Asia: Still Competition for Mexico’s Nearshoring Benefits

Mexico's export growth to the United States has been less compared to Asian countries such as Vietnam, Malaysia, India, and Indonesia. The trend suggests that these countries are offering conditions that outweigh Mexico’s advantages as a nearshoring destination.

A study by Bain & Company, found that between 2019 and 2023, US imports from Mexico rose by 34%, while imports from these Asian countries increased by 54%. Jordi Ciuró, Partner, Bain & Company, pointed out that this is surprising, considering Mexico's strategic location and proximity to the United States, which ideally provide it with a greater competitive edge.

Additionally, it is concerning that Mexico, despite being a leading producer of these goods, encompassing sectors like electrical equipment, machinery, mechanical components, and metals, is being outpaced by Asian countries in supplying them to the United States. "These countries are growing at a faster pace than Mexico. We decided to investigate this, thinking it might be due to products that Mexico does not manufacture, which would make sense. However, we discovered that more than half of their growth has been in products where Mexico is already a market leader," Ciuró explained.

If the current growth trend continues, Mexico's exports are projected to rise by US$310 billion by 2030. However, if Mexico addresses existing challenges to fully capitalize on nearshoring, exports could increase by up to US$500 billion. Armando Flores, Senior Manager, Bain & Company, emphasized that Mexico's main obstacles include underdeveloped production ecosystems and clusters, insufficient infrastructure, restricted energy and water supplies, a lack of skilled labor, high financing costs, and security issues.