Did you know that nearshoring is a trend that is gaining momentum around the world?
This strategy consists of outsourcing services or production to suppliers located in geographically close countries to take advantage of reduced costs, proximity and efficiency to key markets.
In this context, Mexico has a unique opportunity to become a world leader in nearshoring. At LGS International, as supply chain experts. We will tell you how this is a great opportunity for Mexico.
We will discuss its benefits for Mexican companies, its impact on the Mexican economy and the challenges Mexico faces to take advantage of this opportunity.
What is Nearshoring?
Mexico and China are two of the world's leading trading partners. Both countries have a long history of economic collaboration. In recent years, nearshoring has gained momentum among Mexican and Chinese companies.
Nearshoring is a business strategy that instead of opting for outsourcing to distant countries, companies choose to locate their operations in nearby nations to take advantage of benefits such as:
Improved delivery times: Mexican companies can reduce their product delivery times by locating their operations in Mexico. This is especially important for companies operating in industries that require quick delivery, such as electronics or fashion.
- Cost reduction: The cost of labor in Mexico is significantly lower than in China. This can help reduce your production costs.
- Access to skilled talent: Mexico has a skilled workforce in a wide range of industries. This can help Chinese companies find the talent they need to expand their operations in Mexico.
- Geographic proximity: This reduces transportation and logistics costs, as well as delivery times.
- Cultural similarities: This facilitates communication and collaboration between companies and their suppliers.
- Access to new markets: By taking advantage of trade relations between the two countries, companies can reach and enter new markets more easily.
The impact of Nearshoring on the Mexican economy and industry
Near-shoring is a trend that is having a significant impact on the Mexican economy and industry. According to the Council of Global Enterprises (CEG)it could generate up to 4 million jobs in Mexico by 2030. It is also driving the growth of industrial parks in Mexico.
This business model has allowed Mexico to strengthen its commercial ties and expand its presence in the international market, especially with countries such as China.
Benefited sectors: Automotive, technology and more
This is benefiting a wide range of sectors in Mexico, including:
| Sector | Description |
| Automotive | Mexico is an important automotive production center in the world. It is helping automotive companies reduce their production costs and improve their efficiency. |
| Technological | It has focused primarily on providing software development, design and data analysis services. This has helped technology companies reduce their development costs and improve their time to market. |
| Footwear | It has generated thousands of jobs in Mexico. It has also contributed to the growth of the Mexican footwear industry. |
| Aerospace | Mexico is an important aerospace production center in Latin America. Nearshoring is helping aerospace companies to reduce their production costs and improve their flexibility. |
Growth of industrial parks in Mexico
This trend of moving production and services to nearby countries has driven the growth of industrial parks in Mexico. According to Forbes, 453 companies are expected to arrive in Mexico in 2024 and 2025, representing an investment of more than 10 billion dollars.
This growth is due to several factors, including:
- The growing demand for nearshoring by companies.
- The availability of skilled labor in Mexico.
- Mexico's logistics infrastructure and services.
The growth of industrial parks in Mexico is expected to continue in the coming years. Companies engaged in this business are looking for locations in industrial parks that offer the following advantages:
- Location close to target markets.
- Access to skilled labor.
- High quality infrastructure and logistics services.
- Connections with other industrial parks
Companies looking to take advantage of the growth of industrial parks in Mexico should consider the following factors:
- LocationChoose an industrial park located close to the company's target markets.
- InfrastructureEnsure that the industrial park has adequate infrastructure to meet the company's needs.
- ServicesVerify that it offers the necessary services, such as security, maintenance and cleaning.
The growth of industrial parks in Mexico is a positive trend that is benefiting the country. Companies looking to take advantage of this trend should consider the factors mentioned above to make an informed decision.
Chinese Shoemakers in Leon: A Case Study in Nearshoring
In recent years, Mexico has become an attractive destination for foreign investment, especially in the manufacturing sector. This is due to a number of factors, including geographic proximity to target markets, availability of skilled labor, and high-quality infrastructure and logistics services.
An example of this trend is the interest of Chinese shoemakers in investing in Mexico. According to Eduardo Sojo Santos, co-founder of LGS Internationala consultant and expert in the China-Mexico supply chain, "Chinese shoemakers are looking to relocate their operations to Mexico.Chinese shoemakers are looking to move their operations to Mexico to take advantage of the geographic proximity, skilled labor and competitive costs.
Leon, Guanajuato, is an important center of footwear production in Mexico. The city has a large supplier base and skilled labor force, making it an attractive destination for foreign investment...
Near-shoring offers Chinese shoemakers a number of advantages, including:
- Reduced transportation costs: By locating their operations in Mexico, Chinese shoemakers can reduce the costs of transporting their products to target markets in North America and Europe.
- Improved delivery times: Delivery times for Chinese shoemakers' products will be reduced by locating their operations in Mexico.
- Access to skilled laborMexico has a skilled labor force in the footwear industry.
- Proximity to target marketsMexico is close to the target markets of Chinese shoemakers.
Obstacles and challenges of Nearshoring in Mexico
Near-shoring is a trend that offers a number of opportunities for Mexico, but it also presents some challenges. These challenges can be overcome with the right investments and policies, but it is important that Mexican companies and government are aware of them.
Among the obstacles and challenges of nearshoring in Mexico are:
| Obstacle | Challenge | Measure |
| Infrastructure | Lack of connectivity between Mexico and target markets | Investment in transportation and logistics infrastructure |
| Labor | Lack of workforce qualification | Investment in education and training |
| Security | Insecurity in Mexico | Improved safety |
By taking steps to overcome these challenges, Mexico can position itself as an attractive destination for foreign investment and nearshoring.
Future prospects: What does the future hold for Nearshoring?
This trend is likely to continue to grow in the coming years. Mexico has a number of advantages that make it an attractive destination for nearshoring, but it also faces some challenges that must be overcome to take full advantage of this opportunity.
It is difficult to accurately predict the future, but it is possible to identify some trends that could influence its development in the coming years.
- Globalization: Companies will continue to look for ways to reduce their costs and improve their efficiency, and this is a strategy that can help them achieve these goals.
- Technology: Technological advances are facilitating collaboration between companies in different countries.
- Geopolitical changes: Geopolitical changes could also influence the development of nearshoring.
Near-shoring is a trend that is having a significant impact on the global economy. Mexico is well positioned to take advantage of this trend and benefit from the opportunities it offers.
To take full advantage of this trend, Mexico must take steps to overcome the challenges it faces, such as lack of infrastructure, skilled labor and security.
LGS International is a Mexican company that offers supply chain consulting and advisory services . We have extensive experience in the sector and we help you evaluate your nearshoring needs and find the best solution for your business.
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