Mexico Focus
Why Mexico?
Mexico's Investment Landscape
Whether you are an entrepreneur or seasoned investor, exploring Mexico’s colourful investment landscape could open new vistas of opportunity. The country’s government has introduced various initiatives to encourage foreign investment and entrepreneurship, providing optimal conditions for businesses to thrive.
If you are looking to broaden your investment horizons, Mexico should top the list of destinations for your next venture. Its strategic location, growing economy, and skilled workforce present a vast array of opportunities for businesses and investors alike. The powerhouse ranks among the top 15 global economies and is the second-largest economy in Latin America.
With its proximity to the United States, Mexico serves as a key gateway to North American markets. In addition, it offers easy access to trade routes spanning both the Atlantic and Pacific Oceans. Thanks to its advantageous location, businesses can tap into a colossal market of over one billion consumers and 60% of the world’s GDP.
Mexico is now the 12th largest economy in the world
A dynamic and competitive hub for foreign investment
Mexico has emerged as one of the most competitive nations worldwide in terms of productive investment. It boasts a sizeable domestic market, a stable macroeconomic framework, healthy economic growth rate, and advanced manufacturing capabilities. The convergence of these factors positions Mexico as an enticing hub for foreign investment.
In the first half of 2023, FDI in Mexico soared to over USD 29 billion. The surge represents a substantial 41% increase compared to the same period in 2022. According to a statement by the ministry, the results reflected the confidence of investors in sustaining, enlarging, and initiating investments in Mexico. The US, Canada, Spain, Japan, and Germany account for the vast majority of foreign investment flowing into Mexico. Industries such as mining, manufacturing, financial and insurance services, transportation, retail and wholesale trade have seen the most foreign investment.
Access to vast international markets
The USD 1.4-trillion economy has sustained its growth momentum for the eighth consecutive quarter, thanks to strong domestic consumption and industrial activity. As an open economy, Mexico offers unfettered access to international markets through 14 free trade agreements with 46 countries, 32 agreements for promotion and reciprocal protection of investment, with 33 countries, 9 limited scope agreements within the framework of the Latin American Association of Integration (ALADI) in addition to being a member of the Transpacific Partnership. These include the trilateral United States–Mexico–Canada Agreement (USMCA) that replaced the North American Free Trade Agreement.
Ease of setting up business operations
In general, the process of incorporating a company in Mexico takes between two to three weeks. Once the incorporation is complete, the company can enter into contracts, open bank accounts, and formally commence operations. Incorporated companies in Mexico enjoy the freedom to pursue any business purpose without the need for prior authorisation. Special permits may, however, need to be obtained if the business falls within a particular niche sector. For instance, financial institutions or entities operating in the energy, oil, and gas sectors would require approval from the authorities.
Mexico is the 5th largest country in the Americas and the 14th largest country in the world
A privileged location as the heart of the Americas
Mexico boasts over 11,000 kilometers of coastline, with 3,294 kilometers on the Atlantic side (including the Gulf of Mexico and Caribbean Sea) and 7,728 kilometers along the Pacific. This extensive coastal reach positions Mexico advantageously, providing easy access to major global markets. Consequently, businesses operating within Mexico can achieve faster response times, thereby reducing logistical and inventory costs. The country’s strategic location offers industries quicker access to key trading partners, minimizing delays and disruptions in the supply chain. This is supported by an extensive infrastructure that includes:
- 49 customs facilities (21 on borders, 11 internal, and 17 maritime)
- 58 ports and terminals on the Pacific coast
- 59 terminals on the coasts of the Gulf of Mexico and the Caribbean
- 15 major road corridors
Varied realities and development processes exist side by side.
Overview of Mexico’s states
Northern states along the US border attract the most influx of foreign capital. This is primarily due to the presence of maquiladoras, which are manufacturing and assembly plants geared towards production for export. These facilities are typically owned and operated by foreign companies to leverage the lower labour costs and preferential trade agreements. Additionally, foreign investment is concentrated in Mexico City and the neighbouring Bajio region, encompassing areas such as Guanajuato and Queretaro.
Historically, Mexico’s southern states have not received much fanfare from foreign investors. However, the current administration is ramping up efforts to attract investment to the region. To this end, ambitious infrastructure projects have been launched. These include the Maya Train to enhance connectivity, the Dos Bocas refinery to bolster the energy sector, and the Trans-isthmus Corridor to consolidate Mexico’s position as a leading logistics hub.
Exploring Mexico
Popular Investment Destinations
Mexico City, the capital, is a Federal District. The capital city of Mexico is the most populous city in Latin America. Based on data from the Mexican Institute for Competitiveness, places that demonstrate higher competitiveness draw in greater talent and investment. They also prioritise the improvement of working conditions. Mexico City boasts a competitiveness index of 63.22. It has consistently held the position of the most competitive entity for 20 years in a row.
