It might come as no surprise to you, but the Coronavirus pandemic that started in China has created a lot of chaos and uncertainty in that country’s economy. Many American companies have chosen to stop manufacturing in the Asian country.
There were already many concerns over manufacturing in China way before the Coronavirus pandemic. How far away it is from the United States, the long time it takes for the product to arrive in the country, the illegal activities happening in some factories, and of course the trade war.
Coronavirus has been a nightmare for the outsourcing industry in China since the pandemic began in late January. Many American companies have stalled since they failed to receive their product from China or even some type of insurance.
American companies operating in China are losing millions of dollars each day, and what amazes industry analysts is how ill-prepared and unprofessional Chinese insiders reacted to the shutting down of the factories.
American Entrepreneurs were just told to wait there till the pandemic is over or to cut their losses. That made many companies angry and made them rethink their outsourcing strategy and supply chain.
Hasbro, one of the biggest companies manufacturing in China, announced that they will leave China before 2020 ends moving to another jurisdiction where they can have more control over their products and prevent this from happening ever again.
White House Insiders have started to draft plans to give monetary incentives to American companies who move from China to the United States. This is a great idea, but the factories are not looking at the United States for their new manufacturing home.
Southeast Asia and especially Mexico are the countries who are lined up to benefit the most from the Chinese exodus. Mexico’s proximity to the United States and its low wages makes it the best choice for American factories.
When the new and updated NAFTA agreement was signed a couple of years back (the US-Mexico-Canada Agreement), experts correctly predicted that Mexico could become the new China, the coronavirus chaos, and the reaction of the outsourcing industry in China just confirmed this in my opinion.
Manufacturing companies in Mexico have not stopped production because of the Coronavirus, they took precautions and are still sending the finished products in approved trucks complying with everything Health and Safety Regulation.
This is all possible thanks to the proximity of both countries, and because the northern part of Mexico where most of these factories are located have adapted to the needs of American companies.
The city of Tijuana in Baja California, which borders San Diego, has become a haven for American outsourcing companies. They have the biggest commercial border in the world, most of the residents speak English, they have schools dedicated to training professionals to fulfill the needs of the factories.
I know for a fact that more than 40 American factories have already asked about Tijuana and I expect that number to continue to grow, especially right now since the dollar has just reached new heights in Mexico.
As of the writing of this article, one dollar equals 23 pesos. Meaning that your investment in Mexico has the potential to be very low, I would highly advise you to get a proper quote regarding the cost of manufacturing before you decide Mexico is the right fit for your outsourcing needs.
Mexico has been in the outsourcing market for more than two decades but has stalled in this regard thanks to its problem with government corruption and the ongoing drug war causing many security risks for American investors.
For of these reasons, Mexico will continue to be a red flag for many Americans, but it should not slow you down. Security concerns have slowed in the country as the military has become heavily involved in protecting individuals.
Plus, thanks to the many professionals who are in charge of the outsourcing industry, you won’t ever have to set foot in the country. Which is what most of our clients do, they wait for their product to arrive in the United States and hire a consulting company to take care of the rest.
Thousands of Americans already have factories in Mexico. Companies like Hewlett Packard, Microsoft, Hyundai, Apple, Samsung all have factories in Baja California and will continue to expand.
There is no doubt that Tijuana will become the new Wuhan, this is a huge opportunity to cut ties with China and begin a new outsourcing operation in a country much closer to yours and in many regards more efficient and cheap.
I understand that there is more that needs to be known about Tijuana before choosing to move there, but that is why we are here. If you have any questions please feel free to ask them, we will happily settle your doubts and guide you through the process of helping you save millions of dollars by moving to Mexico.