China vs. Mexico Manufacturing: Exploring What the Future Holds

Emerging technologies and shifts in trade relations between countries continually impact global manufacturing. Historically, U.S. manufacturers have chosen Mexico and/or China as their preferred international destinations for production to save on costs.

However, as U.S. and China trade relations have soured, and new incentives for manufacturing in Mexico have been established, it’s important to evaluate which location is most viable for the future, and how shelter services in Mexico play a part when making a decision.

How Manufacturing in Mexico vs. China Has Changed

Both countries have provided significant cost-saving advantages for U.S. manufacturers over the years. Though, over time, Mexico has emerged as the preferred choice.

For decades, the cost-efficiency of manufacturing in China due to cheap labor was the biggest allure. Yet, as labor costs in China have increased, they no longer balance out the high transportation costs and long shipment times as they did before.

Furthermore, the ongoing trade war between China and the U.S. has resulted in retaliatory tariffs and unfair trade practices, establishing yet another reason for U.S. manufacturers to look elsewhere.

Alternatively, Mexico’s labor costs have remained competitive and its industrial workforce has offered relief for U.S. manufacturers struggling with fulfilling essential production roles. In addition, the geographic proximity between the U.S. and Mexico offers a logistical advantage, helping to reduce shipping costs and meet tight deadlines.

What’s more, incentives under the USMCA have solidified the trade relationship between the U.S., Mexico, and Canada and have encouraged manufacturers to grow trade activity within this set bloc.

The Key Advantage of Shelter Services in Mexico

Cost-effective labor rates in Mexico, along with favorable geo-political advantages give Mexico the edge over China for U.S. manufacturers. Meanwhile, there’s another unique benefit available: shelter services in Mexico.

Shelter services help U.S. and other foreign manufacturers minimize risk and liability when launching production in Mexico. A shelter company has the administrative infrastructure to help manufacturers get their operations up and running in three to four months, compared to the six to seven months it takes as a standalone entity. Plus, manufacturers save on labor, taxes, permits, and license fees.

Essentially, shelter services in Mexico allow U.S. and other foreign manufacturers to make a seamless, cost-effective transition to manufacturing in Mexico for the first time. And, as global manufacturing companies reassess their strategies, these advantages continue to make Mexico a clear choice for the future.

The Strategic Impact of Nearshoring to Mexico

As economic dynamics continue to shift, many manufacturers have begun relocating their operations from China closer to the U.S.

Nearshoring to Mexico reduces delivery time and saves considerably on transportation and labor costs. This option also speaks to manufacturers’ larger sustainability initiatives by lowering the carbon footprint linked with long-haul logistics while simultaneously keeping up with the increasing demand from an American audience.

If you are considering nearshoring to Mexico, we are here to support your production goals. Our shelter services can help streamline your transition to manufacturing in Mexico and get your operations up and running quickly and efficiently.

Learn more about what it takes to get started. Contact IVEMSA today.