Mexico´s Potential
Being the second-largest economy of Latin America, Mexico also represents one of the most popular business locations in North America and worldwide. Could Mexico be an attractive business location for your operation? We are going to explain briefly and conclusively why Mexico is the perfect location for foreign direct investment.
Mexico on the way to economic independence.
In times of re-negotiations of NAFTA between Mexico, Canada and the United States, Mexico has increasingly been seeking is currently for alternative free-trade agreements. Therefore, in March 2018 a new contract was signed in Brussels, considering the renovation and further development of the existing free-trade agreement MEFTA, which enables enabling duty-free trade in goods between Mexico and Europe. Further agreements were signed with Brazil and Australia. Mexico focuses on several trading partners and counts with over 50 trade agreements worldwide, includingtax- and duty-reliefs , among other benefits. Mexico clearly shows its economic stability. One of the main indicators is the constant rise of the GDP per capita , resulting that Mexico is one of the safest and fastest growing economies of Latin America.
Export-orientated motives:
- Absence of several market entry barriers generates a high cost-saving
- The geographic location guarantees access to significant markets (advantages: short distances, low logistical expense, proximity to clients, flexible adaption to any change in the market)
- Donald Trump´s Trade Policy might cause concerns about investments in Mexico.
- The solution: Renovation of MEFTA and expansion of numerous trade agreements in order to prevent the economic dependence on the USA.
Costs-oriented motives
- Lower production costs
- The national legislation guarantees flexible working hours including high performance.
- Personnel with high qualifications and well-developed work skills is availabe. German companies focus on dual education system in Mexico.
Resource-oriented motives
- Due to the attractive conditions of production, an extensive network of German companies has established, especially in the automotive sector.
- Industrial parks guarantee not only a good infrastructure, but also a just-in-time production with low logistic efforts and a high supply.
Governmental incentives
- National programs of subvention are an additional plus for outsourcing companies.
- Creation of infrastructure and employment enable government incentives.
Reasons for a direct investment in Mexico
Due to its attractive location, numerous foreign companies already have access to major, lucrative sales-markets. Short transport distances guarantee cost- and time-saving, which is appreciated especially by German companies.
Additionally, the national legislation guarantees dynamic working hours permitting a high performance. Thanks to the excellent conditions of production an extensive network of foreign companies has established, primarily in the automotive sector. Due to the increase of foreign companies numerous industrial parks developed, which guarantee not only a just-in-time production but also low logistical expenses.
