There are a number of reasons why many companies are expanding to Mexico and setting up manufacturing operations in the country. The North American Free Trade Agreement is certainly a major determining factor. The ability to produce goods and ship them out of Mexico, tariff free, is a major plus for businesses, as is being afforded the freedom to import materials and other necessary items used in manufacturing without incurring any financial penalties.
There is also the added benefit that comes from taking advantage of a highly skilled workforce that is present in Mexico. Although quickly becoming an ideal offshoring destination, the country has always had a major manufacturing infrastructure in place set up by foreign organizations.
Companies manufacturing in Mexico can be assured that items made in the country will always be of the highest quality, with the added benefit of being produced at a fraction of the cost of doing business in other countries, such as the U.S.
Now, Mexico boasts a large number of workers who are technologically and mechanically inclined. Companies manufacturing in Mexico can be assured that items made in the country will always be of the highest quality, with the added benefit of being produced at a fraction of the cost of doing business in other countries, such as the U.S.
The offshoring advantages of Mexico are too many to list. Still, many manufacturing organizations looking to establish an operational presence in the country may not be sure of how to get started.
Tips for doing business in Mexico
International Business Times listed a number of best practices that companies wishing to establish manufacturing operations in the country would be wise to follow. Key points include the fact that Mexicans would rather establish a personal relationship as opposed to a business one.
This means that decision-makers or other leaders within an organization should make several glad-handing trips and develop a rapport with those who have the authority to grant permission for a company to do business in the country. However, once that hurdle has been crossed, a company will then need to decide on the business model that should be employed in order to reach its manufacturing goals. Maquila Reference lists three distinct ways for an organization to establish operations in Mexico.
The easiest way is likely to work with a shelter company. These are organizations that have a thorough understanding of Mexican business law, logistics and labor and workforce rules. Essentially, shelter organizations have already established a genuine rapport and working relationships with governmental officials. Partnering with them makes sense from many different angles.
Shelter companies also provide recruitment and workforce training, facilitates the import of raw materials used in manufacturing and the export of finished products outside the country. These organizations also handle payroll and manage any tax-related issues that may arise.
Simply from a business perspective, any foreign organization looking to become involved in offshoring would be wise to work with a shelter organization. This reliable business partner makes the process much smoother and efficient than an organization trying to go through the process with no assistance.
Certainly, there are other available options listed by Maquila Reference that manufacturers can consider and each offers its own distinct advantages. However, there are certain rules and regulations that must be followed before business can be done in either scenario. If a smooth and streamlined process is what a foreign company is looking for, then working with a shelter company is certainly the way to go.