New Trade Routes
The pandemic has brought substantial changes in the way we do businesses. New ways to sell, market, distribute and to contact the final customers. This is happening not so much for the so- called “B2C” or sales from “Business to Final Customer”, but also for the “B2B” or sales from “Business to Business” in a value chain.
Moreover, and prior to the pandemic, there was already convulsive activity in the international trade with the, so-called by the global news media, “trade war” between the United States of America and China.
As well as its preludes, such as the BREXIT, the oil market, and the fall in prices of commodities such as food, minerals, and other raw materials.
In short, a whole new scenario has been cooked up for global companies, or those that, without being so, participate in global value chains.
Now, how does Mexico fit into this scenario of changes in international trade and the pandemic? Thanks to the signing of the new Free Trade Agreement between the United States of America, Canada and Mexico (USMCA), value chains, both in their production stage as well as in the distribution, are favored.
The United States of America (USA) remains a large market worldwide, if not “the” big market, and with the sum of Canada and Mexico in a free zone, then the position of “North America” is definitely “the” market. While the growth path to get out of the pandemic is not very clear in Mexico, due to the lack of counter-cyclical measures, the US and Canada have done the job, and their economies will be among the least affected and with a clearer recovery soon! At the time of writing these comments, a second package of fiscal stimuli is about to be approved in the USA, and no one discard that there will be a third one in the first half of next year. This indicates the decision of the government of this country to encourage its economy.
Considering the value chains already created for more than 20 years between these 3 countries, since the entry into force of the first Free Trade Agreement (NAFTA), many industries are already sufficiently integrated, and the new USMCA, will only accentuate and enhance them.
It is there that Mexico should take advantage to consolidate its global presence as the place of manufacturing for North America, and now, to impulse the nearshoring as an even more interesting alternative. Manufacturing, nearshoring and distribution operations for this market will be the impetus required by the Mexican economy.
How can companies start their operations in Mexico? Well, of course by opening plants or production processes within the Mexican territory. But there is another way to achieve this, through the Shelter companies, which already operate large volumes of imports and exports in this market. These companies already have the knowledge, the trained personnel and the facilities to start a healthy operation from day one!
You can even think of this type of company as a way to a Jump-start, and when the stable volumes of production are acquired, the environment is known, and the company is completed with Import/Export operating licenses, the operation can be transferred, and the companies may continue without altering their pace, let’s say it’s a seamless transition.
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