What the Country Needs to Become a Global Powerhouse
As tensions between China and the United States escalate, Mexico finds itself in an increasingly advantageous position, inching closer to becoming a global powerhouse. However, there are challenges that Mexico must address to fully realize this ambition.
In the context of deglobalization and the rise of regionalization, China has experienced economic decline, while Mexico has made strides, albeit to a lesser extent, according to an analysis by Grupo Financiero Banco BASE.
Indeed, imports of Chinese products into Mexico have reached their lowest levels in the last two decades, signaling a shift in the trade dynamics. This trend has already benefited certain products, as consumers have turned to alternatives in Mexico, Europe, and other Asian countries for everything from computer chips and smartphones to clothing, as reported by The Wall Street Journal.
In their report titled “Nearshoring. Volume 2. Mexico’s Moment?”, Banco BASE analysts highlight some of the main drawbacks of doing business with China:
- Insufficient protection of intellectual property.
- Disparities in quality levels.
- Cultural differences in business practices.
- The possibility of higher tariffs and restrictions from the United States.
In this context, the aforementioned factors “pose a challenge and therefore carry risks for companies considering relocating to that country,” the report emphasizes.
What Does Mexico Lack to Rival China? One advantage for Mexico lies in its conditions, which differ significantly from those of the Asian nation. Mexico poses neither an economic nor political threat to the United States, and labor costs remain competitive. However, there are drawbacks that need attention:
- The perception of insecurity and corruption, affecting the costs companies face in the country.
- Challenges in water supply.
- Restrictive electrical policies.
“Mexico’s infrastructure poses a challenge due to the possibility of insufficient water and electricity supply for companies relocating to the country,” warns Banco BASE.
These factors, according to economists, limit Mexico’s ability to fully capitalize on nearshoring opportunities. However, with appropriate economic policies, the country could be on its way to its “Mexican historical moment,” experts agree.
This is where our company, MexPortal.com, comes into play. We specialize in assisting companies, factories, and manufacturers in relocating to Mexico. By doing so, these businesses can benefit from zero import tariffs when exporting products to the USA and Canada, providing a significant competitive advantage in the global market.
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