In the present-day world, setting up a business can be a strenuous task as investors have various options to choose from, but some crucial factors have to be considered before any activity. Geographical importance, state of the economy, manufacturing costs, and available labor are some of the significant elements.
Globalization has changed the economic scenario all around the world, leading to developing countries like Mexico to become a major hub for many manufacturing companies. Countries like Mexico that have a stable economy, and are becoming more developed, offers a broad range of benefits for both business and investors.Here are just a few reasons why companies succeeding in Mexico:
Geographical Location
A key location and a crucial international transport hub make Mexico an intriguing prospect for business for investors all around the world. Firstly,proximity to the U.S means low shipping costs that have made investors more interested in Mexico as compared to China. And secondly, the facility to work in similar or almost the same time zones helps the companies to coordinate with U.S headquarters, which makes a better working environment for the workers.
Stable Economy
The Mexican economy has caught the global spotlight in recent years. The economy of Mexico is quite stable, with gross domestic product ranking 15th globally. It is all due to Mexico’s strong petroleum exports and manufacturing industries. When the world was recovering from the 2008’s economic recession, only two countries which stood unscathed by the economic crisis were Australia and Mexico. After signing the North American Trade Agreement, Mexico opened its borders leading its economy to become diversified and welcome business from around the globe. Mexico’s current economic climate provides a work-friendly environment for the companies, drawing the interest of not only U.S. companies but also multinational companies from all around the world.
Skilled Labor
Companies are always looking for less costly but high-quality options. Although, when it comes to low-cost labor, previously, China was always ahead of everyone, now the scales have changed to Mexico. Mexico provides abundant, low costly, highly skilled, and reliable labor. Companies can save up to 20-30% while setting up their business in Mexico. Another important aspect of business in Mexico is the workweek. The U.S. has a 40 hours work week while in Mexico, the workweek is about 48 hours long. This difference can increase work efficiency by almost 16%.
Trade Agreements
The success of all the companies succeeding in Mexico is all due to the efforts of the Mexican government. Mexico makes the best use of its maquiladoras program, which started during the 1960s. It provides tax benefits to all the foreign manufacturing companies doing business in Mexico. NAFTA is beyond doubt one of the most notable agreements, Mexico has about forty more trade agreements which facilitates the shelter manufacturing and allows the foreign companies to import or export their material VAT-free and duty-free.
These are only a few of the several advantages of setting up a manufacturing business in Mexico. For further detail about companies succeeding in Mexico,check this.