With a population of 21.2 million people, Mexico City is one of the most populous metropolitan areas in the world. The central region of Mexico is home to over half of the country’s population. The arid northern regions and the tropical southern areas have relatively low population densities.
In recent years, Mexico City has entered the spotlight as a burgeoning tech hub with a strong focus on cultivating entrepreneurship. It is home to around 75% of all fintech companies in the country. A host of government initiatives has partially fuelled the rapid growth of a budding tech ecosystem. In 2018, Mexico was the first country in Latin America to introduce legislation regulating fintech. The regulatory framework facilitates the entry of new players and the diversification of existing players’ offerings.
The industry’s explosive development can also be chalked up to an abundance of funding opportunities, local talent, and the city’s advantageous location. In close proximity to thriving tech hubs in Austin and Los Angeles, Mexico City enables entrepreneurs to stay connected to the neighbouring tech scene. Further, it serves as a strategic testing base and a gateway to Latin America’s dynamic markets.
Nuevo León, bounded to the north by the US, is situated in north-eastern Mexico. It was the second-largest recipient of foreign direct investment in 2022. The appeal of Nuevo León lies primarily in its industries. Renowned for its ironworks, steelworks, and smelters, the state was the birthplace of Mexico’s first heavy industrial plants. These early establishments played a pivotal role in laying the foundation for the country’s industrial development.
- Automotive
With the third largest economy in Mexico, Nuevo León is the country’s third-largest contributor of automotive parts. Industry giants, such as Brembo, Caterpillar, Denso, Daimler, KIA, Magna, have established operations in Nuevo León. Additionally, the state is home to the Nuevo León Automotive Cluster, an association of leading manufacturers as well as educational institutions and government bodies affiliated with the industry. Last year, Tesla announced plans to open an assembly plant near Nuevo León’s capital, Monterrey. By choosing Nuevo León as the location for its first Gigafactory in Mexico, Tesla joins a growing list of prominent industry players tapping into the state’s vast manufacturing capabilities.
- Production of domestic appliances
Nuevo León is also at the very forefront in the production of household appliances in Mexico. 41% of the country’s total production of home appliances takes place within the state. Industry heavyweights such as LG, Panasonic, Philips, and Whirlpool have established a strong presence in the region. The concentration of Tier 1, 2, and 3 appliance manufacturers in and around Monterrey underscores the area’s importance as a key production hub.
Located in the west-central region of Mexico, Jalisco is the country’s fourth-largest economy. Lauded for its diversity and adaptability, Jalisco’s economy is one of the most dynamic in Mexico. The state has cultivated a robust business ecosystem spanning various industries, ranging from agriculture to semiconductor design. It has attracted a multitude of businesses that have originated or relocated and prospered here.
- Agribusiness
Agriculture and other primary production sectors form the backbone of Jalisco’s economy. Jalisco led national primary production in 2022 with 41.7 million tons of agricultural, aquaculture, fishery, and livestock products. The state’s fertile lands produce heavy yields of maize, wheat, beans, and sugarcane. In addition, it is one of Mexico’s leading producers of beef and pork. The iconic beverage tequila was named after its birthplace – a town in Jalisco bearing the same name. Jalisco’s agribusiness sector is poised for exciting developments, as it makes inroads into agri-tech and crop diversification.
- Manufacturing and advanced manufacturing
With over 37,000 companies operating in its manufacturing sector, Jalisco serves as a national epicentre of manufacturing activities. It has contributed to the generation of over 507,206 jobs. Notably, the region excels in automotive, electronics, metalworks, plastics, and telecommunications.
Over the recent years, Jalisco’s advanced manufacturing industry has experienced marked growth, primarily driven by the consolidation of its automotive parts sector and the arrival of aerospace companies. Jalisco hosts the operations of 150 automotive companies, the majority of which specialise in manufacturing supplies for light vehicles. The remaining companies serve the heavy vehicle market and altogether employ nearly 30,000 people.
Guanajuato, situated in central Mexico, ranks as the sixth-largest economy in the country. Its industrial and manufacturing sectors have seen significant growth, as evidenced by the presence of 58 industrial parks. A total of 3,200 hectares are designated for industrial purposes. In addition, the state has a young and well-qualified workforce, with an economically active population of over 2.4 million. Its rapidly expanding young population has the second-fastest growth rate in the nation. This demographic advantage has been conducive to the state’s economic growth and development.
- Automotive
According to statistics provided by Mexico’s Industria Nacional de Autopartes, Guanajuato ranked first in vehicle production across the country. In 2022 alone, it manufactured 725,251 units, which accounted for 21.9% of the national aggregate figure. The Bajio region overtook Nuevo León, Coahuila, Puebla, Aguascalientes, and San Luis Potosi in automotive production.
