Investments in Mexico: 10 good reasons

According to a recent World Investment Report from the United Nations Conference on Trade and Development, Mexico is among the finest emerging nations to invest in (UNCTAD). If your organization is currently investigating new nations to deploy manufacturing resources, take into account the 10 reasons why investing in Mexico is a wise choice for business executives trying to develop their brands.

Investments in Mexico: Strategic Geographical Position

The world’s largest consumer market is right next door to Mexico. A more than 2,000-mile border separates the two nations. Due to Mexico’s close proximity to the US, a truck delivering manufactured goods from the country can reach any area in the US’s continental US in less than 48 hours.

As a result, when compared to its rivals, Mexico offers shipping at very affordable prices. Mexico not only enjoys a favorable location in North America but also serves as a link between the US, Canada, and the rest of Latin America.

Investments in Mexico: large population with a strong economy

Mexico is the tenth most populous country in the world, according to official statistics. The “economically active population” of the country is anticipated to grow further. All individuals of either sex who provide the labor for the creation of goods and services are considered to be members of the economically active population. Mexico has made significant efforts recently to improve the skill sets of its workers.

Investments in Mexico: Wide Network of Free Trade Agreements (FTAs)

Mexico is a party to a total of 12 free trade agreements (FTAs), which cover trade with 45 nations worldwide. The ability to export goods duty-free to the majority of the world’s major markets is a benefit of investing in Mexico. The United States-Mexico-Canada Free Trade Agreement, the Trans-Pacific Partnership (TPP), the Mexico-EU Free Trade Agreement, and the Pacific Alliance, a pact comprising Chile, Colombia, Peru, and Mexico, are four of the most important trade agreements for Mexico.

Investments in Mexico: Exceptional Human Capital

According to a recent report from the Organization for Economic Cooperation and Development (OECD), higher education graduation rates among Mexican youngsters have been rising gradually over the past ten years. Federal universities, national universities, private universities, and technological institutes are all over Mexico. Businesses who decide to invest in Mexico will have access to a workforce that annually graduates more than 113,000 engineers. This ranking positions Mexico as the eighth-most engineer-rich country in the world.

Investments in Mexico: Expanding domestic market

Private consumption in Mexico accounted for more than 65 percent of its GDP in 2018, which will be a problem for businesses looking to invest there in order to gain access to the country’s domestic market. A consistent pattern of rising consumer expenditure in the domestic market is being driven by Mexico’s expanding middle class. 53% of Mexican consumers have access to supermarkets, “hypermarkets,” and department stores, according to a recent Financial Times report.

Investments in Mexico: Tax Breaks and Credits

For international companies looking to establish manufacturing in Mexico, some of the most alluring advantages and incentives are:

Imports of raw materials and suppliers for IMMEX-certified enterprises are duty-free for up to 18 months:
exports are subject to zero-rate value-added tax, even if they are transported to a third party;
Refunds of value-added taxes for IMMEX-certified producers; Refunds of import duties for components used in goods that the manufacturer exports or that are sold to another entity for export;
No corporation income is subject to local or state income taxes.

Investments in Mexico: Protection of Intellectual Property and Innovation

Both the Federal Copyright Law and the Industrial Property Law of Mexico govern intellectual property in Mexico. Among the IP associations that Mexico is a part of are the:

Patent Cooperation Treaty (PCT); World Trade Organization (WTO); World Intellectual Property Organization (WIPO); Paris Convention for the Protection of Intellectual Property.

Investments in Mexico: Leading Sectors of Industry

The manufacture of passenger cars is one of Mexico’s most significant industrial sectors. Mexico is now the seventh-largest producer in the world thanks to the businesses that have chosen to invest in its auto sector. Electronics, aerospace, and medical device manufacturing are some of Mexico’s other notable businesses.

Investments in Mexico: Infrastructure

During Enrique Pena Nieto’s presidency in Mexico, a National Infrastructure Program was implemented between 2014 and 2018. The program made an estimated $600 billion in US investments, or around 8% of GDP, to update the infrastructure that is essential to Mexico’s economy. Investments were made during this time in:

Ports, both new and old; roads; railroads; and electricity generation capability.

Highly Affordable Workforce

An entry-level worker’s typical fully loaded base salary is a tiny portion of the fully loaded hourly compensation in the United States. For entry-level workers, China has fully burdened labor costs that are roughly twice as high as those in Mexico.

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