Mexico, the platform for China to North America

The constant Foreign Direct Investment (FDI) outgoing from China to Latin America, that accumulated until 2020 around USD 187,000 million according to information from "The American Enterprise Institute", represents a great opportunity for Mexico, which until the same reference year, barely hoarded around USD 2,360 million, which represents 1.26% of the total. The new free trade agreement for North America (USMCA), outlines Mexico as an ideal platform for the Asian giant to access the North American market, taking advantage of a series of unique conditions established in said agreement, which benefit the establishment of new production plants in the country, highlighting in particular the changes in the rules of origin of goods for the automotive industry:

• Requirement of 75% of production in North America (Mexico, United States and Canada).
• 70% of the steel and aluminum in a vehicle must come from North America.
• 40% of the value of a passenger car or 45% in the case of trucks, must be made with materials and parts produced by workers in a plant where the average hourly wage is at least 16 US $ (United States dollars). This percentage also includes the value of the final assembly of the car.

In addition, Mexico offers benefits not only by its international treaties, but also by its unique advantages for attracting foreign investment, such as:

1. Specialized and competitive workforce (Capabilities and costs).
2. A strategic location (3,000 KM border to US) to access the North American market.
3. There is first class infrastructure in terms of buildings and industrial parks. The Corporate Industrial Real Estate Developers, who are mostly part of the Mexican Association of Private Industrial Parks (AMPIP), offer all the necessary conditions to establish operations as complex as required within their industrial projects.
4. There are programs promoted by the Federal Government through the Ministry of the Economy such as the IMMEX program (Manufacturing Industry, Maquiladora and Export Services) that aims to strengthen the competitiveness of the Mexican export sector, and grant certainty, transparency and continuity to the operations of the companies, as well as to promote the export of goods and services from Mexico to different parts of the world.
5. State governments play a very relevant role in attracting investment, providing incentives and support to companies in topics such as attracting and training talent, one-stop shop for government procedures and socio-demographic and labor information for decision-making among several other items that facilitate the establishment of new operations in the different states of the country.

Currently, many Chinese companies with a global presence already operate in Mexico in strategic sectors such as automotive, telecommunications, transportation, technology, commercial banking and mining, among others. Also the energy, auto parts and textile sectors are expected to be included in the industries with the greatest potential to attract Chinese investments to Mexico in the coming years.

Actually, in Newmark we are working in synergy with the "Chamber of Commerce and Technology of Mexico - China", a binational association founded at 2008 to boost business between Mexico and China, to help Chinese companies during the Site Selection Process through a robust real estate consultancy to successfully establish its operations in Mexico.

Some of the Main Drivers to evaluate for Successful Site Selection are:

• Real Estate: Efficiency & Profitability

• Acquisition of Talent and Skilled Workforce

• Supply Chain and Logistics

• Accessibility and Connectivity

• Business Environment

• Government incentives

• Regulatory Framework

• Infrastructure and Services Availability

Contact us, we'll gladly develop a strategy tailored to your project for the successful establishment of your operations in Mexico.

Abraham Fernández

Industrial Director

Abraham.fernandez@nmrk.com

m. +55 28490830