South Korea a Barely Mentioned Nearshoring Partner

US and European companies are normally those taking advantage of nearshoring opportunities. However, there are companies in many countries that are also interested in moving operations to Mexico, among them South Korea, Mexico’s fourth largest trade partner in the world. 

According to Kim Sang-Soon, President, KOTRA Latinoamérica, the automotive sector played an important role in the economic development of South Korea, which led it to become the fifth largest automobile manufacturer in the world. “This industry has led Korean exports and with Kia’s presence since 2016, many companies have shown their interest in working together [with KOTRA],” Kim said in an interview with MBN. 

According to Sang-Soon, there are over 100 Korean companies in the Mexican automotive industry, which makes the latter country one of the main receptors of Korean investment. 

Mexican local governments have actively been looking for Korean investment. In May 2023, Nuevo Leon Governor Samuel García took a trip to East Asia, including South Korea, to seek investments for the state. García promoted Nuevo Leon as an attractive destination because of its proximity to the US, as well as its skilled labor force and industrial expertise. During his trip, he met the Korean Minister of Foreign Affairs, Park Jin, and different representatives of Korean companies including the leading OEM Kia. “Even before nearshoring, investments and Tesla, South Korea was there. You were there, trusting in us, in our industry, as well as in the dedication of our people. To this day, you continue to do so. That is why we traveled more than 11,000km to Seoul and why we will keep coming every time we are invited, because we are fully committed to seizing this opportunity to strengthen our relationship and take both Mexico and South Korea to the next level," García told Jin in a public conference. 

In an interview with MBN, Jung Woo-Seok, Director General, Samu Mexico, said that the relationship between Mexico and South Korea is beneficial for the company as some products can enter the country with no taxes. Jung mentioned that Mexico plays an important role for the company since it manufactures for both the US and Mexican markets. South Korea is also planning to use Mexico as a platform to export to other Latin American countries with developed automotive sectors like Brazil. 

During the interview, Woo-Seok mentioned that bringing operations to Mexico is crucial since the country has not yet developed some technologies, mostly because it has imported products like molds and plastic pieces from South Korea and other Asian countries. Samu, which makes plastic molds for the automotive industry, is planning to bring Korean mold technology to Mexico. 

Woo-Seok also mentioned that as part of the nearshoring phenomenon, many of its clients like Toyota, Honda and Nissan are looking to move their entire production line, including suppliers, to Mexico.  

Korean companies have a wide presence in Mexico and this trend is expected to continue. On May 15, 2023, MBN reported that Kia announced an expansion of its plant in Pesqueria, Nuevo Leon, which will allow the company to produce its new EV9 electric car. Additionally, Korean companies are also participating in forums and events for the automotive industry, during the International Automotive Industry Supply Summit (AISS) in Queretaro, in which MBN was the main media partner. Over 10 Korean companies attended along with KOTRA representatives. The attending companies were Hyo Seong Electric, Jin Kwang, Samu Taelim Industrial, Sic Tube, Hyundai Welding, CTR, TSR, Simpac, Dong a Whasung and Seohan Industry.