mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
China’s New Competitor: Mexico?

A manufacturing revolution is underway in Mexico, the FT reports:

For the first time in a decade, Latin America’s second-largest economy has become a credible competitor to China.

During the first half of this year, Mexico accounted for 14.2 per cent of manufactured imports into the US, the world’s largest importer. In 2005, Mexico’s share was just 11 per cent. Surprisingly, China, which gained huge chunks of the US import market for many years, has started to lose ground. From a high of 29.3 per cent of the total at the end of 2009, it has now shrunk to 26.4 per cent.

While winning a bigger slice of the US market, Mexico has diversified its customers. A decade ago, about 90 per cent of the country’s exports went to the US. Last year, that figure fell to less than 80 per cent. Suddenly, it seems, Mexico has become the preferred centre of manufacturing for multinational companies looking to supply the Americas and, increasingly, beyond. Today, Mexico exports more manufactured products than the rest of Latin America put together.

The result of this turnround can often seem counter-intuitive. Chrysler, for example, is using Mexico as a base to supply some of its Fiat 500s to the Chinese market. During last year’s inauguration of the US company’s $500m investment in Mexico, Felipe Calderón, the country’s president, told the nation: “I think it is the first time that a Mexican vehicle, at least in recent times, is to be exported to China … we always thought it was going to be the other way around.”

This supports the Via Meadia view that, despite terrible drug violence and other social problems, Mexico actually has a lot to be proud of, not least a functioning democracy and a growing manufacturing sector. There is no doubt the drug trade poses a serious threat. America, after all, is the world’s leading importer of illicit goods, and much of our drug supply comes from or through Mexico. But this story is cause for hope that even more jobs will soon be found outside Mexico’s black market.

Features Icon
© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service