The Shift from China to Mexico: Redefining Global Partnerships
The global economic landscape is rapidly transforming, compelling many businesses to reevaluate their investment and partnership approaches—particularly in China. Rising labor and manufacturing costs in China, trade tensions, supply chain shortages and escalating political uncertainties have prompted many companies to seek alternatives. Mexico is gaining popularity as a global partnership destination. A recent Deloitte study projects a 10 percent annual growth in foreign direct investment (FDI) in Mexico, reaching over $60 billion by 2027. For U.S. companies decoupling with China, Mexico is a favorable choice due to its economic stability, strategic proximity and promising growth opportunities.
José (Pepe) Guevara, Alberto de la Peña, Renee Arrington, Keith Pearson, Darla Roden, Jeff Cartwright
In our Q1 2024 Pearson Partners Spotlight SeriesTM breakfast, held on March 5, 2024, we convened a panel of experts for a compelling dialogue building on our December discussion on U.S./China relations. We discussed why these increasing challenges were driving many companies to cut ties with China and pivot to nearshoring in Mexico. Our speakers included:
- José (Pepe) Guevara, Chairman & Chief Executive Officer, Pecan Grove Farms
- Alberto de la Peña, Partner | Co-Chair – International Practice Group, Haynes Boone
- Darla Roden, General Counsel, LALA U.S.
- Jeff Cartwright, Managing Partner, Shoreview Management Advisors
- Keith Pearson, Chairman, Chief Executive Officer & Co-Founder, Pearson Partners International (Moderator)
The panel discussed the job creation and economic growth potential of partnerships with Mexico, as well as the country’s potential as a manufacturing hub for companies decoupling from China. However, they also highlighted challenges, such as understanding market and labor laws, establishing facilities throughout the country and addressing infrastructure challenges. The panelists delved into the intricacies of Mexico’s political landscape, including constitutional reforms and rule of law, and the challenges U.S. businesses face when investing in Mexico, including cultural and legal hurdles.
Speakers addressed the (then-upcoming) Mexico presidential election, saying the outcome would impact U.S./Mexico trade, nearshoring and investment activity. (Pearson Partners further discussed the implications of Mexico’s presidential election during our subsequent Spotlight Series™️ breakfast on June 11, 2024.)
Topics explored by our panel included:
- Economic Realignment: Navigating changing factors in China and their impact on business strategies.
- Trade Agreements and Policies: Understanding the role of agreements like the USMCA in shaping a new trade paradigm.
- Geographical and Logistical Advantages: Leveraging Mexico’s strategic proximity for enhanced supply chain efficiency.
- Cost Dynamics: Analyzing the costs of operations and manufacturing in Mexico versus China.
- Cultural and Market Differences: Recognizing the differences in the culture and employment market in Mexico.
- Market Access: Exploring Mexico’s gateway to diversified global markets.
- Skilled Workforce: Tapping into Mexico’s pool of talented and skilled professionals.
- Cultural and Economic Ties: Capitalizing on Mexico’s cultural compatibility, shared time zones and language capabilities.
- Risk Management: Diversifying investments to mitigate geopolitical tensions, supply chain vulnerabilities and over-reliance on the Chinese market.
- Sustainability and Social Responsibility: Harnessing Mexico’s environmental and social standards commitment to meet corporate ESG criteria.
The insights shared during our Spotlight Series breakfast underscored a pivotal theme: Despite complexities, the opportunities for meaningful cross-border partnerships between the United States and Mexico are expanding at an unprecedented pace. As nearshoring becomes an increasingly attractive strategy for companies seeking resilience and efficiency, Mexico offers a compelling investment case. Its skilled workforce, favorable trade agreements and growing manufacturing capabilities position it as a critical player in the global economy.
However, success in this evolving environment requires thoughtful leadership. Companies must look beyond traditional assumptions, perform careful due diligence and foster relationships that respect cultural nuances and legal frameworks. As several of our panelists noted, the most successful leaders will view this moment not as a defensive maneuver in response to global pressures, but as an offensive strategy to unlock new growth and innovation.
The U.S.–Mexico partnership is not just a matter of proximity but of shared opportunity. At Pearson Partners International, we are committed to helping our clients navigate these complexities and seize the potential that lies ahead. We look forward to continuing these conversations in future Spotlight Series events—and to supporting senior leaders as they chart a course through today’s interconnected global landscape.
Learn more about the Pearson Partners Spotlight Series™ breakfast events.
