Chinese Companies Turn to Mexico Amid U.S. Tariffs

The COVID-19 pandemic almost instantly threw a multi-year wrench into global supply chains — and highlighted the advantages of more compact logistics operations.For many U.S. companies, that has meant reshoring manufacturing operations from lower-wage nations back to the States.But for manufacturers in China who want to keep a foothold in the North American market, it means finding a way to get its operations closer to their end-markets.And if it also means getting around U.S. tariffs, all the better.Bloomberg recently detailed the trend of Chinese manufacturers sending both operations and personnel to new facilities in Mexico, where — under a revamped North American trade pact — products aren’t subject to the tariffs imposed on Chinese-made goods.Chinese investment in Mexico was already on the rise, growing from $154 million in 2016 to more than $270 million in 2017 amid heightened trade tensions between the U.S. and China. By last year, persistent supply-chain headaches and a tech crackdown by Chinese officials fueled an increase to nearly $500 million.Bloomberg noted that materials and labor in Mexico are more expensive than China, but that gap is closing — just as tariffs and logistics costs take their toll.The article particularly looked at Hofusan Industrial Park, a former cattle ranch outside Monterrey about 100 miles from the border. The site housed one facility three years ago; today, there’s 11, including electronics company Hisense and auto-parts maker Hangzhou XZB.Officials expect 35 facilities and some 15,000 workers in the industrial park in coming years — about 10% of which would be managers from China.