Diligence the watchword for new investors in Mexico

As supply chain diversification gathers pace in the wake of the pandemic, Mexico is emerging as a major production base for multinationals wanting to be closer to North America. Since October last year, the country has attracted some $9bn of nearshoring investment from the likes of Tesla, Unilever, Mattel and BMW. According to fDi Markets, US companies switching production closer to home accounted for just over 40% of the $40bn of Mexico’s foreign direct investment in 2022.

As a stable, economically resilient democracy with low labour costs, an increasingly skilled workforce, growing industrial capacity, tax incentives and the US–Mexico–Canada (USMCA) free trade agreement, Mexico is a staging post for companies looking to secure disruption-free exports to the north.

Foreign companies must continue to be aware of the country’s operational threats, most notably corruption, organised crime and political risks, especially the unpredictability of populist, economic nationalist president Andrés Manuel López Obrador (Amlo). Yet Mexico’s recent progress in tackling these business risks is cause for confidence among firms looking to establish a presence in the country.

Read the full article on fDi Intelligence.