As an American investor, you have a ton of opportunities to make a number of investments in many countries around the world. Europe and Asia have had a rise of foreign investment going into the country, but there is another country closer to the United States that has been in the eyes of investors and financial institutions.
Labor and tax, alongside trade and customs, will continue to be key areas to consider in the Mexican market, but without the shocks experienced in recent years due to policy decisions such as the Subcontracting Reform. Companies should pay close attention to these elements for their Mexico operations, as increased oversight and compliance audits can be expected.
While the prospect of a US recession is still contested by analysts, Mexico’s unique geographic position, strong international trade architecture, and an ever-increasing capable workforce, ensure that opportunities are still there to be had.
I am talking about the southern neighbor of the United States, Mexico. Although Mexico is very close to the United States and it shares many similarities in how they do business. There are still a lot of things you must know about the country before you decide to invest in it.
Even though both countries are connected and share the world’s largest and most traveled border, culturally they could not be more different. Mexico is a country full of tradition and history and its population loves to embrace it and celebrate.
Mexico is the largest Spanish speaking country in the world and has the second largest population in South America. It’s where I moved my business a few years ago and I suggest you consider doing the same.
A couple of years ago Mexico’s Secretary of Education made it mandatory for college graduates to learn a certain level of English before they graduate. For this reason, many of the younger Mexican workforces speaks a decent amount of English. Thus, there is a great deal of English speaking labor, especially in Northern Mexico and Tijuana.
Education in the country has also been on an upward swing as many of its public institutions have been placed in top lists of higher education especially in the fields of medicine and engineering.
Mexico has one of the vastest amounts of natural resources of any country around the world. Many of these natural resources are not being exploited to gain as much as they could be because there is not enough infrastructure in the country to do so.
American and foreign investment in the country has for the most part been responsible for managing these natural resources. Thanks to these investments Mexico has emerged as one of the top emerging markets.
American companies, banks, and other financial institutions have taken advantage of Mexico’s relatively low labor costs and the cost of living to open subsidiaries inside of the country. Do not be surprised when you see the same companies that manage your portfolio in Mexico.
How cheap it is to live in Mexico is also one of the countries selling points. Mexico is in many ways cheaper than the United States. Americans are taking advantage of this and are coming into the country in packs to commute back to the US or retire and spend their years enjoying the beach, weather, and many other benefits they could never afford in the United States.
Mexico has a population of 128 million people living inside the country which is 1,964,375 square kilometers. Its major cities include Mexico City, Guadalajara, Monterrey, Tijuana, Queretaro, and Juarez.
Their currency is the Mexico peso, but dollars are widely accepted in the country, especially in Northern Mexico. In fact, the US dollar has had a substantial rise in value in the country over the past few years. Making it an excellent moment to invest in the country as an American.
Major exports include manufactured goods which are made in maquiladoras, vehicles and automobile parts, oil, oil and energy products, silver and metal, a wide variety of fruits and vegetables, coffee, and cotton.
Major imports include machines for the manufacturing of metal and metal products, steel mill products, machinery for agriculture, electrical equipment, automobile parts, aircraft parts, and many products designed for repair or assembly in the country.
As you can see by its major imports and exports, Mexico has a vast amount of resources inside of the country but they do not have the machinery to exploit the full potential that these resources can provide.
In the past few years, Mexico has had consistent economic growth. The growth has been slow but steady. This is despite the new presidency that is making many changes and reforms to the country.
The main reason behind Mexico’s steady growth is its focus on innovation. Innovation has been a key platform on how the Mexican economy will grow in the next few years and it has succeeded with that promise.
Guadalajara has been considered by many as the Mexican Silicon Valley thanks to its huge number of startups and a lot of American tech companies setting shop there. This is a prime place for foreign investment if you are interested in tech.
Mexico also has the benefit of being in a ton of partnership agreements with other countries. Meaning that investing in Mexico will get you a front-row seat to the economy of multiple countries.
An agreement between Mexico, the United States, and Canada that has been extremely beneficial for Mexico’s manufacturing industry is the USMCA (formerly known as the North American Free Trade Agreement).
There is a lot that you need to know before investing in Mexico. Although it is the closest country to the United States and a great window into the Latin American market, you should definitely take a crash course and learn about the country’s culture and identity before investing in it. We will happily guide you through that process.
I hope you’ve found this article on how to do business in Mexico to be helpful. For more information, or for assistance on investing in Mexico, contact us.
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