« Insights > Maquiladora

Mexico has competitive advantages over China

Admin | 03.10.2012

Salaries increase in China, as well as a drop in their economic growth rates, provide Mexico with a competitive advantage in the race to attract investment from the United States, the Wall Street Journal pointed-out.

Salaries increase in China, as well as a drop in their economic growth rates, provide Mexico with a competitive advantage in the race to attract investment from the United States, the Wall Street Journal pointed-out.

Salaries in China’s manufacturing sector, which a decade ago were 25% of salaries paid in Mexico, have reached the same average as those paid to Mexicans, and therefore the investments that left for China are now coming back to Mexico, according to a note published in the newspaper. Mexico could be a more affordable destination to produce when taking into consideration, in addition, productivity differences by Mexican workers, higher than the Chinese’s, and the fact that exports are made faster and for lower costs from Mexico to the United States. However, according to a study by Boston Consulting Group, China, with one billion people, keeps the advantage of being a much bigger market and, with the increase in salaries, an increasingly higher purchasing power. Therefore, few experts expect a massive return of private investment to Mexico, also due to the drugs traffic-related violence in Mexico and the fact that this country has not generated a qualified labor force as required by the industry, nor a chain of supply as the Chinese, the note warned. In spite of its limitations, Mexico is already considered the most affordable country to produce manufacures aimed for the US market, according to the consultants firm Alix Partners.

Source: maquilaportal.com

Insights

Top