Mexico Manufacturing Over China – Not an Either-Or Scenario

Commentary by Doug Donahue

Much has been written about the inherent benefits of manufacturing in Mexico over China: Mexican labor is now more affordable than labor in much of China; China is further away, hence more expensive and slower for shipping; and Mexico’s presence in NAFTA lowers or eliminates import duties into the North American market.

While Mexico’s advantages over China as a destination for low-cost manufacturing are increasingly evident, the mainstream media misses the point by emphasizing the “all-or-none” element of Mexico versus China. For manufacturers, the point of setting up operations in China has always been about production in Asia. In contrast, manufacturers looking to export for the North American market are aware of the benefits that give Mexico a clear advantage. The point is that big companies, irrespective of industry, need to have a low-cost manufacturing strategy that includes both Mexico and China. In many cases, the same goes for their suppliers too.

This article in Plastics Today, for example, details how medical device manufacturer Phillips-Medisize has recently completed the acquisition of manufacturing operations in Suzhou, China and Queretaro, Mexico from the Adval Tech Group of Switzerland.

This deal in Mexico and China by Phillips-Medisize, and similar companies, is about localization and being where their customers are – not just low-cost manufacturing. Having operations in both countries gives the company global reach and a larger footprint, putting them in a better position to realize topline growth.

Source: Plastics Today

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