Needs and employment
The popular phrase “a tailored suit” makes perfect sense when it comes to investments. Dorbecker considers it difficult to provide a general perspective on what the needs of a Chinese company are before investing in Mexico, because they are very specific. “You have to go visit their factories, see and understand how they operate, hold meetings with the Mexican government, with businessmen. “Doing accompaniment is an investment of time,” she adds.
Although there are several companies that seek the embassy with the interest of arriving in Mexico, investments also come from the promotion of private initiative, as is the case of arrival at industrial parks in the national territory with specialized advice. For example, for two years now, the Mexican firms American Industries and Finsa have had offices and staff in China, which also constantly work at fairs with Mexcham.
Víctor Cadena, executive vice president of the organization, affirms that one of the first points that are put on the table with companies seeking to be exporters are the rules around the T-MEC, which mark a certain regional content value at the North American level. for products manufactured in the country. “The legal certainty of having a stable regulatory framework, which does not change every year or every six-year period,” he adds.
Dorbecker and Cadena agree that another determining factor is the supply and cost of water, the supply and price of electricity, as well as the availability of land.
In mid-August, a group of government officials Chongqing He arrived in Mexico as part of a business trip managed by Mexcham. In the list of sectors in which private initiative shows the greatest interest in landing in the country, the automotivespecifically, auto parts, as well as electronics and appliances.
The relationship with this province is close. Mexico has a presence as an investor through the auto parts manufacturer Nemak, with a manufacturing plant and through thousands of imported containers with spare parts for Italika motorcycles. Last year, at the West China International Trade and Investment Fair and the Cross-Border E-Commerce Fair held in Chongqing, Mexico served as the guest of honor.
But the fact that more factories arrive in the country, whether Chinese or of some other origin, does not necessarily mean a direct improvement in workers’ conditions. Since the second half of the last century, international investments saw Mexico as the ideal place to install their complexes as they found the most economical labor force in the North American region. Jobs became repetitive jobs on production lines.
Enrique Dussel Peters, coordinator of Cechimex, from the UNAM Faculty of Economics, highlights that the country’s manufacturing industry has been characterized by importing components and concluding with their final assembly in plants within the national territory, which brings with it low levels of added value, since the processes that truly involve the use of technology and generate more value are left outside the country.
“Asking Chinese investment now to break with the maquila tradition since 1965 would be illusory, and even more so, as a new participant that faces enormous difficulties to integrate, such as searching for suppliers, training, moderately developed human capital, etc. Rather, we should tell Ford, Nissan or Volkswagen, who have been around for decades, that increase their added valueand not to new companies that don’t even know where,” he argues.
According to the China FDI Monitor, in 2022 these capitals brought with them the creation of 19,506 jobs, the highest figure for the region and which, at the same time, accounted for 62.4% of the total jobs created in Latin America. and the Caribbean.
Specialists agree that a rule that should be set for these new investments consists of ensuring the transfer of knowledge, in addition to greater cooperation between the public, private and academic sectors.
“We do not see that there is, as China did in the past with Western groups, a clause requesting the transfer of knowledge around the industries to locals, which also made China so quickly build up its capabilities around to technology and innovation, which was achieved with appropriate policies,” argues Noyola.
Nothing is eternal
Such dynamism between China and Mexico had not been seen before, but everything has an expiration date and the desire to diversify investments also has a limited validity. Some specialists consider that It won’t last more than five years.
The pandemic and the war between Russia and Ukraine have brought new economic scenarios to the world. At the end of August, Brazil, Russia, India, China and South Africa (BRICS) accepted the group that maintains a “non-aligned” position, with the integration of Argentina, Egypt, Ethiopia, Saudi Arabia, Iran and the United Arab Emirates.
“It is a window of opportunity that will not last forever. It will only last a few years and all those opportunities have to be taken advantage of,” adds Cadena. “We have to see how economic blocks develop globally, how these global financial institutions develop. It is important to analyze and time will set the guidelines for us,” she says.
In addition to the creation of certain economic blocks, Mexico will not have a Free Trade Agreement with China as Peru, Chile, Costa Rica, Ecuador and, soon, Uruguay already have, neither in the short nor in the medium term.
Section 10 of Chapter 32 of the T-MEC highlights the main factor why not seen in the near futureby prohibiting its members from any trade agreement with countries that do not have a free market economy, that grant subsidies or put the North American productive plant at risk.
Despite this, there are cooperation mechanisms, such as the Mexico-China High Level Business Group, in which companies from both countries meet annually to deepen mutual knowledge and strengthen the bilateral economic relationship. Mexico’s time to take advantage of the appetite of Chinese companies to invest is now.