviation industry, a strong growth potential is predicted for the coming years, which will consequently attract more FDI.
The Canadian company Bombardier has a strong presence in Querétaro, and a specialized Aviation University is located there. Overall, Mexico is one of the six most important suppliers in the U.S. aviation sector.
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Puebla – Automotive mecca since the early days
Since the mid-sixties, the Volkswagen Group has been producing individual models in Puebla. Meanwhile, the German car manufacturer Audi has established facilities in the same state, more precisely in the village of San José Chiapa. In 2016 the new production plant, which includes an education center, was inaugurated.
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Metalworking industry at the US border
Years ago, the metal industry was established close to the US border, in the Mexican state of Nuevo León, especially around its capital Monterrey. An advantage of this location is its proximity to the US market, as 84% (2017) of exports go to the neighboring country.
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Jalisco – The Mexican Silicon Valley
IT companies have settled mainly in the state of Jalisco, which is located on the west coast of Mexico on the Pacific Ocean.
The region around Guadalajara is known as the Silicon Valley of Latin America, where you can find more than 700 high-tech companies such as Oracle, HP, Motorola, and IBM. Jalisco currently has the fifth-highest number of companies with FDI in Mexico. Approximately 50 percent of all foreign investment comes from the United States and Canada, with another 25 percent from Europe.
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Headquarters and the chemical industry in the capital region
The location in and around the Mexican capital has been chosen by many companies for their Mexican headquarters. It is not only the central location and the well-developed infrastructure that speak for this region, but also its proximity to the economically strong regions of Puebla and the Bajío. The capital region has attracted companies from the chemical industry such as BASF and Bayer.
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Baja California – The gateway to the Pacific Ocean
Baja California is an excellent opportunity for suppliers in all sectors due to its privileged geographical location and proximity to the United States. In recent years, medical technology is the main type of company to be established in this region; these companies work closely with manufacturers in San Diego.
The port of Ensenada, one of the five seaports in Baja California, is one of the most important ports on the Pacific Ocean.