Expanding operations into Mexico is a strategic move for many foreign businesses but navigating the complex regulatory and administrative landscape can be challenging. Shelter companies provide an effective solution, allowing businesses to establish a presence in Mexico without dealing with legal and administrative burdens. There are several types of shelter companies, each offering different levels of service and flexibility. Understanding these models can help businesses choose the right fit for their needs.

1. Shared Shelter

A Shared Shelter model enables multiple companies to operate under a single legal entity. This approach allows businesses to share critical regulatory registrations, such as the Importers Registry, IMMEX permit, and VAT & IEPS Certification. Since administrative services like payroll, human resources, and accounting are shared, companies benefit from lower operational costs. This model is ideal for businesses looking for a cost-effective way to establish operations in Mexico with minimal risk and legal exposure.

2. Dedicated Shelter

In a Dedicated Shelter model, the foreign company operates under an exclusive legal entity owned by the shelter service provider. Unlike the Shared Shelter model, this entity is not shared with other businesses. Under this model, companies can still benefit from a full administrative support. Companies opting for this model typically require greater operational autonomy but prefer to avoid the legal complexities of creating their entity.

3. Independent Shelter

The Independent Shelter model allows foreign companies to establish their legal entity in Mexico while still leveraging of the administrative expertise of a shelter service provider. This model is best suited for companies that want to have legal presence in Mexico and full ownership of their operations but that need assistance in managing compliance, HR, payroll, and other administrative functions.

4. Flexible Shelter / Stand- Alone Administrative Services

For businesses that do not require the full shelter service and only need a third party company to take care of some administrative services, some shelter service providers offer this solution. In this scenario, companies can select only the specific administrative functions they need, such as payroll, HR, foreign trade, accounting or tax services, without committing to a full-service package. This is ideal for businesses that already have some operational capabilities in Mexico but need support in specific areas to enhance efficiency and compliance.

5. Contract Manufacturing with Shelter

Unlike other shelter models that primarily focus on administrative services, the contract manufacturing with shelter also integrates production capabilities. There are only a few shelter companies in Mexico that are also contract manufacturers and that operate under this approach.  In which they actively participate and get involved in the whole manufacturing process. This model is particularly advantageous for businesses looking to outsource production.

Choosing the Right Shelter Model

Selecting the appropriate shelter model depends on various factors, including the business strategy of the company and of the expansion, the complexity of operations, and cost considerations. Businesses seeking to entry into Mexico with reduced risk and legal exposure may find the Shared Shelter model appealing, while those requiring exclusive legal entities may prefer the Dedicated or Independent Shelter options.

By understanding these shelter models, businesses can make informed decisions that align with their strategic goals and operational requirements, ensuring a smooth and efficient expansion into Mexico. For more insights into how shelter companies can help your business, consider contacting Mexcentrix, which in addition to the shared, dedicated and independent shelter also offers the Flexible Shelter / Stand- Alone Administrative Services solution.

We adapat to your company needs and requirements. Contact us!

Expanding operations to Mexico has become attractive for manufacturing companies seeking competitive advantages. While the country offers numerous benefits, including reduced labor costs and proximity to the U.S. market, understanding taxation in Mexico is essential to ensuring success and compliance. Below, we outline the key aspects of taxation that manufacturing companies must understand when establishing operations in Mexico.

Firstly, it is important to understand which are the main federal and local taxes:

Main federal taxes:

• Corporate Income tax (impuesto sobre la renta “IT”)
• Value added tax (impuesto al valor agregado “VAT”)
• Special Tax on Production and Services (“IEPS”)
• Import duties
• Social security contributions

Main local taxes:

• Payroll Tax
• Property Aquisition Tax

Now let`s take a closer look at the taxes that are most relevant for manufacturing companies:

Corporate Income Tax (CIT)

According to the Mexican Income Tax Law, residents in Mexico and foreigners with a Permanent Establishment (PE), are subject to income tax, and are taxed on their worldwide income at a rate of 30% on a net basis.

For manufacturing companies, understanding the scope of taxable income and deductions is vital, as this 30% rate is applicable to taxable profits.  Common deductible expenses include operating costs, depreciation, and certain employee benefits, including employees profit sharing.

Safe Harbour

Under the safe harbor regime, maquiladoras have the option of paying taxes according to the safe harbour method. In which tax profits equals to the greatest amount equivalent to one of the following percentages:

• 9% of the value of the assets
• 5% of the amount of ordinary costs and expenses of their operation.

A maquiladora is a manufacturing operation in Mexico which is run by a foreign company and exports goods to other countries.

