3 Reasons To Near-Source Your Business To Mexico

August 18, 2014

08/18/14 Forbes. By Deanna Cioppa

manufacutiringAs the cost of outsourcing manufacturing to China levels out with the United States, companies are looking for new places to set up shop—locations with competitive labor costs, optimal transport options and an open trading environment—and finding them much closer to home in sunny Mexico. There’s a lot that’s attractive about America’s neighbor to the south that may drive American manufacturing from China to just next door: A stable economy protected by government policy, a robust telecomm infrastructure and abundant natural resources. Regulation and macro-economics aside, part of what’s attracting foreign trading to Mexico is a combination of where it is, who lives there and who they trade with.

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Report: NAFTA’s Uninvited guest: China and the Disintegration of North American Trade

January 3, 2014

NAFTA_logoBy Enrique Dussel Peters and Kevin P. Gallagher

CEPAL Review, August 2013

This paper examines the extent to which China’s entry into the World Trade Organization in 2001 and subsequent surge in global exports affected the composition of trade between the United States and Mexico through 2009. The authors found that China’s entry had a significant impact on the trade relations between these two North American countries, replacing and displacing many of the export strongholds in place before China joined the WTO and after the first stage of the North American Free Trade Agreement (1994-2000). Based on this research, the authors offer a variety of policy options for reinvigorating United States-Mexico trade and cooperating with China in the global economy.

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Asia Faces Competition in Mexico’s Energy Sector

December 16, 2013

The Wall Street Journal, 12/16/2013

Oil barrelsAsian energy groups are looking at opportunities in Mexico following a decision to break Petróleos Mexicanos’s oil and gas monopoly, but they could face tough competition from Western rivals for the right to exploit the country’s huge and lightly developed reserves.

Mexico’s relatively stable political environment and geographic proximity to the U.S. could attract investors from there, including companies that have been selling stakes in Asian and African energy projects to focus on exploiting shale gas and oil opportunities nearer to home. Attractive Mexico projects could also interest European companies such as Spain’s Repsol, which is 9.3% owned by Pemex, and others already active in the country.

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Mexico moving to grow trade ties with Asia

August 27, 2013

drawing bar chartReuters, 8/27/2013

Asia could become twice as important to Mexico as an export market over the next five years as the country strengthens trade ties with the fast-growing economies of the region, Mexican Economy Minister Ildefonso Guajardo said on Monday.

Latin America’s biggest exporter is working to diversify its trade to reduce its dependence on the U.S. market, which takes in more than three quarters of Mexico’s exports. For years a peripheral market for Mexico, Asia has been growing in importance, and Mexican President Enrique Peña Nieto has been at pains to bolster relations with China in particular since he took office at the start of December.

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Mexico wants to see tequila on China’s top shelf

July 31, 2013

tequilaSmart Planet , 7/30/2013

Tequila makers are celebrating the long-awaited opening of China’s market after President Xi Jinping came here in May and, among other things, announced China would relax the restrictions that have prevented brands like Herradura, Patron, Don Julio, and José Cuervo from exporting there. The industry envisions positioning its tequila on China’s top shelf: competing for a share of that country’s fast-growing luxury lifestyle market.

Currently, 79 percent of Mexican tequila heads north to the United States, the world’s top consumer. As China gets wealthier, people are buying more liquor. Spirits sales volume rose 5 percent in 2011 to reach 4.4 billion liters in 2011, according to Euromonitor, a market research provider. And the trend towards pricier, higher quality products — “premiumization” — is happening across all categories, from traditional Chinese baijiu to Scotch whiskey.

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Mexican peso at crossroads between reform rally, Fed taper

July 19, 2013

financeReuters, 7/18/2013

For those who like volatility, there’s money to be made on the Mexican peso. It could rally on the hopes of a more robust future for Latin America’s second-biggest economy. Or it might get hammered by U.S. Federal Reserve policy moves. Maybe both will happen in the next six months.

While other regional economies are suffering from China’s slowing demand for commodities, Mexico is humming along. Factory exports to the United States are seen picking up and a series of economic reforms has investors seeing a brighter future.

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That US natural-gas manufacturing boom? It’s happening in Mexico

July 3, 2013

drawing bar chartQuartz, 7/2/2013

The shale gas boom has done a lot to boost the US economy. It’s such a big deal you can see it from space. All that new natural gas has lowered energy costs, which has led analysts to wonder if it could help make America’s energy-heavy manufacturing businesses more competitive with countries that have low labor costs but over-burdened energy infrastructure. But there’s a lot standing in the way of that vision, including the potential for gas exports to affect the value of the dollar, and the observation that maybe energy costs aren’t such a big deal.

But where the US is faltering, Mexico is taking advantage of all that cheap natural gas to boost factories; last year, pipelines brought more natural gas across the border than ever before. Mexico is already successfully competing with places like China on labor prices, but its energy costs are lower, too. Combine that with its proximity to the United States and deep integration into the American supply chain, and you’ve got a recipe for export-oriented success. Pemex, the country’s state-owned oil company, is spending $3.3 billion to build a new, 750-mile pipeline from Los Ramones, Mexico, near the country’s industrial heartland, to Agua Dulce, near Texas’ shale oil fields.

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