Mexico has emerged as one of the most dynamic and attractive destinations for doing business in Mexico as proven by foreign direct investment (FDI) in recent years, thanks to its strategic location, competitive labor costs, and a series of trade agreements that position it as a key player in global markets. For investors looking to capitalize on opportunities in the region, understanding the top-performing sectors is crucial.
Doing Business in Mexico
Mexico has become a leading destination for global investors, thanks to its strategic location, competitive labor costs, and a network of advantageous trade agreements. With proximity to the United States and Canada, Mexico benefits from duty-free trade under the United States-Mexico-Canada Agreement (USMCA), making it a key hub for companies targeting the North American market.
One of the most significant sectors driving foreign direct investment (FDI) is manufacturing. Mexico's manufacturing industry is diverse, encompassing the automotive, aerospace, electronics, and medical devices sectors. Electronics manufacturing, in particular, has seen a sharp rise, with major companies shifting production from China to Mexico due to lower labor costs, tariff advantages, and a need for more resilient supply chains.
- Over the last 10 years, over $6.4 trillion dollars have been invested in the areas of electrical equipment, appliance, and component manufacturing in Mexico
- Over 70% of that investment was made by the United States, followed by Switzerland, Germany, South Korea and Sweden.
- This represents 39% of the total manufacturing foreign direct investment in Mexico over the last 10 years.
Key Sectors for Investment
Mexico, a vibrant and dynamic country, offers a wealth of opportunities for foreign investors. Its strategic location, skilled workforce, and growing economy make it an attractive destination for businesses seeking to expand their reach.
Here are some of the key sectors ripe for investment in Mexico:
Automotive Industry
The automotive industry is one of Mexico's strongest sectors, with the country ranking as the 7th largest producer of automobiles globally. Mexico is home to several major global automakers, including General Motors, Ford, Nissan, and Volkswagen, which have set up manufacturing plants to take advantage of the country's skilled labor force and proximity to the U.S.
Key Insights:
- The sector contributes about a third of Mexico's total exports, with a focus on producing vehicles and auto parts.
- Mexico is also the 4th largest exporter of light vehicles globally, making it a key player in the global automotive supply chain.
This industry is particularly attractive due to Mexico’s favorable trade agreements, such as the USMCA (United States-Mexico-Canada Agreement), which allows duty-free export of cars and parts to the U.S. and Canada.
Download the automotive industry in Mexico e-book for more insights.
Aerospace Industry
Mexico’s aerospace sector has experienced significant growth, positioning itself as a global hub for aerospace manufacturing. With over 300 aerospace companies in the country, including Bombardier, Safran, and Honeywell, Mexico has become the 12th largest aerospace producer globally.
Key Insights:
- Exports from the aerospace sector have grown at an annual rate of 14%.
- The industry is supported by clusters in cities like Querétaro, Chihuahua, and Monterrey, with a focus on producing parts for aircraft, engines, and maintenance services.
The Mexican government’s support for innovation and research in aerospace has contributed to the sector’s ongoing growth, making it a prime opportunity for investors looking to enter the high-tech manufacturing space.
Download the aerospace industry in Mexico e-book for more insights.
Medical Devices
Mexico is a leading exporter of medical devices and is the largest supplier of these products to the U.S. The country has become a global hub for medical device manufacturing, including the production of surgical instruments, diagnostic equipment, and consumables.
Key Insights:
- The medical device industry has seen consistent growth, with over 500 companies operating in Mexico.
- The country's pharmaceutical industry is also expanding, particularly in the production of generic drugs.
Investors can take advantage of Mexico’s proximity to the U.S. healthcare market, as well as the cost-effectiveness of manufacturing medical products in the country.
Download the medical device industry in Mexico e-book for more insights.
Electronics Manufacturing
Mexico is a global leader in electronics manufacturing, particularly in the production of consumer electronics, telecommunications equipment, and computer hardware. The country is the second-largest exporter of electronics to the United States, making it a critical supplier for tech companies like HP, Samsung, and LG.
Key Insights:
- Mexico is the 2nd largest electronics exporter to the US, and is the leading exporter of flat-screen TVs.
- Tijuana and Guadalajara are two key hubs for electronics manufacturing, with Guadalajara often referred to as the "Silicon Valley of Mexico" due to its innovation and tech startup ecosystem.
With a highly skilled workforce and strong ties to North American tech markets, Mexico is well-positioned to continue growing in this sector, offering a strong investment potential.
Read more insights about electronics manufacturing in Mexico.
Logistics & Supply Chain
Mexico's geographic location, with easy access to both the Atlantic and Pacific Oceans, makes it a critical player in global supply chains. The logistics and supply chain management sector has grown significantly due to the nearshoring trend, as companies look to move production closer to North American markets.
Key Insights:
- Ports like Veracruz, Manzanillo, and Lázaro Cárdenas are critical gateways for global trade.
- Mexico’s infrastructure investments in highways, railroads, and airports have further improved logistics efficiency and connectivity to North American corridors.
The growing demand for efficient cross-border trade, coupled with infrastructure investments, makes logistics a strong sector for investment.
Read the Industrial Corridors in Mexico blog for more insights.
Information Technology (IT)
Mexico is increasingly recognized as a hub for IT outsourcing, offering a highly skilled and cost-effective workforce for software development, IT support, and cybersecurity services. Companies in the U.S. and Canada are leveraging Mexico's proximity and time zone compatibility for outsourcing tech operations.
Key Insights:
- Mexico ranks among the top outsourcing destinations in Latin America for IT services with a large pool of talented IT professionals with expertise in various programming languages and technologies.
- Cities like Guadalajara, Monterrey, and Mexico City are major hubs for software development and innovation, fostering a growing startup ecosystem.
Mexico offers a cost-effective environment for IT outsourcing services, including software development, customer support, and data management.
Read the Growing Technology Ecosystem blog for more insights.
These are just a few of the many promising sectors for investment in Mexico. The country's strong economic fundamentals, strategic location, and supportive government policies make it an ideal destination for businesses seeking to expand their operations and capitalize on the growing opportunities in Latin America.
Conclusion
Mexico offers a rich landscape of investment opportunities across multiple sectors. From its booming automotive and aerospace industries to its rapidly growing IT outsourcing and energy sectors, Mexico is an ideal destination for investors looking to tap into North American markets. With its competitive labor costs, skilled workforce, and strategic location, Mexico remains a key player in the global economy.
Takeaway Insights:
- Mexico's automotive sector contributes about a third of the country's total exports and is the 4th largest exporter of vehicles globally.
- Mexico's aerospace industry is growing at a 14% annual rate, consolidating into productive clusters with 80% of exports destined for the U.S.
- Mexico’s medical device industry employs over 150,000 workers, with 70% of factories operating in controlled environments. The country is also the top exporter of medical devices to the U.S.
- Mexico is the 2nd largest electronics exporter to the US, and is the leading exporter of flat-screen TVs.
By understanding the strengths of each sector, businesses can better position themselves to benefit from Mexico’s thriving investment climate.
Download the free Doing Business in Mexico: a manufacturer's guide for more insights.