Maquiladoras import raw materials, components and machinery to process or assemble them in Mexico and then export back the finished manufactured goods. The processing, transformation, or repair of goods must be carried out with temporarily imported machinery and equipment owned by the foreign principal.

Value Added Tax (VAT)

The Value Added Tax (VAT) in Mexico is 16%, applicable to:

• –  Sale and lease of goods.
• –  Rendering of services.
• –  Persons who grant the temporary use or enjoyment of assets within Mexican territory.
• –  Import of goods or services into Mexico.

Manufacturing companies, particularly those operating under Mexico’s IMMEX program and VAT and IEPS Certification, may benefit from exemptions or deferrals on VAT for temporary imports of raw materials and components.

Under these programs,  manufacturers can temporarily import materials without paying VAT as long as the finished goods are exported. Neverthelss, it is essential for manufacturers to maintain accurate records and ensure compliance with VAT reporting requirements to avoid fines or penalties.

Payroll Tax

A payroll Tax is applicable on wages and other expenditures derived from an employment relationship. This tax rate varies per State, but such tax normally amounts to 2% and 3% on the wage paid.

Property Acquisition Tax

The buyer of any type of real-estate property (house, land, building, apartment, among others) is responsible for paying taxes on real-state or land. The applicable tax may vary among the different States in Mexico, but the average is a 2% rate. Nevertheless, the Property Acquisition Tax may reach 6.5% on the sale price in some states.

In addition to the main applicable taxes, it is important to take into consideration the following topics related to taxation in Mexico:

Transfer Pricing Regulations

Mexico enforces stringent transfer pricing rules to prevent tax avoidance through under- or over-pricing transactions between related entities. Manufacturing companies with parent companies abroad must ensure that all cross-border transactions are conducted at arm’s length meaning prices must reflect market rates.

Companies should prepare detailed transfer pricing documentation annually to comply with these regulations, demonstrating that their transactions meet arm’s length standards.

Compliance with Mexican Financial Reporting Standards (MFRS)

Financial reporting in Mexico must adhere to Mexican Financial Reporting Standards (MFRS), which may differ from International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP). Manufacturing companies must ensure their accounting systems align with MFRS to avoid compliance issues.

Large companies are often required to undergo annual audits, and maintaining accurate financial records is critical for both tax reporting and audit purposes. Records must be preserved for at least five years and include invoices, receipts, and all financial statements. Digitalization of these records is recommended to streamline compliance processes.

Next step for understanding Taxation in Mexico: Partnering with Experts

The complexities of Mexico’s tax and accounting landscape make partnering with experienced service providers or shelter companies an invaluable strategy for manufacturers. These partners can handle administrative burdens such as tax compliance, tax recovery, among other administrative tasks,  allowing companies to focus on their core manufacturing operations.

Understanding taxation in Mexico is crucial for manufacturing companies aiming to establish or expand their operations in the country. Manufacturers can optimize their tax strategies by staying informed about corporate income tax, VAT, transfer pricing, and available incentives while ensuring full compliance. Partnering with local experts like Mexcentrix can further enhance the success of manufacturing ventures in Mexico.

With the right knowledge and support, companies can turn challenges into opportunities. Mexcentrix can help you by facilitating the whole process. Contact us! 

In recent years, nearshore manufacturing has emerged as a transformative strategy for businesses seeking cost efficiency, supply chain resilience, and proximity to key markets. Mexico, with its strategic location and robust manufacturing ecosystem, has played a central role in this shift.   So, what can we expect in 2025?

Mexico’s  Manufacturing Market

Mexico’s manufacturing market is expected to have a compound annual growth rate of 1.32% is (CAGR 2025–2029):

   Source: Statista, 2024. Manufacturing- Mexico. https://www.statista.com/outlook/io/manufacturing/mexico

As shown below, the manufacturing market is expected to grow at a moderate pace; nevertheless, it is expected to continue to solidify its position as an important destination for nearshoring.

Several companies are still shifting manufacturing operations from Asia to Mexico to simplify supply chains, reduce lead times, and mitigate risks associated with global disruptions.

Moreover, potential policy changes after the 2024 US and Mexico elections, may have impacts on trade policy and tariffs, supply chains, and in long-term investment in manufacturing.

Digital Transformation and AI

Digital transformation, automation and smart manufacturing will play a pivotal role in the nearshore strategy. Mexican manufacturers are expected to adopt advanced technologies like AI. Nowadays, AI is being applied worldwide in various areas, including smart production, intelligent robots that performs tasks effectively, workflow automation, improve quality control among others, which is a key efficiency driver.

