Asian enterprises drive the growth of Mexican nearshoring

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Asian countries are becoming a crucial engine for the growth of nearshoring activities to Mexico, driving the establishment of automotive and manufacturing enterprises.

India serves as an example. According to a study by Reuters and Maersk, this Asian country and Vietnam are the top preferred destinations for nearshoring, reshoring, and near-sourcing for supply chain professionals. However, India is also establishing important relations with Mexico to take advantage of the free trade agreements the Latin American nation has signed.

According to the Embassy of India in Mexico, there are three areas with the highest performance for investments:

  • Information technologies
  • Pharmaceutical industries
  • Automotive sector

Recently, some Indian companies have arrived or expanded their presence in the country, as Japanese, Korean, and Chinese enterprises are also doing. This is no coincidence; companies from all these nations find Mexico is a vital investment destination with access to the United States market, thanks to the USMCA Free Trade Agreement and Latin America.

The Reuters and Maersk study indicates that India and Vietnam account for 21% of the surveyed supply chain professionals' preferences. Mexico ranks seventh, with 9%.

Global X ETFs, a New York-based provider of exchange-traded funds, states that India and Mexico are among the main emerging market countries that can fill the export gap left by China’s reduced dominance in global trade.

In this context, nearshoring activities in Mexico are rising due to the relocation of automotive OEMs, technology industries, furniture manufacturers such as Nissan from Japan, LG from South Korea, and Chinese enterprises like Kuka Home and Man Wah Holdings.


Different sectors encompass nearshoring in Mexico’s investment

The Embassy of India in Mexico explains that several companies from this country have invested in Mexican territory over the past years, with around US $4,000 million by March 2024 and over 200 companies operating.

The Mexican Ministry of Economy expects a similar amount from Japanese enterprises throughout the year, accounting for investments reaching US $1,430 million from Japan between January 2024 and March 2024.

Japanese enterprises investing and operating in Mexico include Toyota, Honda, Mazda, Okita Iron Works, Suminoe Textile, Denso, and Mitsui High Tech.

Almost all major Indian IT and ICT companies have operations in Mexico. Some include TCS, HCL, Infosys, Tech Mahindra, NIIT, Aptech, Hexaware, Cognizant, Wipro, BirlaSoft, and Zoho.

In the pharmaceutical sector, notable Indian companies include Lupin, Dr. Reddy's Laboratories, Zydus, Claris, Life Sciences, Hetero Drugs, Sun Pharma, and Solara.

There are also enterprises from the food processing sector: Parle-G, the world’s best-selling cookie brand, has its only American manufacturing plant in Mexico. It is part of the Indian company Parle Products.

According to the Embassy of India report, Olam Group, a leading company in the food, agribusiness, and food ingredient industries, is looking to set up a production plant in the country.


The automotive industry keeps boosting foreign activities

Also from India, Sakthi Group is investing in Durango’s auto parts sector. The group holds activities in various areas, including sugar, dairy products, industrial alcohol, distribution and automobile components, transportation, energy, textiles, IT, education, and health industries.

Hero Motocorp, India's largest two-wheeler manufacturer, also announced a plan to start operations in Mexico after entering into a distribution agreement with Grupo Salinas in January 2021. The Tata Group, under the name Titan X, opened an automatic refrigeration parts manufacturing plant in April 2024.

Hotel chain Oyo began operations in the Mexican market in 2019 and continues to expand its operations.

Also recently, Flex Americas, a subsidiary of UFLEX Ltd. specializing in flexible packaging, announced the expansion of its operations with a US $ 100 million investment in Altamira, Tamaulipas.

Indian company UPL Ltd, a chemical industry company, also disclosed a US $ 11 million investment in a new Research and Development Center and manufacturing plant in Saltillo.

Zoho Corp, an IT company, opened its first office in Mexico in February 2024.


Nuevo Leon keeps gaining relevance as a nearshoring to Mexico node

In August 2023, the authorities of Nuevo Leon, Mexico, and Uttar Pradesh, India, signed a memorandum for cooperation in the commercial, tourism, pharmaceutical, and health sectors.

At this time, Samuel Garcia, Nuevo Leon governor, attracted Indian companies to one of Mexico’s most important automotive hubs, as Vimecarti Viney, an Indian electric vehicle company, announced the opening of its first plant in the Mexican state, with a US $ 200 million investment.

To sustain the growth of nearshoring to Mexico, the country must continue attracting foreign enterprises and investments and offering the best industrial infrastructure to enable these companies to develop their activities.

To do so, Frontier Industrial offers industrial land for sale and buildings for lease in Mexico’s most important industrial regions, as well as Build-to-Suit projects with access to all the necessary services. Feel free to contact us and develop your project with us if your enterprise is looking to establish in Mexico.