Bridging Gaps, Promoting Trade Between Mexico, China: CHINA CHAM

Q: What role does CHINA CHAM play in fostering Mexico as an attractive destination for Chinese companies? 
A: CHINA CHAM has undergone significant transformations since its founding, adapting to changing needs and the evolving relationship between Mexico and China. Initially, China was seen as a competitor to Mexico in exports to the United States, but the dynamic has shifted. Mexico is now a key supplier to the United States, and China has become a major source of investment and job creation in Mexico.

CHINA CHAM was established 15 years ago and has evolved to reflect these changes. We now focus on highlighting the positive impact of Chinese investment and moving away from outdated perceptions of China as merely a competitor with low-quality manufacturing. We provide services aligned with our members’ needs, including capitalizing on Chinese investments for nearshoring. As the USMCA has increased requirements for regional content, especially in automotive manufacturing, our role has shifted to facilitate this new reality.

Q: How has the membership size and profile of CHINA CHAM evolved over its 15-year history?
A: CHINA CHAM began as a small initiative by its founding members, with fewer than 10 participants. It is now composed of over 100 members. We initially focused mainly on Mexican exporters seeking business in China, but now work also with Mexican entrepreneurs and companies offering services to Chinese firms in Mexico or those looking to enter the Mexican market.

Over the past few years, investment in Mexico has surged, reflecting the growing commercial relationship between Mexico and China. This increase is largely due to the shift in interest following the trade war initiated during the administration of former US President Donald Trump. We previously had to actively seek out Chinese businesses; now, many approach us, seeking opportunities in Mexico. The landscape has changed dramatically. While Mexico has benefited from this shift, Vietnam has also emerged as a major beneficiary and it is often referred to as the "New China" due to trade agreements like the Trans-Pacific Partnership (TPP). Despite this, Mexico's geographical advantage and geopolitical position continue to offer significant opportunities, though we must effectively navigate and capitalize on these changes.

Q: What is helping Mexico attract the interest of Chinese companies and what factors are essential to maintain this interest?
A: Mexico’s proximity to the final market, the United States, is one of its biggest strengths. However, the lack of infrastructure limits our ability to capitalize on this advantage.

Unlike China, which rapidly developed cities, railways, roads, and ports, infrastructure development in Mexico has been limited. China’s strategy was to build infrastructure and attract investment, whereas we are barely developing infrastructure for a demand that is already here. Mexico lacks sufficient ports, roads, and energy, leading to bottlenecks. China’s investment in infrastructure was strategic, anticipating future needs. Conversely, Mexico’s infrastructure projects, such as the Interoceanic Corridor of the Isthmus of Tehuantepec (CIIT) project, have not been well-aligned with investment needs in the north of the country, particularly concerning the Mexico-US trade relationship. For Mexico to remain attractive, the country needs significant improvements in electricity, natural gas, green energy, road, and port infrastructure. The port of Manzanillo, for example, is severely congested, and corruption and violence further complicate matters.

Q: What lessons can Mexico learn from China regarding economic development?
A: China's success in attracting investment largely stemmed from its strategic focus on infrastructure development, which established a strong value chain and supply network. This robust infrastructure has enabled companies like Apple to continue manufacturing iPhones in China, benefiting from the well-established supply chain and skilled labor. Despite rising labor costs in China, which are increasing by about 30% annually, the efficiency of its supply network and skilled workforce continue to make it a preferred location for production.

Mexico still offers cheaper labor and land. The key lies in long-term planning and execution, similar to China’s approach, where the stability of a single-party system allows for comprehensive and long-term development plans. Similarly, trans-sexennial plans would allow for the development of a proper platform for investment. 

Q: What are the most common mistakes and challenges Chinese companies face when relocating to Mexico?
A: Chinese companies investing in Mexico sometimes lack experience and familiarity with international markets. This has also been a problem for companies from other countries like Germany or Japan. Many companies new to Mexico have limited knowledge of the country and its business practices. This is compounded by language barriers and differences in business culture.