Sustainability Practices

Sustainability will be a critical factor for manufacturers in 2025. U.S. clients increasingly demand environmentally responsible practices, influenced by consumer preferences. Mexico’s investment in renewable energy and green manufacturing initiatives provides a competitive edge.

Furthermore, companies are expected to invest in innovation and software development for eco-friendly practices.

Geopolitical and Economic Incentives

The reshoring trend is a response to supply chain disruptions and reflects broader geopolitical and economic shifts. The U.S. is still focusing on reducing dependency on China, creating opportunities for countries like Mexico. This movement aligns with ongoing efforts to foster regional economic stability and enhance supply chain resilience.

Evolving Workforce Dynamics

Mexico boasts a skilled and cost-competitive workforce, making it a top choice for nearshore manufacturing. It is expected that manufacturing companies will invest more in workforce training and development, to upskill workers in advanced manufacturing and innovative technologies. While automation and robotics will play a significant role in enhancing productivity, and might reduce workforce requirements, human capital will keep playing a crucial role for manufacturing companies. Being an important factor in Mexico’s nearshoring success.

Succeding with a Shelter Company

Despite its advantages, nearshore manufacturing in Mexico still presents some challenges. These include potential labor shortages in high-demand regions, regulatory hurdles, potential policy and trade changes from U.S and Mexican government and the need for continued investment in infrastructure.

Manufacturing in Mexico has long been a cost-effective strategy for international manufacturers looking to expand production. Collaborating with a shelter company in Mexico offers the safest and most efficient approach to doing business. It allows manufacturers to concentrate fully on production while retaining complete control over their manufacturing processes.

Furthermore, shelter companies also streamline the transition to manufacturing in Mexico by managing critical administrative tasks. These include site selection, employee recruitment and hiring, tax and accounting management, and ensuring compliance with trade regulations. Mexcentrix can help you by facilitating the process through a smooth start and running of operations. Contact us!

Mexico recently overtook China as the United States’ largest trading partner, marking a significant milestone in the North American trade relations. This shift reflects changes in global trade dynamics and reflects that many companies are taking the decision of manufacturing in Mexico and selling to the U.S.

The Numbers Behind the Trend

In 2024, Mexico accounted for approximately 15.3% of total U.S. trade, surpassing China’s share of 12% to 13%. This includes increased exports from Mexico to the U.S., particularly in automobiles, machinery, and electronics, and a rise in U.S. exports to Mexico.

Source: Statista, 2024. https://www.statista.com/chart/20366/trade-volume-top-us-trade-partners/

Factors such as rising labor costs in China, the U.S.-China trade war, supply chain disruptions, and the benefits of nearshoring have all contributed to this change.

But how does Mexico stack up against China in terms of selling products to the U.S.?  Let’s take a deep dive into the key differences and advantages of each.

1. Proximity and Logistics: A Key Competitive Advantage for Mexico

One of Mexico’s strongest advantages over China is its geographic proximity to the United States. The closer geographical distance between Mexico and the U.S. means that products can be transported land or sea much faster than goods shipped from China.

• Mexico to the U.S.: Transporting goods from Mexico to the U.S. is fast, with land shipments taking 3 to 7 days depending on the region. The established infrastructure along the U.S.-Mexico border allows for easy access to major U.S. markets such as California, Texas, and Arizona.
• China to the U.S.: Ocean freight from China to the U.S. can take 14 to 30 days, depending on the port and route.

Below you can find a cost and time comparison on ocean and air freight:

Sources: Container Shipping Cost Calculator [2024] – Freightos & International Container Shipping | Online Freight Marketplace

2.Tariffs and Trade Agreements: USMCA vs. Tariffs

The trade relationship between the U.S. and Mexico is governed by the United States-Mexico-Canada Agreement (USMCA), which replaced NAFTA in 2020. The agreement provides duty-free access for most goods moving between the U.S. and Mexico, provided they meet certain rules of origin.

• Mexico (USMCA): Due to the USMCA, companies manufacturing in Mexico and selling to the U.S. can take advantage of the reduction or exemption of tariffs. Which is also a factor that provides an attractive option for businesses looking to avoid tariffs that might be imposed on goods from other regions.
• China (Tariffs): Trade tensions between the U.S. and China have led to the imposition of tariffs on several Chinese goods. These tariffs can make Chinese goods significantly more expensive, reducing their competitiveness in the U.S. market compared to products from Mexico, which generally enter tariff-free under USMCA.

