China-Mexico relations have been friendly over the years, but those ties are strengthening in light of US political rhetoric down on international trade. With so much in common, China and Mexico are reaching out to one another to broaden their alliance. Many Chinese companies are even moving operations to Mexico while the Latin American manufacturing country courts the Chinese investment and infrastructure.
Top 4 Mexican Incentives for Chinese Business
Mexico is actively courting international investment, particularly from China. And Chinese companies see much to be excited about, including:
- Reforms: Mexico has recently overhauled transportation infrastructure, opened gas and oil fields, reformed commercial law and labor laws, and revamped security efforts.
- Free Trade Deals: Mexico offers Chinese companies integrated access to the US consumer market as well as free trade with most of the world via over 40 free-trade deals.
- Integration with US Companies: Mexico and the US are strategic manufacturing partners, and Chinese involvement in Mexico means integration with the US economy and companies.
- Low Labor Cost: As Chinese labor costs rise, Mexican labor stays low while their productivity rises. This is a cost-saving advantage that drives stronger China-Mexico relations.
The two countries seem to reaching across the ocean to strengthen China-Mexico relations in recent months. Chinese companies are actively investing in Mexico, and companies like Hisense Co. are increasing their existing Mexican investments. Below are some of the many indicators that this partnership is strengthening.
- China is Mexico’s second largest trading partner.
- Mexico needs infrastructure to exploit their energy resources whereas China is looking for affordable energy.
- Mexico poses a gateway of sorts to the US market, and Chinese companies are already exploiting this link by manufacturing their goods in Mexico and exporting them duty free to the US.
- Diplomatic talks between the two manufacturing countries have increased over recent years and months.
There is a benefit for both countries if China-Mexico relations continue on this trajectory. Some fear the US may reduce trade with Mexico in coming years, yet Chinese trade will more than make up Mexico’s loss. Likewise, Mexico will continue to need trading partners for their energy reserves, which China stands to profit from immensely. On the other hand, if US-Mexico economic ties hold firm, strong China-Mexico relations mean a more productive Mexico and a stronger China vis-à-vis US markets.
For additional information on China-Mexico relations visit our parent company blog at http://tecma.com