Things to consider before expanding operations to Mexico

Updated: Aug 25

Mexico continues to establish itself as a country that offers numerous possibilities for businesses of all kinds to prosper. There are various pacts and agreements such as USMCA which significantly facilitate trade and incorporate legal processes that make it easy for companies to establish their operations in the country.


Companies of all sectors can benefit from growing their operations in Mexico. It's a great location for its closeness and ease of cross-border trading. According to World Bank Group, Mexico City and Monterrey score 82.9 for their ease of trading. It is also known that Mexico has a highly skilled and cost-effective workforce.


However, there are many factors and elements to consider before expanding operations to Mexico. Here are some of the most important ones.


The sector you’re in: There is a strong manufacturing industry in Mexico which can be much cheaper than in other parts of the world. The automotive industry is Mexico’s leading manufacturing sector, with an estimated export value of $95.7 billion dollars. Take the time to research and determine if your industry can benefit from Mexico’s highly skilled labor and cost-effective workforce.


Cost of business: It is essential to consider other business costs, such as construction permits, property taxes, and overall taxes. Tax law in Mexico is constantly changing. In recent years, the government has increased the cost of construction permits. Regarding taxes, Mexico ranks the 121st in the world when it comes to ease of payment. In comparison, the US is ranked 37th. Don’t let this discourage you. With the proper guidance, you can develop a strategy that works for your business.


Disputes and contracts: When it comes to conducting business, enforcing contracts can be difficult to navigate in Mexico. When employee or contract disputes arise, the Mexico City First Instance Oral Civil Court steps up to help solve them, however, the process may take up to 350 days on average for a resolution. Luckily, when you work with a partner with experience in law and regulations you can be sure to meet all requirements and receive the proper guidance if any problem arises.



 

Read more: Relocating Business Functions to Mexico

 


Growing internationally helps your company enter new and diverse markets while also growing your customer base and increasing your revenue. Luckily, expanding to Mexico has never been easier. Nepanoa can guide you along the way.