3. Labor Costs and Manufacturing Efficiency

Labor costs play a pivotal role in determining the overall competitiveness of products sold to the U.S. In the past, China was seen as the go-to destination for low-cost manufacturing. However, wages in China have risen steadily over the years, narrowing the gap between Chinese labor costs and those in other countries, including Mexico.

The average manufacturing wage in Mexico is approximately $2.60 to $4.80 per hour, depending on the role and sector. In contrast, labor costs in China have increased steadily, with hourly wages exceeding $6.50 per hour.

4. Manufacturing Clusters and Industry Specialization

Both Mexico and China have developed strong manufacturing sectors, but their strengths differ by industry. While China is known for its electronics and textiles, Mexico has become a major hub for automotive manufacturing, aerospace, electronics, and medical devices.

5. Intellectual Property

Furthermore, it is considered that manufacturing in Mexico count with a lower risk of intellectual property theft than in China. Still both countries have strong work to do in intellectual property protection matters.

What’s Next in regards to manufacturing in Mexico?

The dynamics of global trade have shifted, and for many companies, Mexico is proving to be a more advantageous option for selling products to the U.S. than China. While China remains a dominant player in many sectors, the trade war, rising labor costs, and increasing geopolitical risks have made it a less attractive option for U.S.-bound goods in recent years.

Politics in each country play a very important role, as if import duties in United Sates are increased for products manufactured in Mexico, the scenario can change.

For foreign companies seeking cost-effective, efficient, and nearshore manufacturing, Mexico offers clear advantages in terms of speed, cost savings, and flexibility. As such, it’s no surprise that manufacturing companies are choosing Mexico over China for its manufacturing process and selling goods to the U.S. market.

In Mexcentrix we can help you by facilitating the process through a smooth start and running of operations. Contact us!

Mexico’s potential in semiconductor manufacturing extends far beyond its geographical proximity to the U.S. Over recent years, the country has made impressive strides in enhancing its technological capabilities. Traditionally known as a hub for low-cost, labor-intensive manufacturing, Mexico has gradually transformed its workforce to include more advanced manufacturing skills.  The availability of more highly- skilled professionals opens its doors to other industries.

As worldwide demand for semiconductor chips remains insatiable, Mexico can play an important role.  As the graph below show demand and revenue has grown significantly in the last couple of years:

Semiconductors Revenue in Mexico

Source: https://www.statista.com/outlook/tmo/semiconductors/mexico

In regards to manufacturing, historically, Taiwan has been the largest semiconductor producer in the world. Nevertheless, with the United States taking the initiative with the CHIPS Act, there has been a growing interested in establishing chip manufacturing facilities in North America.

The above- mentioned, leads to Mexico playing an important role in supporting the North American market.

Supporting the North American Market

Even if Mexico doesn’t develop full-scale semiconductor manufacturing, as the country isn’t considered ready for this, it can still play a supportive role in the North American semiconductor supply chain:

• Reduced Reliance on Asian Markets: Rather than attempting to build end-to-end semiconductor manufacturing capabilities, Mexico could focus on less capital-intensive, yet crucial, stages of the semiconductor process like TAP (Testing, Assembly, and Packaging). By contributing with this special process or focusing on a specific area of the supply chain, it can help North America reduce its dependence on Asia for certain semiconductor manufacturing steps.
• Enhanced Supply Chain Stability: Mexico’s location next to the U.S. means quicker shipping times and reduced transportation costs, which can be crucial during periods of high demand or supply chain disruptions.
• Complementary Manufacturing Capabilities: Mexico’s strengths in manufacturing and assembly can complement the high-tech, capital-intensive manufacturing facilities located in the U.S., creating a balanced ecosystem that strengthens the entire North American semiconductor market.

By following this roadmap, Mexico can position itself as an essential part of North America’s semiconductor supply chain, supporting the region’s technology goals and contributing to a more resilient and integrated semiconductor industry.

Nowadays, there are already important players in the semiconductor industry in Mexico,  including R&D centers, assembly and test manufacturing.

Which include among others:

• Intel: Guadalajara.
• Texas Instruments: Aguascalientes.
• Infineon Technologies: Tijuana.
• Skyworks Solutions: Mexicali.
• QSM Semiconductors: Queretaro

Furthermore, the future of semiconductor manufacturing in Mexico looks promising. With its strategic advantages, growing skilled workforce, and supportive government policies, the country is well-positioned to become an important part of the global semiconductor supply chain.

