In terms of foreign trade, nearshoring is the strategy by which companies relocate their operations to a nearby country, with a similar time zone, in order to make their supply chain more efficient, speed up delivery times and reduce costs, generating benefits for both parties, creating jobs and boosting the country’s economic development.
Nearshoring accelerated with the arrival of the COVID pandemic, a phenomenon that brought with it many mobility restrictions, border closures and delays in the flow of raw materials and finished products.
According to a Deloitte study, this market is expected to grow at a compounded annual growth rate (CAGR) of 10.3% by 2025. Likewise, according to the Inter-American Development Bank (IADB) prognosis, Latin America and the Caribbean could increase global exports by USD$78 billion each year, of which USD$35.3 billion correspond to Mexico, that is to say 45%.
Some transnational manufacturing companies that have recently moved or are in the process of moving their operations from China to Mexico are: Yasaki, Foxconn, Panasonic, LG Electronics, Samsung, Intel, Tesla, General Motors, Ford Motor Co; Honeywell, Siemens, ABB, Eaton and Schneider Electric.
In addition to the manufacturing sector, which is in high demand worldwide, there are other industries that benefit from nearshoring, such as the technology industry, the automotive industry, the electrical industry and the electronics industry. Small and medium-sized companies in Mexico benefit greatly from this trend, especially those that have the capacity to become suppliers of companies that relocate their operations to our country.
Most economies no longer want to depend on Asia, Mexico is a country with a very interesting geographic location, furthermore being a country with many resources, its main border is with the United States, which makes it a country with an important strategic position.
Unfortunately, Mexico is only taking advantage of 15% of the total number of companies relocating to Latin America.
With the pandemic, offshoring logistics were greatly affected, since many of the U.S. suppliers are in Asia, including China, the predominant one. The interruption of operations in this country, as a result of the pandemic, demonstrated the great vulnerability of offshoring, due to the exclusivity of suppliers in these countries.
Faced with this situation, Mexico has been gaining ground, U.S. companies are increasingly adopting nearshoring and are concentrating on our country. One of the most recent cases is the company “Shein”, a global fashion giant, which has just announced the opening of a production plant in Mexico. Part of the retailer’s strategy to take advantage of nearshoring is to have another production center outside of China, reducing shipping times and lowering distribution costs for Shein’s customers in Latin America.
The state of Jalisco is the national leader in nearshoring. Guadalajara registered the highest demand for nearshoring during the first quarter of the year, with more than 77 thousand m2 marketed, positioning itself among the preferences of potential investors above the northeast region with cities such as Monterrey and Saltillo. The Government of Jalisco reaffirms its commitment to the implementation of diverse strategies to promote nearshoring as the public policy Jalisco Tech Hub Act to be a leader in Mexico and Latin America in the development, conversion, attraction and retention of talent through innovation and high technology.
Another example of nearshoring is the arrival of Tesla in Mexico, in Nuevo Leon, where foreign investment and reindustrialization in areas close to the United States was boosted. Nuevo Leon is becoming an electromobility hub in Mexico, which is why the Americas Mobility of the Future, an event dedicated to the mobility of the coming times, intelligent transportation, infrastructure and sustainable logistics, will be held. Nuevo Leon has benefited greatly from nearshoring, and expects to close the year attracting 8 billion dollars in foreign investment, twice of last year’s figure.
According to PwC Mexico analysts, the Ministry of Finance and Public Credit has already announced that it will not present changes to tax laws in order to guarantee legal certainty and attract Foreign Direct Investment, thus taking advantage of nearshoring after the breakdown of value chains worldwide.
The Tax Administration Service (SAT) is aware that there are between 40 and 800 companies based in Asia that intend to move to Mexico. The Inter-American Development Bank (IDB) projects that Mexico could add USD$35 billion in exports as a result of the relocation of supply chains. The additional amount is equivalent to 2.6% of the Gross Domestic Product (GDP) and is higher than the estimated of the rest of the 25 economies that the Americas will receive as the total sum, according to the information provided by El Economista.
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**La publicación de este documento no constituye una asesoría jurídica, contable o profesional de ningún tipo, ni pretende ser aplicable a casos partículares. Este documento sólo se refiere a las leyes aplicables en México. |