As one of the largest economies in Latin America, Mexico is rapidly emerging as a popular destination for global investment. Its strategic location, huge market potential, and improving business environment make Mexico an ideal choice for investors. More and more companies are choosing to invest and build factories in Mexico, why is Mexico a hot spot for investment?
Mexico's Investment Advantages.
Mexico has a favorable investment climate and huge market potential, making it a preferred destination for foreign direct investment (FDI). Mexico ranks 14th among the world's largest recipients of FDI and attracts a large amount of international investment funds.
1. Competitive labor market.
Mexico is competitive in terms of labor costs, which makes outsourcing to Mexico an option for many businesses. In addition, Mexico has a young and highly qualified workforce, with 45% of the population between the ages of 30-49 and 17% with degrees in world-class engineering programs.
2. A strong network of markets and free agreements.
Mexico is one of the most competitive countries for productive investment. Mexico has a strong domestic market, providing businesses with the opportunity to cater to a large domestic consumer base. This domestic market, combined with Mexico's advanced manufacturing capabilities, makes it an attractive investment destination.
3. USMCA and North American market.
Thanks to its strategic location, Mexico is the gateway to the most important market in the world, the North American market. Mexico has established good relations with its North American neighbors by replacing the North American Liberty Agreement (NAFTA) with the United States-Mexico-Canada Agreement (USMCA). With a population of nearly 500 million and an economy of about $23 trillion, the USMCA region is one of the largest free zones in the world, according to the World Bank.
4. Mexico attaches great importance to the development of high-tech manufacturing.
Mexico has become a major exporter of advanced high-tech products, especially in Latin America. High-tech manufacturing accounts for 35% of the region's total, underlining Mexico's strong presence in the sector. With an increased focus on innovation and technological advancement, Mexican companies have been able to produce and export cutting-edge products that meet the needs of both domestic and international markets.
5. Mexico has an advanced and mature manufacturing base.
Mexico's manufacturing sector excels in producing complex and sophisticated products, which was recognized in the 2018 Harvard Economic Complexity Atlas, placing it in the top 20.
6. Mexico provides a platform for innovative industries.
Mexico has a diverse and innovative industrial platform, with more than two-thirds of its exports coming from highly complex industries. Mexico's main exports include machinery and transportation equipment, steel, electrical equipment, chemicals, food, and petroleum and petroleum products.
Things to consider when setting up a factory in Mexico.
1. Confirm whether you need to sell in Mexico while exporting your products. Businesses that export their products in their entirety do not need to register a separate legal entity in Mexico. However, if a business plans to sell goods and services to a company in Mexico and issue invoices, it must have a legal entity in Mexico.
2. Determine the appropriate corporate structure. Companies need to be careful about whether the shelter provider they have chosen is better able to control their operating costsOr evaluate whether the shareholding system or the limited liability system is the type of company that the enterprise can benefit from.
3. Determine regulatory requirements. Companies operating under a shelter service provider can reduce the regulatory burden, which includes shortening the time it takes to register with IMMEX and obtain company filings or operating licenses from the Social Security Administration (IMSS), Customs (ADUANA), and Environmental Health and Safety Authorities (SEMARNAT), among others.
4. Make a choice between leasing, buying and building a new plant. In Mexico, the number of Class A plants is sufficient. These facilities are typically located in well-connected industrial clusters and can quickly adapt to the unique needs of manufacturers.
5. Determine personnel needs and training needs. In Mexico, universities and corporate-backed training centers that can provide quality vocational training will have a significant impact on the long-term development of your business.
6. Evaluate the local businessmen. Understanding the capabilities of local vendors in providing quality parts may help you cut costs significantly.
7. Cooperate with authorized customs brokers. Only Mexican-approved customs brokers will be able to clear your goods at customs.
Steps to set up a factory in Mexico.
To open a factory in Mexico, you need to go through the following procedures:
1. Apply for a business license: apply for a business license from the local industrial and commercial department in Mexico, and provide relevant documents as required, such as articles of association, shareholder register, etc.
2. Registered company: To open a factory in Mexico, you need to register a company, and the type of company includes sole proprietorship, partnership or limited liability company, etc. It is necessary to provide information such as company name, business scope, registered capital, etc., and comply with local company regulations.
3. Tax registration: To open a factory in Mexico, you need to register with the local tax department, apply for a tax number, and pay taxes in accordance with local tax laws.
4. Apply for import and export license: If the products produced by the factory need to be imported and exported, you need to apply for an import and export license from Mexico** and comply with the relevant regulations.
5. Recruit employees: Opening a factory in Mexico requires recruiting local employees, including production workers, management personnel, etc. It is necessary to comply with local labor laws and regulations, such as labor contracts, social insurance, etc.
Opening a factory in Mexico requires procedures and operation in accordance with local laws, regulations and policies, and at the same time, it is necessary to pay attention to safety, environmental protection and other aspects to ensure the normal operation and long-term development of the enterprise.