Next Steps for Semiconductor Manufacturing in Mexico

• Build Specialized Facilities: Developing specialized semiconductor fabrication facilities requires substantial investment but can be done in phases. Mexico can start by establishing facilities focusing on specific parts of the semiconductor manufacturing process, such as wafer testing, packaging, or assembly.
• Expand Education and Training Programs: Partnering with universities and technical institutes (both locally and abroad) to create specialized programs in semiconductor engineering and advanced manufacturing will be critical to further develop a skilled workforce. Scholarships, internships, and apprenticeships can attract students to these fields and provide hands-on experience.
• Government Support and Incentives: Offering tax incentives, subsidies, and funding grants can help attract international semiconductor companies to invest in Mexico. Furthermore, policies that support R&D tax credits and provide favorable loan terms for infrastructure projects can further enhance investment projects.
• Availability of adequate infrastructure and utilities: Availability of water and electricity supply are critical for different processes in the semiconductor manufacturing industry.

Investing in Mexico

As the demand for semiconductors continues to grow, Mexico’s role in this industry is likely to expand, offering exciting opportunities for businesses and workers alike.

Whether you’re a company looking to invest or a professional seeking opportunities in the semiconductor field, now is the time to pay attention to Mexico’s burgeoning semiconductor landscape. Mexcentrix can help you by facilitating the process through a smooth start and running of operations. Contact us! 

Mexico has rapidly become a significant hub for electronics manufacturing, driven by a combination of strategic location, cost-effective labor, skilled workforce, and favorable trade agreements. This blog explores the factors behind Mexico’s rise in the global electronics manufacturing landscape, the challenges it faces, and the potential for future growth.

Strategic Location and Proximity to the U.S.

One of Mexico’s most significant advantages is its proximity to the United States, the world’s largest consumer market. This geographical advantage facilitates just-in-time delivery, reduces shipping costs, and enhances the ability to respond quickly to market demands. The shorter supply chains compared to those in Asia offer manufacturers the flexibility to manage production more efficiently, especially in the context of the ongoing global supply chain disruptions.

Cost-Effective and Skilled Labor Force

Mexico offers a competitive labor market with wages significantly lower than those in the U.S. or Europe but higher than in many Asian countries. This cost-effectiveness does not come at the expense of quality. Mexico’s workforce is known for its technical skills, especially in electronics, automotive, and aerospace manufacturing. Numerous technical schools and universities in Mexico offer specialized programs in engineering and electronics, ensuring a steady supply of skilled workers.

Trade Agreements and Regulatory Environment

Mexico’s participation in the United States-Mexico-Canada Agreement (USMCA) and its network of free trade agreements with over 50 countries provide manufacturers with tariff-free access to key markets. This regulatory environment makes Mexico an attractive destination for foreign direct investment (FDI), as companies can produce goods in Mexico and export them globally with fewer trade barriers.

Growing Infrastructure and Technology Ecosystem

Mexico’s infrastructure, particularly in its northern industrial zones, has seen significant improvements. Modern industrial parks, reliable energy supplies, and robust transportation networks are crucial for high-tech manufacturing. Moreover, the Mexican government has been proactive in supporting the development of a technology ecosystem, promoting innovation and investment in electronics manufacturing.

Challenges Facing the Industry

Despite these advantages, Mexico’s electronics manufacturing sector faces several challenges, including political instability due to the change of presdient can create uncertainty for investors. Additionally, in some cases, Mexico faces challenges in intellectual property protection, which can be a concern for companies dealing with high-value, innovative products.

The Main Electronics Manufacturing companies in Mexico and where are they located

Mexico is an important center for electronics manufacturing, with many companies operating in the country. Here are some of the main companies and their locations:

The Most Manufactured Electronic Products in Mexico

The Future of Electronics Manufacturing in Mexico

The future of electronics manufacturing in Mexico looks promising. The ongoing trend of nearshoring, where companies relocate production closer to their home markets, is likely to benefit Mexico. As companies seek to mitigate risks associated with long supply chains, Mexico’s strategic advantages become even more pronounced.

Investments in education and infrastructure, coupled with government support for innovation, will be key to sustaining growth. Additionally, Mexico’s ability to adapt to global trends, such as the increasing demand for green and sustainable manufacturing practices, will determine its long-term success in the electronics manufacturing sector.

Mexico’s rise as a global hub for electronics manufacturing is the result of a strategic blend of location, skilled labor, favorable trade agreements, and growing infrastructure. While challenges remain, the country’s potential for growth is significant. As global companies continue to seek efficient and reliable production bases, Mexico is poised to play an increasingly important role in the electronics manufacturing industry.

