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Chinese Presence Growing in Mexico

Posted by Larry Doyle on November 24, 2009 12:57 PM |

It’s a big world out there.

While American investors can become consumed by the developments here at home, we need to be mindful that there is a LOT going on beyond our shores. To that end, I was thrilled to host Keith Fitz-Gerald on No Quarter Radio’s Sense on Cents with Larry Doyle on November 8th. Keith addressed a number of developments in Asia during the course of our interview.

Keith and I reviewed his book Fiscal Hangover: How to Profit from the New Global Economy, which was released the week after our interview. How is Fiscal Hangover doing? It is currently Amazon’s top-selling book for investing. Not bad.

What is Keith thinking currently? In a recent commentary, Is Mexico the “New” China?, Keith highlights:

When it comes to global manufacturing, Mexico is quickly emerging as the “new” China.

According to corporate consultant AlixPartners, Mexico has leapfrogged China to be ranked as the cheapest country in the world for companies looking to manufacture products for the U.S. market. India is now No. 2, followed by China and then Brazil.

In fact, Mexico’s cost advantage has become so cheap that even Chinese companies are moving there to capitalize on the trade advantages that come from geographic proximity.

Mexico’s allure as a production site that can serve the U.S. market isn’t limited to China-based suitors. U.S. companies are increasingly realizing that Mexico is a better option than China. Analysts are calling it “nearshoring” or “reverse globalization.” But the reality is this: With wages on the rise in China, ongoing worries about whipsaw energy and commodity prices, and a dollar-yuan relationship that’s destined to get much uglier before it has a chance of improving, manufacturers with an eye on the American market are increasingly realizing that Mexico trumps China in virtually every equation the producers run.

While most American consumers and investors may view our relationship with Mexico strictly through the lens of NAFTA, these recent international trade dynamics bear watching as they may serve to benefit the economy in North America in general and Mexico specifically.

Thanks Keith Fitz-Gerald for helping us see the global forest and not merely the American trees.

LD

  • divvytrader

    No wonder i keep reading about entire formerly busy immigrant neighborhoods in Phoenix becoming deserted almost overnight as the residents stream back to Mexico for steadier work .

    NYTimes ran an article last week featuring various Mexican familes now wiring money to relatives INSIDE THE UNITED STATES to keep them afloat while they look for work here as well as talk with illegals in USA who want to go home but don’t have the money to get there ……

    • Larry Doyle

      Oh how the worm has turned.

  • TeakWoodKite

    I think it is happening north of the border as well.

    China State Construction Engineering Corp, the largest contractor in China, has bagged a subway ventilation project worth about $100 million in New York’s Manhattan area, marking the construction giant’s third order in the United States’ infrastructure space this year.
    The jobs?
    The China Securities Journal reported Saturday that CSCEC would become the fifth company to start initial public offering (IPO) on the Chinese mainland since the China Securities Regulatory Commission (CSRC) resumed IPO last month.

    The prospectus would be published on Monday. The company planned to issue 12 billion shares, raising 42.6 billion yuan ($6.26 billion), the largest flotation among the five, said the newspaper
    (related)






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