Mexico, The Best Fit For The International Expansion Of U.S. Companies - International Law - Mondaq Mexico - Mondaq Business Briefing - Books and Journals - VLEX 571650022

Mexico, The Best Fit For The International Expansion Of U.S. Companies

Author:Resendiz Wong Abogados
Profession:Resendiz Wong Abogados

In order for a company to survive in this rapidly evolving global economy, it must eventually expand at least a portion of its business operations overseas or across borders, to become a more lean and cost-efficient organization. One can rest assured that the competition is now or is currently in the planning stages of taking such steps, and it would not be wise for a company to allow itself to be left behind.

Many consider the top three locations for such expansion to be between Mexico, China and India, however after careful consideration of all the facts it becomes clear that Mexico is now, and has always been the best location for the international expansion of U.S. companies' business operations, whether in production, sales or services.

Some of the reasons why Mexico is the best destination for the international expansion of U.S. companies are:

Low Labor Costs - The average factory worker in Mexico is paid $2.60 an hour with tax and benefits included, as compared to the U.S. 2002 average of $21.11 an hour (Business Week, Dec 14, 2003). It is true that the average pay for manufacturing labor in China is less than that in Mexico, at approximately $0.95 an hour, but in China companies are expected to provide their employees housing, food, medical care, recreational activities, and uniforms; the exact benefits are negotiated with the local government (local communist party headquarters). Because of the extensive responsibilities involved, many international business consultants would argue that bringing on a new employee is more like adopting a worker as opposed to hiring one. In the end, unless a company intends to employ a very large number of factory workers for a large scale industrial operation, establishing a subsidiary in Mexico is by far the most cost-effective option. Mexico is a Big Consumer Market in and of Itself - Mexico is the second biggest consumer of U.S. products and services worldwide. By establishing manufacturing or service industry operations in Mexico, U.S. companies are not only producing their products or providing their services more inexpensively, in a business friendly country which borders the U.S., but one with a consumer market in which their services and goods are needed, and one in which their products will not need to be transported very far to reach; something that has yet to develop in neither China nor India. Proximity to the United States - Being that Mexico and the United States share a common...

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