Interested in Manufacturing Electronics in Mexico?

If you are a company in the electronics industry interested in manufacturing in Mexico, it is important to have a reliable partner for a hassle-free start of operations.  Mexcentrix can help you by facilitating the process through shelter services and flexible solutions that guarantee long-term success. Contact us! 

Starting a business in Mexico

Incorporating a company from abroad is a complicated task if you do not count with personnel in Mexico with know- how and experience in this process and who can submit all the paperwork required before the public notary and authorities.  As each country count with different processes and regulations for company incorporation, it is important to learn beforehand about the process to know what to expect.

Mexico allows foreigners to incorporate and operate companies in Mexico without limitation in most cases, nevertheless, some activities in Mexico are restricted for foreigners.

Steps for Incorporating a Company in Mexico

The main steps for incorporating a company in Mexico are:

Determining the type of entity.

The 3 most frequently used corporations in Mexico are:

• Sociedad Anónima (“S.A.”).
• Sociedad de Responsabilidad Limitada (“S. de R.L.”)
• Sociedad Anónima Promotora de Inversión (“S.A.P.I.”)

Contacting with an expert is always important to receive advice on which type of entity is best for your company, in some cases even incorporating a company is not needed for establishing operations in Mexico, therefore it is always important to contact the experts, such as Mexcentrix, who counts with legal advisors that can provide advice and consulting on this topic.

Following on determining the type of entity, the company must determine the corporate name of the new entity, which must be authorized by the Ministry of Economy.

Once the name of the new entity is authorized the company shall proceed with the drafting of the bylaws, which must include among others:

• Name of the company and its address.
• Object of the company: You should include the corporate purpose and  the main activities of your business in detail, and every other activity related to the business that the company will carry on.

• Name and data about shareholders/ partners, including number and percentage of ownership. Under the Mexican law all the three abovementioned entities must have at least minimum two shareholders/ partners.
• The partners must appoint the corporations management (either a Board of Managers or a Sole Manager).
• Name of the Statuory Auditor (Comisario)
• Rules on profit distribution
• Powers of attorney granted to individuals: When the new company has foreign shareholders/ partners it is important and recommended to appoint someone in Mexico to appear before the public notary and perform other administrative tasks before the authorities. If the power of attorney is granted to a foreigner, it must be apostilled/ legalized in the country of origin. Afterwards, it must be translated to Spanish by an official translator and notarized in Mexico.
• Characteristics and organization of annual partners/ shareholders meeting.
• A social capital and nationality chapter which must be included when the shareholders/ partners are foreigners.
• Causes and procedure for dissolution or liquidation.

Bylaws signature

• The signature of the by-laws must take place in Mexico, in the State where the company has been incorporated. Incorporating shareholders must appear personally or represented through powers of attorney before the public notary.
• The new company must have a physical address in Mexico for incorporations purposes which can be subsequently changed.
• Additionally, if it’s the case a copy of organizational documents duly notarized and certified by Apostille or legalized, must be provided.

Registration Before Authorities

• Once incorporated, the first step is to register the new company before the Public Registry of Commerce (Registro Público de Comercio).
• Afterwards the company must be registered in the Tax Administration Service (SAT) in order to obtain its tax id (RFC).
• If the company counts with foreign shareholders/partners shall be registered before the National Registry of Foreign Investments (RNIE)
• As most companies hire employees they should register before before the Mexican Institute of Social Security (IMSS) and the Institute of National Housing Fund for Workers (INFONAVIT).

Do you have any doubts regarding the company incorporation process in Mexico? Feel free to contact us, we have helped several of foreign companies to throught the incorporation process in Mexico and to start operations.

Your company has decided to start manufacturing operations in Mexico but do not know where to start from? Site selection is within the first steps after after performing a feasibility  study. Nevertheless, most companies do not know that  choosing the right site involves a thorough examination of multiple factors.  

This blog post will navigate you through a site selection, we will explore the detailed steps necessary for finding the ideal industrial building for your operations. 

Geographical Location

• Proximity to Borders and Ports: Businesses that rely heavily on exports should consider locations near the US border or major ports like Veracruz and Manzanillo to streamline logistics and reduce shipping costs. 

• Proximity to Suppliers: Proximity to key suppliers can reduce lead times and transportation costs of raw materials and components. 

• Free economic zones: Being relatively close to a free economic zone such as a “Recinto Fiscalizado Estrategico” can be an important point to take into account for site selection, if it goes according to the business strategy.  

