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China chooses Mexico as its main foreign investment destination

Mexico is now the place with the highest number of investment projects of Chinese companies outside China. Currently, about 109 development plans are carried out throughout the Mexican territory.

The most attractive sectors for Asian firms are manufacturing — assembly plants, mining, agriculture and even the assembly of cars, drilling and oil exploration.

According to studies of international consultants, Mexico currently offers to the United States better manufacturing costs than China, Chinas manufacturing costs have increased in the past 3 years  and are just 6% below manufacturing costs of some U.S. locations, while the Aztec country remains 25% lower compared to its northern neighbor.

Approximately 57 Chinese companies have set up in Mexico since they consider it as the ideal place for cheaper production, due to the low cost of Mexican manpower; the avoidance of elevated tax duty on Chinese products since Mexico is part of NAFTA plus the close proximity and having  the world”s largest consumer market: the United States, as a business partner.

This has allowed Mexico to be in the sights of more Chinese enterprises. The company Hon Hai, the largest electronics manufacturing contractor in the world, decided to establish a manufacturing plant in Ciudad Juarez, Chihuahua, in northern Mexico, which will employ 20,000 people.

In Sonora, the Chinese textile company Sinatex invested $92 million dollars in the installation of a maquiladora plant, from which it will supply about 25% of total imports of threads to the U.S.

The mining sector in Mexico has also drawn the attention of Asian investors; the company Jinchuan Group Ltd. spent $25 million dollars on exploration of the Bahuerachi mining project, in the state of Chihuahua, to produce zinc, copper, molybdenum and silver.

The companies Sinopec and PetroChina are currently engaged in drilling and exploration in the Gulf of Mexico for its counterpart, Petroleos Mexicanos.

Xintian-Mexico integrated company in agriculture and trade in certain scale, bought in 1998 1,050 hectares of farmland in Campeche to start with agricultural development that has allowed to have a fixed asset of more than $10 million dollars.

Among the future Chinese investment in Mexico, are the Foton Mexico, auto Assembly Company, which plans to invest over $250 million dollars and generate about 1,000 direct jobs and 3,500 indirect jobs in the state of Michoacan, and Lenovo, technology manufacturer, that will invest $40 million dollars to produce laptops in Mexico, this is its largest investment of the company outside of China.

Source: E-mid, 28.09.2009

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