Guanajuato has emerged as a prime destination for automotive Original Equipment Manufacturers (“OEMs”). It is the only state that is home to seven world-renowned OEMs. After the entrance of General Motors in the 1990s, Ford, Hino, Honda, Mazda, Toyota, and Volkswagen followed suit. Guanajuato also houses a vibrant automotive cluster comprising around 3,600 suppliers. Further, there are many business opportunities to be grasped along the regional automotive supply chain. These encompass additive manufacturing, electrical vehicle components, electronics, fuel efficiency solutions, and high precision plastic injection.
- Information technology (“IT”)
Guanajuato boasts a thriving cluster of IT and creative industries. The IT cluster is predominantly sculpted by the specific needs of the automotive and agribusiness industries. Driven by disruptive trends, such traditional industries are undergoing a digital transformation through and through. The ongoing process of digitalisation is commonly referred to as Industry 4.0 or the Fourth Industrial Revolution.
Bounded to the north by New Mexico and Texas, Chihuahua is the ninth-largest economy in Mexico. Located in the north, it is Mexico’s largest state by land area. In 2022, Chihuahua came in at third place for the highest GDP growth among the states, soaring by 8.1%. As a producer of copper, iron, gold, lead, silver, and zinc, Chihuahua plays a leading role in the mining sector. The western mountain regions hold economic significance due to their thriving forestry and livestock-raising industries.
- Manufacturing
Chihuahua has a flourishing manufacturing sector, which makes up around 67% of its total economic activities. It has evolved into a major hub for the special Manufacturing, Maquiladora, and Export Services Industry promoted by the Mexican government. An impressive roster of more than 500 companies operate in this booming sector in the region. Collectively, they generate around 373,000 employment opportunities. Some notable companies that have established operations in the state include Ford, Johnson & Johnson, and Borg Warner. Chihuahua specialises in the production of automotive parts, medical devices, electronics, and electrical goods, in particular.
- Nearshoring
Nearshoring is a business strategy that involves relocating some or all of a company’s operations closer to its target market, resulting in lower expenses and fewer logistical challenges. Recently, in light of global supply chain reconfigurations, Mexico has been gaining in popularity as a premier nearshoring destination. When it comes to harnessing the benefits of foreign investors establishing nearshoring operations, the state of Chihuahua takes the lead.
According to the state’s Ministry of Innovation and Economic Development, Chihuahua’s success can be attributed to the confluence of its advantageous location, sophisticated infrastructure, and strong collaborative ties between the public and private sectors. It has attracted substantial investments across ten key sectors, including apparel, automotive parts, electrical machinery, furniture, and vehicles.
Situated in the eastern-central region of Mexico, Puebla has the eleventh-largest economy. Since the 19th century, Puebla has served as a key agricultural-industrial hub in the vital Mexico City–Veracruz corridor. The main goods manufactured in this area include automobiles and automotive parts, beverages, machinery, processed foods, and textiles.
- Automotive
Puebla’s automotive industry is a principal driver of growth in Mexico’s overall automotive sector. The state’s capital city, sharing the same name, serves as a production hub for approximately 83% of light vehicles manufactured the country. In 1967, Volkswagen set up its biggest overseas assembly plant in Puebla. Following Volkswagen’s lead, Audi also established facilities there in 2016. The concentration of major automotive OEMs has catapulted Puebla to become the second-largest exporter of cars and automotive parts in Mexico. The presence of these automotive giants has attracted around 160 suppliers to Puebla, with about 90 belonging to Tier 1. Their main production specialisms include electronics manufacturing, paint application, injection moulding, and steel fabrication.
- Agribusiness
As one of Mexico’s breadbaskets, Puebla boasts a prosperous agribusiness industry that contributes significantly to the country’s overall agricultural output. Its agricultural activities primarily revolve around both the production of essential farming products and the processing of agricultural produce. Maize, coffee, avocado, beans, and alfalfa are among the main crops cultivated in the state. The industry’s growth potential lies in exploring sustainable practices and agri-tech to further bolster Puebla’s agricultural prowess.
How CW Can Help You
Our Affiliates in Mexico
CW provides services in Mexico through our affiliate partners based in the country. Our extensive network in Mexico encompasses a diverse array of organizations. Among these, we have chosen to highlight key partners known for their unique services, designed to meet the varied requirements of companies looking to expand their operations in Mexico.
Mauricio Monroy Contadores
Mauricio Monroy Contadores, Ibáñez Soltero Gómez Paz y Monroy, S.C. is a Tax, Accounting, Audit and Foreign Trade consulting firm based in Tijuana, Baja California, Mexico.
Hone Maxwell LLP
Hone Maxwell LLP helps domestic and international clients with the full spectrum of tax and business law issues. This includes federal, international, state and local tax issues, such as tax planning and tax controversies, as well as international counsel.
