Asian companies relocation, What are the advantages for Mexico?

by Advance Real Estate 9 de May, 2023 565 Views

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The relocation of Asian companies to Mexico is part of a nearshoring strategy that seeks closer proximity to the United States and cost reduction in every process, particularly those related to products and goods transportation.

This shift has brought in foreign investment of over US$7 billion¹ and an unprecedented increase in industrial space demand in early 2022. Moreover, between January and September of that year, close to 400 Asian companies² showed interest in moving their operations to Mexico, according to Concamin.

This confirms that Mexico is seen as the main territory for relocating operations near the United States because of its many advantages.

Foreign investment benefits several industry sectors

Mexico has ideal conditions for industrial activities from foreign companies, along with specialized infrastructure for operating. The country has received several benefits from commercial exchange including:

1. Economic growth

The relocation of Asian and other foreign companies to different regions of Mexico is expected to bring significant direct investment and thousand job opportunities, leading to a positive impact on the country’s GDP.

China led the investment between January and September 2022, accounting for 40% of Asian financial capital³ in relocation projects, making it the largest investment from Asia in the last few years.

2. Availability of materials and supplies

The guarantee of having available materials for manufacturing processes has especially benefitted base metals and automotive industries. It has lowered the risks of shutting down operations while streamlining the transportation and commercialization of goods.

3. Logistics activity: consolidation in Mexico

Developing logistics infrastructure, along with USMCA’s advantages and the entry of Asian capital, will strengthen logistics processes in the country creating many benefits.

A study by Banxico supports this claim, identifying the strained bilateral relations between the United States and China as one of the principal causes of Asian companies’ relocation.

Additionally, a survey found that more than 26% of companies³ within the Global Supply Chain experienced a growth in product demand after moving their operations.

4. Job creation

Simultaneously, the Transisthmian Corridor⁴ development and the industrial zone established in the South and Southeast of Mexico will be new employment sources, specifically in the manufacturing, construction, and transportation sectors.

Until the third quarter of 2022, the manufacturing sector was considered the most significant, reaching more than US$11 billion².

5. Skilled personnel

Nearshoring also provides access to a highly professionalized workforce. It means leveraging training opportunities and specializing in different areas, including those of new sectors such as operating logistics and data centers, is encouraged.

This will allow for greater competitiveness in companies with experts in various industries.

At Advance Real Estate, we are fully committed to industrial spaces lease that will meet the high demand of the next few years, placing Mexico as an industrial zone with proper conditions to run operations and help foreign companies grow.

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Advance Real Estate

Advance is a leading company in the acquisition, leasing and operation of industrial and logistics assets, with presence in 12 cities within Mexico and a portfolio of 11.5 million sf of industrial space.

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