Infrastructure

• Transportation Networks: Access to highways, railroads, and airports is crucial for efficient supply chain management. The quality of local roads and the availability of public transportation for employees should also be assessed. 
• Utilities: Reliable access to water, electricity, and gas are essential. Evaluate the capacity and dependability of these utilities in the prospective area.  

Labor Market

• Availability of Skilled Workforce: Depending on the type of workers required, Mexcentrix can guide you on which location can suit best your company needs and to guide you to  regions with a high concentration of skilled labor relevant to your industry.  
• Labor Costs: Wage levels can vary significantly across Mexico. Balancing cost with the quality of labor is vital for long-term sustainability.  

Regulatory Environment

• Local Regulations and Incentives: Some states provide an more attractive incentives package for foreign investor than other. This will also depend on the amount of investment and employment generation. 

Cost of Living and Quality of Life

• Employee Attraction and Retention: Areas with a higher quality of life can attract and retain skilled workers more effectively. Consider factors such as housing, education, healthcare, and recreational facilities. 

• Cost of Living: The cost of living can impact wage expectations and overall operational costs. Balancing affordability with quality of life is important for both business and employee satisfaction. 

Security

• Crime Rates: Assess the security situation in potential areas. High crime rates can affect employee safety, supply chain security, and overall business operations. 

Selecting the ideal site for your business in Mexico involves a comprehensive evaluation of various factors. By considering geographical location, infrastructure, labor market, regulatory environment, supply chain proximity, cost of living, security, and cultural aspects, businesses can make informed decisions that align with their strategic goals. A thorough site selection process not only enhances operational efficiency but also contributes to long-term success and sustainability in the vibrant Mexican market. 

Collaborating with a shelter service provider like Mexcentrix can streamline and accelerate the site selection process in Mexico. Our team of industry specialists will analyze your unique market requirements to identify the optimal location for your operations. Contact us!  

Businesses are continuously looking for ways to maximize cost savings without sacrificing quality or efficiency in today’s global market. Creating alliances with shelter companies is one successful approach that companies are using, especially in the manufacturing industry.

Most importantly, this strategy is especially advantageous for businesses wishing to establish operations abroad, who are not familiar with local regulations and wish to start operations as soon as possible.

What is a Shelter Company?

A shelter company offers international businesses a way to set up operations abroad without having to worry about local laws and regulations, including involved risks and complications of handling legal, administrative, and compliance-related matters. With this model, businesses can concentrate on their core business, such as production, quality control, inventory, and the shelter company will take care of the rest.

Key Benefits of Using a Shelter Company:

• Reduced Start-Up Costs: Under Mexcentrix shelter services your company can save up to 40% during the pre-operational phase and up to 20% after startup. This is due to economies of scale, the already established administrative teams, and local expertise and experience that help you maximize cost savings.

• One-stop shop: Most shelter services fully support investing in Mexico. From feasibility studies and cost analysis, site selection, company incorporation (if applicable), and visas for expatriates, to all administrative tasks upon starting operations.

• Streamlined Administrative Processes: Shelter companies manage all local compliance requirements, such as taxes, labor laws, and environmental regulations. This reduces the need for a company to hire specialized administrative staff or consultants, resulting in substantial cost savings.

• Labor Cost Advantages: Shelter companies manage the recruitment process, and provide recommendations on wages, benefits, and compensation packages to ensure lower turnover rates that lead to cost savings, in addition to finding employees at competitive wages.

• Access to Established Supply Chains: By partnering with a shelter company, businesses can tap into existing networks of suppliers and service providers, reducing procurement costs and improving operational efficiency.

• Risk Mitigation: Shelter companies assume many of the operational risks, including legal and financial liabilities. This allows foreign companies to enter new markets with reduced risk exposure.

Real-World Example: Mexico’s Shelter Program

Moreover, Mexico is a prime example of a country where shelter companies have significantly benefited foreign investors. Additionally, he country offers an attractive blend of low labor costs, a skilled workforce, and proximity to major markets like the United States and Canada.

• Labor Costs: Labor costs in Mexico are significantly lower than in the US and Europe. The average manufacturing wage in Mexico is between 50% to 70% lower than in the United States​.

• Operational Efficiency: Shelter companies in Mexico, such as Mexcentrix, have a proven track record of helping businesses achieve operational efficiency. They provide comprehensive support services, including HR management, payroll, customs, and foreign trade compliance, among others.

