Mexico has a historic opportunity with the Nearshoringbut it will not be eternal and it is not expected to last many years, so you should prepare to take advantage of this moment.
The country has even been so favored that it is possible that the current geopolitical situation on the planet will also become a factor of benefit and favor for nearshoring in Mexico.
This was stated by experts from the Graduate School of Senior Business Management (EGADE), from the Institute of Technology and Higher Studies of Monterrey (ITESM), during the presentation of the document called “Nearshoring, challenges and opportunities for the integration and strengthening of global value chains in Mexico“, which, according to the authors, a multidisciplinary team made up of 23 specialists, will also become a book in a few months.
Unique opportunity
Mexico had not had an opportunity like the current one in decades, and perhaps it will also be a long time before something similar occurs again.
Dr. Osmar Zavaleta Vázquez, associate dean of research at the business school and EGADE Business School, at Tecnológico de Monterrey, served as spokesperson and presenter of the main results of the study.
According to the information, the nearshoring boom in Mexico responds to:
- the high costs of producing in China;
- the geopolitical context;
- the disruption of global supply chains;
- the transformation of the automotive industry (in a special way); as well as
- changes in consumer demand (immediacy).
In addition, Mexico’s proximity to the United States market, the T.MEC and our country’s global trade agreements, the good level of human capital and the relatively developed infrastructure also play a relevant role.
Mexico, magnet for investments, but…
EGADE specialists considered that our country has actually been a “magnet” for investments for many years, but this has not resulted in uniform development as these are concentrated in a part of our territory.
For example; between 1999 and 2022, that is, in the last 23 years, Mexico City has attracted Foreign Direct Investment (FDI) for 146,255 million dollars, equivalent to 21.80 percent of the total obtained in that period and consolidated as the entity that attracts the most , followed by Nuevo León with 67,722 million (9.30 percent), the State of Mexico with 59,277 million (8.80 percent), Jalisco with 38,781 million (5.80 percent), and Chihuahua with 38,716 million (5.80 percent).
In contrast, the entities that have attracted the least FDI are Yucatán with 4,079 million dollars (0.60 percent), Tlaxcala with 3,836 million (0.60 percent), Campeche with 3,580 million (0.50 percent), Chiapas with 3,478 million FDI ( 0.50 percent) and Colima with 2,541 million (0.40 percent); Together they do not even reach the total FDI captured by Chihuahua, the entity that is last in the previous group.
However, Mexico remains a very attractive destination for FDI, It is estimated that by 2023 the country will raise 36.7 billion dollars; In the first half of this year alone it already raised 29,041 million, which means that even the estimated figure could be exceeded.
Mexico’s challenges in nearshoring and investment potential
For EGADE specialists, our country will face the following challenges in nearshoring:
- Regional diversification of export centers
- Articulation of value chains (north vs south; large companies vs SMEs)
- Development of high added value sectors (technological convergence and innovation)
- Need to invest in electrical infrastructure
- Water shortage in some states
- Housing shortage
- Mobility and pollution problems
However, the investment potential in Mexico through nearshoring is equally relevant:
- Corporate Venture Capital (CVC); angel investors; Family Offices; search and M&A funds.
- Greater exposure to industries and markets
- Greater investment in early stage ventures
- Increases in horizontal services (Logistics, financial, real estate, among others).
Also, among other challenges, the country must balance FDI in states and regions of the country to promote an orderly migration of talent and avoid pressure on cities; that in the macroeconomic field.
On the microeconomic front, some challenges will be:
- Develop networks of local suppliers,
- Raise quality and innovation standards in productive processes,
- Incorporate new technologies and
- Reconfigure industries (automotive, for example).
The presentation of the analysis, which will be turned into a book in the coming months, ended with a panel of experts in which the challenges, opportunities and actions that must be carried out were discussed so that Mexico and its companies can take advantage of this unique opportunity. in decades.
Antonio Sandoval Director Pensiones Dignas, editor, collaborator at Alto Nivel and Prensario; editorial director of magazines in the energy sector, advisor and financial analyst.