As of now, the start of 2025, there are several Chinese industrial parks in Mexico, with notable examples including the Hofusan Industrial Park near Monterrey, which hosts manufacturing plants for ten Chinese companies. When one is considering how to navigate the U.S. import tariffs, for many Chinese manufacturers, pulling the trigger on nearshoring is the right move. Honorable mention industrial parks are Vynmsa Industrial Park in Nuevo León, where companies like CFMoto and Lingong Machinery Group are significant new developments. These parks are big wins for the Mexican government, as we all know, incentives are one thing, and logistics and infrastructure is another, and if the infrastructure isn’t up to par with Chinese standards, they will make it so. The Belt and Road Initiative in Spanish, can you say “Iniciativa de la Franja y la Ruta”. (Remember to roll the “r’s’)
The commitment mentioned above usually begs the question as to what the U.S. market represents to your overall bottom-line, and the need for speed right now is paramount if it’s substantial. Mandarin to Spanish, Spanish to Mandarin, and subsequently both translated to English in the formal documentation submitted to the Mexican government has become a norm in our firm’s portfolio of representation for those Chinese companies who have requested our services. Mitigation strategies inclusive of tariff engineering, as well as country of origin are always top of the discussion, but eventually lead to consideration of an IMMEX, an industrial park in Mexico, or simply the building of one’s own factory. However, the industrial parks stand out with a little more control over the manufacturing process, as well as the cost savings when shared with other Chinese companies. Some of these complexes are the size of 4 or 5 football fields and can boast of streamlined production currently flowing into the U.S. under the umbrella of qualifying for USMCA, which the Trump administration may, or may not, blow-up in the next couple weeks. To date, Chinese companies occupy over 1.8 million square meters of industrial space across Mexico and have their eye on expanding their portfolio.
In 2024, Chinese foreign direct investment (FDI) into Mexico was around $159 million, which is down from a couple years ago, but it’s bouncing back given the current geopolitical landscape.
The FDI is relatively small compared to investments from other countries. For instance:
United States: The U.S. remains the largest investor in Mexico, contributing approximately $27 billion in 2024
Germany: German investments totaled nearly $8.4 billion in the same period
Japan: Japanese companies invested around $6 billion
The manufacturing sector attracted more than half of this investment, highlighting Mexico’s strategic importance in global supply chains. Capitalizing on this, Chinese industrial parks in Mexico host a variety of industries, with a strong focus on manufacturing. Key sectors include:
Automotive: Many Chinese companies are involved in the production of automotive parts and vehicles. Examples are Chery, MG Motors and of course BYD.
Electronics: This includes the manufacturing of computer equipment and other electronic devices. Examples are Hisense, TCL and Lenovo
Machinery: Construction machinery and other heavy equipment are significant areas of investment. As previously mentioned, Lingong Machinery Group (LGMG): LGMG is setting up a manufacturing facility and industrial park in the northern state of Nuevo Leon. This project is valued at $5 billion and includes the development of clusters focused on energy, heavy industry, automobile manufacturing, and new materials.
Trina Solar: While primarily known for its solar panels, Trina Solar is also venturing into machinery manufacturing with significant investments in Mexico.
Furniture: Companies like Man Wah Holdings are expanding their furniture manufacturing capabilities in Mexico
In addition to Nuevo Leon, Chinese companies are increasingly investing in industrial spaces across Mexico, particularly in northern regions like, Coahuila, and Baja California.
The prime example is BYD who is currently scouting real estate. BYD, a leading Chinese electric vehicle (EV) manufacturer, is making significant strides in Mexico. Here are some key details about their investment:
New Manufacturing Plant: BYD is planning to build its first EV manufacturing plant in Mexico. The plant will focus on producing electric vehicles for the Mexican market. This will be the largest manufacturing plant in Mexico.
Location: The company is considering three potential states for the plant’s location, although the specific states have not been disclosed yet. The incentives will be enormous via the Mexican government.
Job Creation: The new facility is expected to create around 10,000 jobs, contributing significantly to the local economy.
The plant is projected to produce up to 300,000 units annually. Beijing is downplaying this a little right now as they don’t wish to alarm anyone. (The U.S. of course as President Trump at one point threatened a 200% tariff on China EV’s coming into the US) Fact is, China knows exactly what to do regarding the never ending tit-for-tat on tariffs with the Trump Administration, and that’s forge ahead. The U.S. is not the only market at this time but will come into play eventually. Afterall, Trump is in his final term. (We think, according to the constitution, for what it’s worth) BYD is also selling EV’s in Germany, Norway, Brazil, Chile, Australia and India. With that in mind, (and global dominance) BYD’s largest production facility in Xi’an, China produced over 1 million vehicles in 2024. This plant alone has the capacity to produce between 4,000 to 4,400 vehicles per day by operating four assembly lines simultaneously. Per day!!! Across all of its facilities, BYD’s total annual production is even higher. In 2024, BYD produced a total of 4,304,073 vehicles, which was a significant increase of 41.34% compared to 2023. Primarily for this reason BYD has emphasized that the vehicles produced in this Mexico plant will primarily serve the Mexican market, rather than being exported to the U.S. (The Trump Administration will believe it when they see it) For grins, I looked at what the pricing would be on the BYD vehicles in the Mexican market. BYD’s Seagull EV starts at around $9,700, 199,626 MXN, BYD’s Dolphin Mini: Approximately MXN 358,800, or $17,657 US, BYD’s Atto 3: Around MXN 864,198, or $42,614 US, and the BYD Tang EV: Approximately MXN 1,404,000, or $69, 248 US. Based on recent studies, the average income for the middle class in Mexico ranges between MXN 18,000 and 22,000 per month for a household. For an individual, the average falls roughly around MXN 8,970 per month. Hmmm…around $1,000/month US. I don’t think BYD will be selling many of the Tang’s or Atto 3’s to the Mexican middle class….but as for the Seagull and Dolphin Mini….there is definitely a market. When the governments of Mexico and China meet for trade talks, BYD will be in the room, because dangling the carrot for improved infrastructure will be a path to success for all, Mexico, Beijing and BYD. What specifically do I mean? Well currently Mexico can hardly boast with around 2,100 charging stations, which is the largest network in Latin America but only about 8% of these charging points are publicly accessible, while the rest are mostly residential. BYD and the Chinese government will commit (most likely) to triple that within the next three years, paving the way for BYD to grow their Mexican market share. With a little more help from Beijing BYD projects that its sales of EVs in Mexico will reach 100,000 units this year. Ya Gotta love those government subsidies. It’s a bold statement since the most popular car sold in Mexico in 2024 was the Nissan Versa, with 93,278 sales. Following closely were the Nissan NP300 with 59,031 sales, and the Chevrolet Aveo with 58,503 sales. GM has come a long way since they tried to sell the Chevy Nova in Mexico, which of course translates in Spanish to “doesn’t go.” One of the absolute dumbest marketing campaigns of the century. Keep in mind, in just two years BYD has grown its market share in China from 2% to 11%, putting Tesla in the rearview mirror, as well as Volkswagen, so “owning Mexico” is no stretch in the next 3 years.