Steps to Maximize Cost Savings with a Shelter Company

• Select the Right Partner: Choose a shelter company with extensive experience and a robust network of local contacts. In addition to a partner that offers customized solutions tailored to your specific industry needs.
• Leverage Local Expertise: Utilize the shelter company’s knowledge of local regulations, market conditions, and business practices to navigate the complexities of the new market smoothly.
• Focus on your Core Business: Let the shelter company take care of all administrative and compliance tasks, which is what they do best, allowing your team to concentrate on core business activities that drive value and growth.
• Continuous Improvement: Regularly review and assess the partnership with the shelter company to identify areas for improvement and additional cost-saving opportunities.

Therefore, for businesses looking to nearshore will take advantage of maximizing cost savings, partnering with a shelter company can be a game changer. Businesses can achieve operational efficiency by leveraging local expertise, cutting start-up costs, and streamlining administrative processes.

Furthermore, for more insights into how shelter companies can help your business, consider reaching out to Mexcentrix, exploring case studies of companies that have successfully leveraged this model. Contact us!

The Bajio region of Mexico stands out as a top contender when it comes to finding the perfect location for manufacturing. Known for its strategic advantages, this region offers a blend of cost-effectiveness, skilled labor, and robust infrastructure that can significantly boost your manufacturing operations. Here’s why the Bajio region is a hotspot for manufacturers.

Strategic Location

• Central Position: The Bajio region is centrally located in Mexico, providing easy access to major markets within and internationally. It is a strategic location not so far from the main ports such as Manzanillo, Lázaro Cárdenas, and Altamira and relatively close to the U.S. border.

• Connectivity: The region is well-connected by a network of highways, railroads, and proximity to major ports and airports, facilitating efficient logistics and distribution.

Skilled Workforce

• Education and Training: The region is home to several universities and technical institutes that produce a skilled labor force, particularly in engineering and manufacturing disciplines.
• Labor Quality: As the Bajio region, is an important automotive and aerospace hub, you can find workers with previous experience and a high technical expertise.

Economic Incentives

• Government Support: The Mexican government offers various incentives for foreign and domestic investors, including tax incentives, subsidies, and support for infrastructure development, depending on the size of the investment.
• Special Economic Zones: Some areas within the Bajio region have been designated as special economic zones, providing additional benefits to manufacturers.

Benefits of SEZ:

• Tax Incentives: SEZ businesses often enjoy tax benefits, including reduced corporate taxes, VAT exemptions, and import duty reductions.
• Infrastructure Development: SEZs receive significant investments in infrastructure such as transportation, utilities, and communication networks, which facilitate efficient manufacturing and logistics operations
• Regulatory Simplification: SEZs typically offer streamlined regulatory processes, making it easier for companies to establish and expand their operations.

Cost Advantage

• Lower Labor Costs: Compared to the northern part of Mexico, labor costs in the Bajio region are significantly lower, allowing for more competitive production costs.
• Operational Costs: Overall operational costs, including utilities and real estate, are also lower in the Bajio region.

Industrial Clusters

• Automotive and Aerospace: The region has established strong industrial clusters, particularly in the automotive and aerospace sectors, leading to a well-developed supply chain and collaboration opportunities. The Bajío region has approximately 1,000 to 1,200 automotive companies and there are estimated to be around 100 aerospace companies. (DATA MEXICO)

• Supplier Base: A robust network of suppliers and service providers supports manufacturing operations, ensuring the availability of necessary materials and components.

Infrastructure

• Modern Facilities: The region boasts modern industrial parks and manufacturing facilities designed to meet the needs of high-tech manufacturing.

Quality of Life

• Living Standards: The Bajio region offers a good quality of life with modern amenities, making it attractive for expatriates and local employees.
• Safety: Most states in the Bajio region are considered very safe places, which is an important consideration for foreign investors and their employees.

Innovation and Technology

• Research and Development: In the Bajio region, several research institutions and a culture of innovation supporting advancements in manufacturing technologies and processes.
• Adoption of Industry 4.0: Companies in this area are increasingly adopting Industry 4.0 practices, enhancing efficiency and productivity through automation and data exchange.

In summary, the Bajio Region presents a compelling location for manufacturers looking to optimize their operations. From its strategic location and skilled workforce to cost advantages and modern infrastructure, the region offers an integral environment conducive to manufacturing success. By choosing this region, manufacturers can benefit from a competitive edge, operational efficiency, and a supportive business ecosystem, making it an ideal location for both new and expanding manufacturing ventures.

Is your business considering manufacturing in the Bajio Region? Mexcentrix can help you by facilitating the process through a smooth start and running of operations. Contact us!