In an increasingly globalized world, nearshoring has become a key strategy for Mexico. Although closely linked to geographical proximity to the United States, our main trading partner, it is important to diversify both clients and suppliers to remain competitive. Mexico has a significant advantage as the seventh country with the most free trade agreements in the world, allowing it to explore opportunities beyond the US market.
While nearshoring does not apply in terms of geographical proximity to Europe, we are a relevant market, especially in the current context of global industrial relocation. However, we still heavily rely on cheap labor, which places us in a competitive position compared to European countries, the United States, or Israel. Mexico stands out as a supply chain generator, but this is just the first step in our journey to becoming a global player, not just local. To achieve this, we must add technological value to our production chain and contribute not only to wealth generation but also to the well-being of emerging markets throughout the Americas.
The Role of Nearshoring in Mexico
Nearshoring has been a fundamental strategy for Mexico due to its geographically close location to the United States. For decades, US companies have chosen to move part of their production to Mexico to take advantage of the benefits of lower labor costs and proximity to their main market. This has allowed Mexico to develop a strong manufacturing industry and become one of the largest exporters in the region. However, relying solely on the US market presents risks such as economic volatility and changing trade policies. That is why diversifying clients and suppliers is crucial to maintaining competitiveness and sustainable growth.
Market Diversification
Despite nearshoring being closely related to the United States, Mexico has leveraged its extensive network of free trade agreements to diversify its markets. Currently, Mexico has trade agreements with more than 50 countries, granting it preferential access to a wide range of international markets. This diversification has allowed Mexican companies to expand their global reach and reduce their dependence on a single market.
Global Opportunities
Although geographical proximity does not play a significant role in nearshoring towards Europe, Mexico has a competitive advantage in terms of labor costs. As more European companies seek to reduce production costs and shorten supply chains, Mexico has positioned itself as an attractive destination. Mexican labor remains competitive compared to European wages, providing opportunities to establish trade partnerships and strengthen commercial relations with European countries.
Adding Technological Value
While cheap labor has been an important factor in Mexico’s economic growth, it is crucial for the country to evolve towards generating technological value. This involves adopting advanced technologies, improving training and education in technical areas, and promoting innovation in production processes. By adding technological value to our production chain, Mexico will be able to compete in more demanding international markets and ensure sustainable long-term economic growth.
Impact on the Well-being of Emerging Markets
The success of nearshoring in Mexico is not only measured in terms of wealth generation but also in its ability to generate well-being in emerging markets throughout the Americas. By establishing trade partnerships and fostering economic development in neighboring countries, Mexico can contribute to regional growth and stability. This includes knowledge and technology transfer, job creation, and promoting social inclusion and sustainable development in recipient communities.
In conclusion
Nearshoring has been a significant boost for Mexico in the global context. While geographical proximity to the United States has been a key factor, diversifying clients and suppliers, as well as pursuing opportunities in Europe, have strengthened Mexico’s competitive position. However, to remain relevant in an increasingly technological world, it is necessary to add technological value to our production chain. By doing so, Mexico will not only generate wealth but also contribute to the well-being of emerging markets throughout the Americas, fostering sustainable economic growth and regional stability.
