Why Businesses Are Expanding to Mexico?

Business expansion in Mexico is in high demand from international investors. It has a shared border with the U.S., 13 free trade agreements with 50 different countries, and a talented and affordable workforce.

The US-Mexico border is the most frequently crossed border in the world, with more than one million people crossing it every day. This massive movement is not limited to people only, but also the products that cross the border frequently because of the USMCA trade agreement (formerly known as NAFTA North American Free Trade Agreement). An increasing number of people and businesses are now moving to or considering a move to Mexico. 

This trend may surprise, but it demonstrates how Mexico has become an attractive market place for business expansion from all over the world. In this post, we’ll cover why Mexico has increased in popularity and how your company can benefit from this development. 

Undoubtedly, business expansion into the Mexican market with almost 130 million Mexicans, 1,9 million people without employment, is a huge workforce potential opportunity. Additional advantage why more and more companies around the world are looking to expand their business in Mexico.

Naturally, this phenomenon is especially prevalent in the southern part of the US because of its geographical proximity to Mexico. In comparison to other important latin american economies like Brazil or Argentina, Mexico has a significantly higher percentage of english speakers. The fact that Mexico is relatively similar to the US culturally, linguistically, and economically in comparison to other countries in the region also makes it an easier market to hire employees.

Nevertheless, the increase in remote work since the Covid-19 pandemic has made Mexico an attractive destination for business expansion. The following are some of the most popular reasons these businesses are choosing Mexico to boost their business and expand:

• Business expenses are significantly lower than in the United States. Office rents and salaries for Mexican workers are affordable.
• Mexico’s skilled talent stands out for its excellent command of English and a culture familiar with that of the United States.
• Monterrey, for example, has a thriving technology scene. U.S. software development giants have moved their operations to Mexico.
• Guadalajara, for its part, has a promising future. In 2022, it recorded sales of US$3.348 billion, and is expected to grow by approximately 17.7% this year.
• Puebla will close 2022 with 1.5% growth. This city is fundamental for the automotive industry. (Volkswagen de México announced an investment of 763.5 million dollars between 2022 and 2025)
• Queretaro’s business center is dominant in manufacturing and commerce. It is the perfect getaway to new customers and consumers.
• Mexico is geographically accessible. It has seaports on both the Pacific and Caribbean coasts.
• Mexico has an abundant supply of renewable energy. It has zero carbon production capacity for local supply and export.
• The Aztec country shares time zones with the United States and other important markets such as Colombia and Peru. This facilitates communication with outsourced teams.

Here are some key aspects to consider

• Mexico offers new business expansion opportunities:  Accessible imports/exports benefit companies working with physical products and manufacturing.

USMCA free trade agreement benefits businesses:

• High threshold for customs duties/taxes means less paperwork and faster customs clearance.
• Stronger intellectual property protection, including exemption for digital products.
• Increased focus on small businesses benefits both companies entering US and Mexico.