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Here’s How Mexico Stands To Benefit From China’s Decline

Using south-of-the-border manufacturers has some serious upsides. Photo by Maksym Kapliuk/Getty Images

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Security concerns, questionable labor practices, supply chain interruptions, and human rights violations have all combined to make China a lot less attractive for global manufacturing needs than it has in previous years.

As a result, many companies and governments are looking for other nations that are capable of providing cost-effective manufacturing services — and Mexico seems poised to emerge as a top contender.

Why Mexico?

From a United States perspective, there’s a clear advantage to ordering from a country that shares a lengthy border. Walmart highlighted the possible upside to doing more business with Mexico recently when it split a major order of employee uniforms between its ordinary Chinese connections and an apparel company headquartered in Mexico.

Fewer things can go wrong when shipping across a shared border instead of the complex process of transporting goods around the world.

COVID-19 exposed a number of the costs and chaos that can result from supply chain disruptions. Furthermore, the rising cost of fuel over the past year has confirmed the need for shorter routes. It all combines to paint Mexico in a very appealing light.

An expanding industry

Since the time frame for delivery from Mexico to the U.S. can be less than half that of a typical delivery from China, there’s a huge incentive for American companies of all types to start dealing directly with Mexican suppliers. Of course, it might not be easy for businesses that have a long history of working with Chinese manufacturers to make the switch.

That’s where companies like Zipfox come in. The firm specializes in forming connections between U.S. businesses and factories south of the border.

The $382 billion in Mexican exports to the U.S. between January and October is more than 20% higher than in the same period in 2021.

Chris Agee
Chris Agee January 2nd, 2023
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