Chinese companies often operate with a more insular approach, prioritizing their large domestic market over international expansion. Their focus is typically on serving the vast needs within China, which can be so substantial that they may not prioritize going abroad. They often lack international experience and English proficiency, making it challenging for them to navigate foreign markets. However, in Mexico, the presence of Spanish-Chinese speakers and the support of CHINA CHAM can help bridge these gaps. CHINA CHAM plays a crucial role in assisting Chinese companies by facilitating connections and offering guidance through partnerships with Chinese organizations. This support helps companies adapt to the Mexican market more efficiently. Once established, Chinese firms tend to improve as they build a larger network and gain more local expertise. 

Q: What unexplored sectors have the potential to benefit from Mexico-China trade relations?
A: The industrial real estate sector is showing a notable shift, especially concerning the renting of industrial spaces to foreign companies. The trade war and the COVID-19 pandemic have led to a surprising return of various industries to Mexico, including textiles, plastics, furniture, and toys. These industries are returning due to high tariffs imposed by the United States on Chinese products, making Mexico a more competitive alternative. For example, some companies are buying Mexican textile firms to serve their US clients more efficiently.

The COVID-19 pandemic highlighted the risks of long supply chains, leading US companies to seek closer suppliers. Mexico's proximity allows for same-day shipping to the United States, a significant advantage over distant locations like China or Vietnam.

This combination of factors — higher tariffs and supply chain disruptions — has made Mexico's industrial sectors competitive again, allowing it to reclaim industries that were previously considered non-viable.

Q: What are the main goods that are appealing to Chinese consumers? What factors contribute to their popularity? 
A: By 2008, we began identifying areas where Mexico could be competitive, focusing on products that aligned with both market demand and Mexico's strengths. While Mexico can excel in specific sectors, success in China requires careful consideration of competitiveness.

China’s market, though vast, is highly competitive and requires significant investment in research and adaptation. While Mexico exports various products to the United States efficiently due to proximity, like avocados and vegetables, exporting to China presents logistical challenges. Products like mangoes and other perishables are less viable for export to China.

Despite these challenges, Mexico has established competitive niches. For example, Mexico exports processed leather, a byproduct of its large cattle industry, which is valuable in China. This is a clear competitive advantage, as China, the world’s manufacturing hub, lacks sufficient leather supplies. Mexican companies must focus on their competitive advantages and carefully choose markets. China's market is dense with global players, and successful entry requires understanding specific opportunities and leveraging unique strengths. Mexican exporters have seen success in certain niches, but the general market remains complex and challenging due to distance and competition from Chinese and global players.

Q: What are CHINA CHAM’s overall plans for the next six years? 
A: We are focusing on assisting our partners in capitalizing on nearshoring. For example, we take Mexican importers to trade shows in Guangzhou, China, where they can find suppliers. We are also considering expanding our efforts by not only involving Mexican service companies but also state governments. The goal is to help these governments attract investment by arranging meetings with Chinese companies interested in investing in Mexico. 

Entering China is challenging, given the limited number of consulates, which are overwhelmed by the demand from Chinese companies looking to invest in Mexico and Mexican governments seeking investment. This creates a significant opportunity for us to facilitate these connections. In the long term, we plan to continue fostering this relationship. Despite misconceptions about Chinese products being cheap and of a low quality, it is essential to recognize that China offers a wide range of products across various price points and quality levels. As we work to dispel outdated perceptions, we aim to enhance understanding and build stronger commercial ties.

Trade with China is here to stay and will continue to play a significant role in the global market. There is still much work to be done, and our efforts will focus on bridging gaps, promoting Mexican industries, and leveraging China's market opportunities effectively.


The China Chamber of Commerce and Technology Mexico (CHINA CHAM) promotes and facilitates business and technological exchange between both countries, supporting bilateral trade relations and promoting investment opportunities across various sectors.