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Mexico as an investment opportunity for Asian companies

What advantages does Mexico offer?

Thanks to its geographic location, Mexico is an attractive market for investments. Although the COVID-19 pandemic has had an impact on the Mexican economy, just like in every other country in the world, Mexico is expected to recover thanks to the following four factors:

  • The United States–Mexico–Canada Agreement (USMCA) is a key element for the recovery of foreign investment. A prolonged recovery could pose the risk of direct competition from other countries due to Mexican exports to the U.S.
  • With the USMCA and the United States’ employment creation agenda, Mexico has a significant opportunity to attract investments.
  • Mexico is one of the main destinations for Foreign Direct Investment (FDI) in the Latin American region, representing 24% of FDI inflow in 2019.
  • Companies in the manufacturing and technology sectors are expected to move their operations from China to Mexico in the next five years.

Due to the importance of the trade relations between Mexico and Asia, EY has identified the most significant challenges faced by Asian companies when establishing operations in Mexico from a tax, legal and labor standpoint.

Overview of China outbound investment of Q1 2022

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Asian Desk Café by EY México (in Spanish)

Main regions for investment in Mexico    

Five main points to consider when investing in Mexico: 

  • 1. Tax framework

    a) Corporate taxes/VAT/Employee profit sharing

    b) Tax withholdings

    c) International treaties on tax obligations

    d) Tax trends in the Mexican market

  • 2. Maquila regime and the IMMEX program

    a)     Alternatives for establishing manufacturing and export operations

    b)     Manufacturing, Maquiladora, and Export Services Industry Program (IMMEX, Spanish acronym)

    c)     Maquila regime

    a.     Considerations and main benefits

    b.     Transfer pricing regulations (SAFE HARBOR - APA)

    c.      2020 tax reform

    d.     Changes to the general customs regulations

  • 3. Shelter regime

  • 4. Customs and foreign trade

    a)     United States–Mexico–Canada Agreement (USMCA)

    b)     Mexican Importers Registry

    c)     Foreign trade development programs

    d)     Comprehensive Business Certification Framework

  • 5. Legal and labor aspects

    Sales, mergers, acquisitions and divestitures within the Mexican legal framework

    a)     Legal, social, labor and transactional compliance

    b)     Intellectual property in digital environments

    c)     Regulatory framework and compliance with anti-corruption measures in Mexico

    Expatriates:

    There are certain tax, migration, labor and social security requirements to which both companies and their employees are subject.

    Workforce management and labor aspects

    Staff recruitment processes often still represent a challenge for Asian companies, especially in terms of maintaining their presence in a western country given the cultural differences.

    Some of the most relevant challenges are as follows:

    a)     Talent management

    b)     Professional career plans

    c)     Benefits and compensation programs

    d)     9/1 rule

    e)     Unions and collective bargaining

    f)      Social security and payroll management

How EY can help

EY has a multidisciplinary team of professionals who can advise Asian companies who wish to invest in Mexico, as well as those who wish to expand their operations in Mexico. EY has an Asian desk for Latin America that is integrated by Chinese, Korean and Japanese professionals, who, given their experience and knowledge about Asian culture and business processes, can provide a personalized service.

Informational resources 

1147618851

Strategic Relations Committee

Who is who?

The team:

Jiawen Shao, China, Hong Kong and Taiwan Desk Manager jiawen.shao@mx.ey.com

Tak Morimoto, Japanese Desk Senior Manager tak.morimoto@ey.com

Jason Yun, Corean Desk Leader, Latin America North jason.yun@mx.ey.com

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Versión en español