Do you know that Mexico has become one of the largest manufacturing economies around the globe? According to research by Macrotrends, Mexico’s manufacturing output for 2019 has increased by 16% of the output for 2016.
Everyone is searching for how or why to start manufacturing in Mexico due to the massive increase. But what is the reason behind this hype? It is probably the number of facilities and benefits provided by a program like the Immex program.
But what is the Immex program?
If you don’t know already about Immex, here is an overview. Impex stands for Maquiladora, Manufacturing and Export Services Industry. It is a program launched by the Mexican Government back in 2006. The incentive of this program is to encourage the development of manufacturing in Mexico. It does this by proposing increased support for foreign manufacturers.
Six benefits of the Immex program
Here are a few reasons that are persuading many companies to choose Mexico.
1.Standalone operation
You can start a standalone business in Mexico without making much exertion. This is one of the common routes the U.S. companies choose. What you have to do is follow the rules and regulations of Mexico, which are not as extensive as in other countries.
2.Ease of entry
Expanding your business to Mexico is not difficult due to the advanced programs like Immex. It loosens the regulations on foreign manufacturers to enter the country. Also, the similar culture and language between the U.S and Latin America make it easy for business owners to join.
3.Allows foreign investment participation
Most countries do not allow foreign investment. If they do, they have a lot of applicable rules and regulations. Mexico is a bit different from other economies. Maquiladora system has made it easier for foreign manufacturers to access shelter companies, which saves them from the rules of foreign investment.
4.No duties on the goods imported
The list of taxation when you choose Mexico as your manufacturing location is short. The excise duty on the goods you import under the Immex program is none. However, there’s one restriction. If items are imported duty-free, you can not sell the finished products in Mexico. The items must be exported.
5.Cost savings
Another benefit manufacturing in Mexico offers cost savings, which most of the companies need on the first basis. Labor costs in Mexico are 70 percent cheaper than that of the U.S. This saves you from most of the expenses. The lesser the labor costs, the more profit. And business always demands profit! Moreover, companies also have access to an affordable infrastructure.
6.Market diversification
Due to the existing industry clusters, you don’t need to worry about the risk of your business. From auto manufacturing to electronics and aerospace, Mexico has widened its trading borders to many industries. And people always choose a risk-free option when it’s come to huge investments.
Final verdict
Mexico has been the most attractive location for new businesses due to the facilities it offers. Since Mexico has widened its borders for trading, the Government has tried its best to gather foreign business in their country by providing advantages through Immex or Maquiladora system.