ACBN Audit & Consulting Business Network, S.C.
ACBN Audit & Consulting Business Network, S.C., is a network of local independent firms in Mexico that provide certified professional accounting, auditing, tax and consulting services in multidisciplinary areas such as: advisory, legal, tax, financial and business strategies.
Expand Your Business in Mexico with CW’s Business Network
Seamless Market Entry and Growth Solutions
CW’s local partners offer a comprehensive suite of services designed to guide your business through the complexities of establishing and expanding in Mexico. Our affiliate firms of experts specializes in market entry strategy, legal compliance, operational setup, and ongoing support, ensuring a smooth transition and sustainable growth.
Mexico Company Formation
Consultation and Entity Selection
- Initial Consultation: Understand client business needs, objectives, and the specifics of their intended Mexican operations.
- Legal Entity Decision: Help clients choose the appropriate type of legal entity (e.g., Sociedad de Responsabilidad Limitada or Sociedad Anonima) based on their business structure and goals, providing guidance through detailed explanations and comparisons。
Documentation and Legal Compliance
- Documentation Collection: Provide a checklist and assist in the collection of all necessary documents from shareholders and managers.
- Legal Compliance and Registrations: Ensure full compliance with Mexican legal standards, including registration with the Mexican Federal Taxpayers’ Registry, social security, and other relevant authorities.
Remote Incorporation Process
- Limited Power of Attorney (POA): Facilitate the remote signing and apostille of POAs for clients who prefer not to travel to Mexico.
- Incorporation Deed: Manage the remote or in-person signing of the incorporation deed based on client availability and preference..
Operational Setup Services
- Bank Account Opening: Assist in the opening of corporate bank accounts, ensuring smooth financial operations from the start.
- Site Selection: Provide expert advice and support in selecting the ideal location for the business, considering logistical, economic, and strategic factors.
- Recruiting and Payroll: Offer comprehensive services in recruiting personnel and managing payroll to ensure that the business is staffed with qualified local talent and operates efficiently.
- Accounting Services: Set up and manage accounting systems that comply with Mexican financial regulations.
Ongoing Support and Consultation
- Regular Updates and Legal Changes: Keep clients informed about relevant legal updates and regulatory changes that might affect their business.
- Continuous Legal and Administrative Support: Provide ongoing support for any legal or administrative challenges encountered during operations in Mexico.
Additional Services
- Social Security Registration: Facilitate registration with the Mexican Social Security Institute to ensure compliance and employee benefits.
- Custom Services as Required: Tailor additional services based on specific client needs or requests, which could include specific legal consultations, tax advisory services, or logistics management.
Mexico Manufacturing Consulting Service
Strategic Business Planning
- Business Model Formulation: Tailor a business plan that aligns with your company’s goals, budget, and industry specifics. We provide exhaustive cost analyses, including licensing, permits, and establishment expenses.
- Regulatory Compliance and IMMEX Guidance: Navigate the intricacies of Mexico’s IMMEX program and ensure strict compliance to leverage benefits for maquiladoras.
- USMCA Compliance Consulting: Conduct detailed studies of the rules of origin under the United States-Mexico-Canada Agreement (USMCA) to determine if the company’s manufactured products qualify as originating goods for tax exemptions under USMCA.
Operational Setup and Support
- Comprehensive Site Analysis: Comprehensive We conduct detailed evaluations to identify optimal locations for your operations based on industry clusters, infrastructure availability, and labor markets.
- Due Diligence and Legal Support for Land Purchase: Perform due diligence on potential land purchases and provide legal support for the acquisition process.
- Legal Assistance for Facility Construction and Permits: Support the company in obtaining necessary administrative permits for facility construction and initiating industrial production, including business operation and environmental protection licenses; Provide legal support throughout the application and management of these permits.
- Contract Review for Construction and Purchasing: Assist in reviewing and auditing contracts related to land purchase and construction of facilities.
- Facility Establishment: From securing the ideal property to negotiating favorable lease terms, we manage all aspects of real estate procurement to ensure your facility meets specific operational needs.
Legal and Administrative Services
- Licenses and Permits: Secure all necessary permits and licenses, ensuring your manufacturing operations comply with Mexican laws to avoid costly fines and disruptions.
- Complete Administrative Support: Our services extend to recruitment, payroll management, accounting, and tax compliance, allowing you to focus on core manufacturing processes.
Relocation and Human Resource Services
- Expatriate and Team Relocation Support: Offer comprehensive relocation services for your team, including immigration assistance, housing, and schooling, to ensure a smooth transition to Mexico.
- Human Resource Management: We handle all aspects of HR from hiring skilled workers to implementing training programs, optimizing your workforce for peak performance.
