How Mexico Became the Hottest Spot for Asian Business
Asian companies are flocking to Mexico, with 63% of nearshoring projects from China, South Korea, and Taiwan. Attractions include supply chain optimization, T-MEC benefits, and lower labor costs. This transformative trend is projected to bring 227 new companies annually from 2023 to 2025.
In a remarkable turn of events, Mexico has become a magnet for nearshoring projects, with a staggering 63 percent originating from the economic powerhouses of Asia—China, South Korea, and Taiwan. The first half of 2023 has seen a surge in interest from Asian companies, a trend projected to reshape the landscape of Mexico's industrial sector.
According to data compiled by the Mexican Association of Private Industrial Parks (AMPIP), the surge in nearshoring projects is not merely a statistical anomaly. The last four months of 2022 witnessed a striking revelation: five out of every 10 Asian companies are actively considering relocating their operations to Mexico, signaling a seismic shift in global business dynamics.
Jorge Luis Baca, the regional director of Querétaro for American Industries, sheds light on the motivations driving this trend. Beyond the allure of optimizing supply chains with automotive giants like Tesla, companies are strategically eyeing Mexico's unique advantages, such as the Treaty with the United States and Canada (T-MEC) and the significantly lower labor costs compared to other options.
“The Mexican option, when weighed against alternatives like China or even relocation within the United States, proves to be a boon for supply chains,” states Baca. An exemplary case is that of Navien, a leading electric heater manufacturer, which plans to establish its first plant outside South Korea in the United States while simultaneously opening a corporate office in Mexico.
American Industries Group, a key player in facilitating these strategic relocations, has already closed 10 projects with Asian companies in 2023, emphasizing the robustness of this transformative trend. The organization's projections for the near future are equally ambitious, anticipating an annual installation of approximately 227 new companies between 2023 and 2025, thanks to the impetus provided by nearshoring.
As investments from Asian nations continue to pour in, the growth of industrial real estate and logistics space in Mexico is set to skyrocket. American Industries Group forecasts a creation of around 60 million square feet of new industrial space, predominantly concentrated along Mexico's northern border. A substantial portion, estimated at 25 million square feet, is earmarked for nearshoring demand in the current year.
Yet, amidst this promising panorama, challenges loom on the horizon. The relocation stage demands a robust consolidation of infrastructure, encompassing physical structures such as land, sea, or air ports of entry. Facilitating the seamless transfer of goods necessitates a strategic focus on aspects like the generation and distribution of electricity, natural gas, renewable energy sources, and water—a complex tapestry that demands careful navigation.
The transformative shift of Asian companies toward Mexico not only underscores the nation's growing prominence as a nearshoring hub but also presents a unique opportunity for collaboration and mutual growth. As Mexico embraces this influx of companies, the nation's economic landscape stands at the brink of a paradigm shift, heralding an era of unprecedented development and innovation.
