US NewsChinese brands 'Made in Mexico': sidestepping US tariffs and reshaping trade

Chinese brands 'Made in Mexico': sidestepping US tariffs and reshaping trade

Hofusan Industrial Park

Images source: © Parque Industrial Hofusan | Hofusan Industrial Park

12:38 PM EDT, May 1, 2024

Dozens of Chinese companies have moved to industrial parks in Northern Mexico, operating as "Mexican brands" and engaging in trade with the USA.

Furniture from the Man Wah Furniture factory in Monterrey carries labels stating they were 100% made in Mexico. These products are distributed to major American retail chains like Costco and Walmart.

Chinese furniture factory in Mexico© manwah.com | manwah.com

However, as the British broadcaster BBC reported, this furniture is actually Chinese, produced in a Chinese factory established on Mexican soil.

Man Wah is among the numerous Chinese companies that, in the past few years, have relocated to industrial parks in Northern Mexico to position their production closer to the American market.

This move not only saves on transportation costs but also allows their products to be considered fully Mexican. Consequently, Chinese firms can sidestep American tariffs and sanctions on Chinese goods amidst the ongoing trade war between the two nations.

Thanks to Chinese investment in Mexico, the country's economy has seen dynamic growth. By June of the previous year, Mexico's total exports rose by 5.8%, reaching 52.9 billion dollars.

In just the first two months of this year, capital investments announced in Mexico nearly matched half of the annual total for 2020.

The Man Wah furniture factory is situated in the Hofusan Chinese-Mexican industrial park. The demand for plots in this area is immense, and every available space has already been sold.

The Association of Industrial Parks in Mexico has announced that all land slated for development by 2027 has been purchased.

Many Mexican economists assert that China's interest in Mexico is more than a mere trend. "The structural reasons that are bringing capital to Mexico are here to stay," says Juan Carlos Baker Pineda, a former Deputy Minister of Foreign Trade of Mexico, in a BBC interview. He adds that there's no sign the trade war between China and the United States will ease up anytime soon.

Baker Pineda was part of the Mexican negotiation team for the new North American free trade agreement, the USMCA.

"While the Chinese origin of the capital coming into Mexico may be uncomfortable for the policies of some countries," Pineda remarks, "according to international trade legislation, those products are, to all intents and purposes, Mexican."

Pineda emphasizes that this situation has strategically positioned Mexico between two global powers. Notably, Mexico has recently overtaken China as the USA's main trading partner.