Sorry, I digress. Now back to topic. Being the proverbial fly on the wall in those meetings of the minds between the Minister of Commerce for China Wang Wentao, Foreign Minister Wang Yi and Mexico’s President Sheinbaum, we would listen intently as Sheinbaum must walk a fine line between working with Beijing and keeping the U.S. administration happy. This is a smart woman and holds a PhD in energy engineering, which translates to making things sustainable. She has focused her public responses on a plan to substitute Chinese imports with Mexican products and stresses the importance of the US relationship without being directly critical of Beijing and at the same time not seen as bowing to President Trump. Luis Rosendo Gutiérrez, Mexico’s undersecretary for international trade reiterates this by confirming that Mexico’s main priority is working with the U.S. and Canada. That of course may change soon if/when the new Trump tariffs on both countries officially come into play. March 2025? Who knows? He also recently elaborated on the misconception of Mexico becoming a Chinese backdoor to the U.S. marketplace. The current flow of FDI from China into Mexico does make one take notice of the ongoing chess match and potential conflict.
In the meantime, Marco Rubio, Trump’s new Secretary of State, somewhat recently wrote a letter specifically warning about this very thing. “Congress passed a free trade deal with Mexico — not China,” he wrote. “Immediate action must be taken to prevent the Chinese Communist Party from exploiting USMCA and weaponizing this important trade deal.” China’s Foreign Minister Wang Yi is already giving Rubio warnings to watch his step.
As for Canada, Justin Trudeau will be stepping down as Canadian Prime Minister in March. The front-runners to replace him are Pierre Poilievre, the leader of Canada’s Conservative Party2, Mark Carney: Former Governor of the Bank of Canada and the Bank of England, known for his economic expertise, Chrystia Freeland: Former Deputy Prime Minister and Finance Minister, recognized for her role in trade negotiations and economic policies, Karina Gould: Government House Leader, known for her work on democratic institutions and social development, Dominic LeBlanc: Minister of Intergovernmental Affairs, with a long-standing political career, François-Philippe Champagne: Minister of Innovation, Science, and Industry, with a focus on economic growth and innovation. The Liberal Party will decide on Trudeau’s successor on March 9.
Waiting in the wings for the time being, the Trump administration tariffs on Mexico and Canada are still merely a threat but could eventually put a nice size ding in the armor of the USMCA trade agreement, which isn’t up for review until 2026.
Trump’s tariffs, if imposed, could be devastating for Mexico, which relies on the US to buy more than 80 per cent of its exports. The President has put on display that he is more than willing to turn tariff threats into reality regardless of the financial detriment to U.S. businesses, and ultimately increased prices on consumer goods. From the President himself, “Yes, there is going to be some pain involved for American consumers.” The million-dollar question is, “How much economic pain will be tolerated,” especially among those who voted for him.
Of note, there is a new Sheriff in town in the US. President Trump has appointed Jamieson Greer as the new United States Trade Representative. Greer will serve with the rank of Ambassador Extraordinary and Plenipotentiary signifying that President Trump has given him full authority. If you recall, this gentleman worked with the former USTR under the first Trump administration Robert Lighthizer for years and is cut from the same cloth.
And now, a quick and very relevant review. Robert Lighthizer is an American attorney and government official who served as the U.S. Trade Representative under President Donald Trump from 2017 to 2021. He played a significant role in shaping American trade policy during Trump’s presidency. Known for his protectionist stance, he was instrumental in the renegotiation of NAFTA (now the USMCA) and took a pivotal role in initiating and carrying out the U.S.-China trade war.
Between Rubio and Greer, China is in for a tough next four years with the U.S. but will of course develop strong trade relations with other countries. (Brazil and BYD is a good example) International trade in 2025….it will be interesting to see how certain companies navigate the trade barriers, and how various countries find a way to turn the chaos into an advantage. Rising above the inevitable chaos, it looks like Mexico could be another Vietnam when it comes to the benefits of a never-ending US-China trade war. I must note that China is also manufacturing EV’s in Turkey, Hungary, and Spain who are not aligned with the rest of the EU on the China tariffs.
[Wiew source]
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