Chinese companies are rushing into Mexico in a frenzy

Is Mexico replacing China as the "World factory"?

In 2023, against the backdrop of a sluggish domestic economic recovery post-pandemic, Chinese companies are intensifying their efforts to expand their global presence. Our previous editions have delved into the increasing trend of Chinese businesses going international, with a special focus on the manufacturing and e-commerce industries. We have specifically highlighted how emerging economies, notably Vietnam and Mexico, are becoming central hubs for receiving intermediate goods exported from China, followed by re-exports.

In 2023, Mexico has emerged as the United States' largest trading partner. With Chinese companies expanding their operations overseas and a shifting global geopolitical landscape, a significant question looms: Could Mexico potentially supplant China as the "world's factory"?

To provide you with a more nuanced understanding of this global shift, we've selected a notable article for this issue. Titled "Chinese companies are rushing into Mexico in a frenzy," this piece, published by South Reviews – an influential biweekly publication in China known for its insightful political and economic reviews – offers an in-depth look at the surge of Chinese enterprises entering the Mexican market. The article serves as a window into the strategic moves of these companies and the broader implications of this trend for global trade dynamics.

Below is Baiguan's translation of the original article:

Chinese companies are rushing into Mexico in a frenzy

Mengya Jia, South Reviews

Monterrey time is 9:00 PM, The day's work for Kanxiu Qiao is not over yet. However, he needs to return to his hotel for an online meeting with the company headquarters located 10,000 kilometers away in China. At this time, the time in the headquarters is 10:00 AM. Monterrey, the capital of the state of Nuevo Leon in northeastern Mexico, is the country's third-largest city and the second-largest industrial base. The North American Huafu Mountain Industrial Park, jointly invested by Chinese companies Huali Group and Futong Group, is located here.

Bird's Eye View of North America Hua Fu Mountain Industrial Park

Hai Hu, chairman of Huafu Mountain Industrial Park in North America, said in a public speech: "Since 2022, it is almost hard to find a place in our park, including the city where I am located, and Chinese companies are rushing to grab factory buildings and land." In May this year, the company where Kanxiu Qiao works officially launched a factory construction project in Mexico. The company's main business is electronic product OEM, and it also went to Southeast Asia to build a production base a few years ago. Located in the same industrial park as Kanxiu Qiao's company, there are also two Chinese companies that make auto parts and hydraulic seals respectively.

A research report by the Federal Reserve Bank of Dallas in the United States shows that China’s share of direct investment in Mexico has increased rapidly in recent years. China’s foreign direct investment flowing into Mexico has increased from US$38 million in 2011 to US$386 million in 2021, making China the fastest growing source of foreign investment in Mexico.

The growth rate of foreign direct investment in Mexico / Source: Dallas

In fact, in the past two years, numerous Chinese domestic brands have been "betting" on Mexico, establishing a local presence, building factories, and carrying out production and marketing activities. Many people believe that Mexico has great potential to replace Southeast Asia.

Why Mexico?

Landing in Mexico

“There are more Chinese people”, this is Kanxiu Qiao’s most intuitive feeling after returning to Mexico five years later.