As we know, Mexico is one of the winners in the reconfiguration of global trade; In fact, our nation is one of the five major beneficiary destinations in the world.
But Mexico is not alone in the fight for the Nearshoring pie.
The good news for our country is that nearshoring is a reality and will be a lasting phenomenon for many years. The bad news is that it must adapt and, even over the years, the country will have to transform itself to maintain its attractiveness and competitiveness. Being part of what today they also call “The Nearshoring Tigers”, emulating the group once known as “The Asian Tigers”, is not a complete guarantee of development and well-being if you do not know how to take advantage of the opportunity.
Nearshoring will last for years
The location of investments by companies that have international business, outside their domestic markets, has been reconfiguring for several years.
Geopolitical conflicts, the pandemic, and the need to diversify your investments generated the urgency to invest in new markets, but not just anyone; There are five nations that have benefited from this trend, they are: Indonesia, Morocco, Mexico, Poland and Vietnam. These five nations are currently the global focus of international investments.
A global survey conducted by Bloomberg found that most large firms have not moved their supply chains, but they are going to change them in the next five years.
“Acute disruptions to supply chains and rising protectionism have raised fears of shortagesand this has led governments to consider strategies such as relocation to domestic markets, or bringing supply chains closer to their neighbors, in addition to other movements such as entrusting their location to markets in allied countries,” says another analysis prepared by S&P Global.
The five winners
An analysis prepared by Bloomberg Economics has detected without fear of being wrong, based on the trail of money that companies that have operations in international markets invest outside their borders, the five countries that are functioning as magnets for global capital: in Asia , these are Indonesia and Vietnam. In America, Mexico; in Europe, Poland, and in Africa, Morocco.
These five nations have been able to attract 10% of new investment since 2017a percentage that contrasts with the size of their economies, since all together they account for barely 4 percent of world GDP.
As a consequence, the five countries have managed to grow their trade relations more than the world average in the last five years, and their production has increased to surpass, as a whole, India’s levels during the year 2022.
Despite being nations that have few things in common, in recent years they have agreed on their interest in becoming connectors of global trade and necessary links to link trade relations between China and the United States, as well as with other large economic blocks such as Europe.
According to the conclusions of Bloomberg Economics, what happened in these nations is not a process of deglobalization, because trade, in one form or another, continues to grow between the two large economic blocks.
What is happening is a relocation process, and these countries are moving their chips appropriately to be the winners of this disruption.
For example, the two Asian countries that appear among the five most benefited by the reconfiguration of world trade have designed a strategy that has spread throughout the world in recent years, called “China +1”.
The strategy began before Covid, because China became a very expensive market for manufacturing, and companies from outside the country began to seek to have a factory located in China, and another in another relatively nearby location.
Indonesia has increased the new investments it has received by 48 percent since 2017reaching $15 billion in 2022.
The country’s trade with the United States and China has also skyrocketed in this period, increasing its exports to the North American country by 71 percent and the imports it receives from China, its current main trading partner, by up to 105 percent.
Vietnam follows a similar strategy, and has benefited greatly from the trade war between China and the United States.
For example, Vietnam has become the main manufacturer of Apple products; Factors such as the above have led it to rank as the eighteenth country that exports the most products, with 356,000 million dollars in 2021, and the nineteenth in imports, with 331,000 million dollars.
Mexico, the great opportunity
Our country truly has a historic opportunity, the big question for analysts is whether it will know how to take advantage of it.
This year, Mexico overtook China as the largest exporter of products to the United States. United by selling more than 450,000 million dollars to the largest economy on the planetwhich represents an increase of 45 percent between 2017 and 2022, according to Bloomberg data.
Much of this increase is explained by having become a gateway to the United States for China, a country that has invested enormous amounts in locating its factories near the border between the two nations and avoiding the increase in tariffs imposed by Trump.
Expectations indicate that, in the next two years, one in every five new businesses that settle in the country will be Chinese.
New investment in Mexico has reached $41 billion in 2022, the highest of the five countries analyzed, which represents an increase of 47 percent compared to the end of 2017.
Another interesting conclusion consists of the fact that countries currently benefiting from nearshoring, such as Mexico, should not be overconfident and, on the contrary, carry out reforms that contribute to increasing their competitiveness or, otherwise, they could let this pass. great opportunity and be excluded from this exclusive club that at the moment is made up of 5 members.
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