More Chinese Enterprises Consider Mexico'S Construction Of The "Mexico Plus" Agreement As A Potential Obstacle.

The United States has recently imposed a 25% tariff on 200 billion US dollars in China's exports to the US and threatened to raise taxes on another $325 billion in China's exports to the US. Wu Guangyun, vice president of North China Toyama Industrial Park, told reporters that as the news of the escalation of trade friction continued to come, businesses that visited the city were also in an endless stream. "The current situation has made many enterprises in China very confused, and some enterprises have exported a lot to the United States. No fear of future uncertainty on the tariff list has become more urgent on the list.

Under the shadow of tariffs, to invest and build factories in Mexico has become an option for many Chinese manufacturing exporters who rely on the US market. "There are dozens of intentional enterprises to consult and consult recently, mostly from the economically developed coastal provinces of Zhejiang, Jiangsu, Guangdong and Shandong, which are engaged in auto parts, machinery and household appliances business." He said.

Mark Keller, chief economist of the economist think tank, told the twenty-first Century economic news reporter that unlike other Latin American countries, Mexico traditionally viewed China as a competitor rather than a potential investor. "Sino US trade friction is expected to open a door for Sino Mexico economic cooperation. Compared with Mexico, China will shift to higher value-added manufacturing industries faster. China may choose to increase investment in Mexico. "

Ruth Maria Mora, Vice Minister of economic affairs of Mexico, said recently that China is an important investor in Mexico auto parts, steel industry and electronics industry. Mexico welcomes Chinese enterprises to invest in Mexico and bilateral cooperation in automobile industry and mining industry.

Opening the door of cooperation between China and Mexico

The head of a domestic and foreign trade enterprise told the twenty-first Century economic report reporter that the company engaged in warehousing equipment production and trade for more than 10 years, and previously exported to the United States accounted for 1/3 of the company's overall business. Customers mainly came from dealers in eastern and western states. Orders for the US market have dropped sharply since last year.

In 2018, the United States imposed a 25% tariff on Chinese products valued at about $50 billion, and the "steel structure and parts" category of storage shelves products was unfortunately "tariff list". "The US customer will not come at once, because the tariff is very high now, plus all other expenses, no one can bear it." The company complained that the company had to turn to other markets, but the loss of the US market had a great impact on revenue. In order to return to the US market, he began to consider investment in Mexico.

The car is a major area in which the United States is struggling with its trading partners. President Trump is threatening to impose global tariffs on cars. This month, the United States increased the tariff of $200 billion on Chinese imports to 25%, covering a large number of auto parts. The US Mexico agreement (the updated North American Free Trade Agreement) requires that the origin rate of cars and parts should be raised from 62.5% to 75%. It is also prompting many automakers to consider adjusting the supply chain and transferring more parts and components manufacturing business to North America in order to meet the requirements of the original origin rate.

"The public is our important customer. Some of their cars are eventually exported to the United States. There will be localization requirements. In 2017, they proposed that we should set up factories in Mexico, so we used to invest mainly in response to customer needs." Zheng Xiaoling, deputy general manager of Polytron Technologies Inc and Secretary of the board of directors, told reporters on twenty-first Century economic report.

The new headquarters in Hangzhou is the first enterprise in Toyama Industrial Park in China. It is engaged in R & D, production and sales of automotive precision parts, and provides a systematic solution for valve train. Customers include Volkswagen, Audi, Ford, general motors and other auto manufacturers. The company plans to invest $9 million in the first phase of the project.

According to Zheng Xiaoling, new coordinates of the Americas business has just started, and products are mainly exported to Mexico and Brazil. In the future, we hope to supply the European and American car manufacturers in the Americas based on the Mexico factory, which will become an important business growth point for the company.

"We are mainly the core components of the automobile engine, and there are not many suppliers that meet the requirements of the vehicle manufacturer worldwide. The replacement of suppliers is also very expensive for the whole vehicle factory, so raising tariffs has little impact on us." She said about potential and comprehensive vehicle tariffs.

At present, half of China's investment in ink is concentrated in the manufacturing sector, but the total investment accounts for a small proportion of total foreign direct investment. According to statistics of the Ministry of economic affairs of Mexico, China's direct investment in Mexico in 2017 was 228 million US dollars, up 300% over the same period last year. In 2018, China's direct investment in Mexico was 250 million US dollars, an increase of 9.7% over the same period last year, and China's investment in Mexico reached 1 billion 145 million US dollars in the 1999-2018 years.

"Going out" should focus on industry matching

It is hoped that the access to the North American market with "zero tariff" is only a factor for Chinese enterprises to invest in Mexico. The investment decisions are more strategic considerations for the long-term development of enterprises and the layout of globalization. At present, there are thousands of Chinese enterprises investing in Mexico. Hisense, TCL, Dechang electric, Fuling global, Beiqi group, three flower holding group and Haitian Group have set up factories in Mexico.

"Manufacturing enterprises go overseas to invest and build factories are not as simple as having a sales branch and doing a single business. They are investing heavily in the early stage, and they need to form a manufacturing system locally." Wu Guangyun told reporters that parts, excipients, components, raw materials and other parts with high logistics cost need to be purchased and subcontracted locally, so the industrial base and supply chain synergy ability of the host country is the key.

Mexico has become one of the largest manufacturing bases in the world because of the complete industrial sector, well-developed manufacturing industry, and the signing of the FTA with 45 countries. The world's top 500 enterprises have factories here. In 2018, Mexico's manufacturing industry absorbed foreign capital of 15 billion 523 million US dollars, accounting for 49.1% of the total FDI absorbed.

"For example, the new Toyama Industrial Park project is located in the new Leon state. It is the second largest industrial area in Mexico, with KIA, Daimler, Caterpillar and other auto giants. There are 15 auto plants within 500 kilometers of the park, more than 400 auto parts enterprises, and home appliance supporting industries, which are nearly half of Mexico. Enterprises will soon find local partners in the supply chain. " Wu Guangyun said.

The "Mexico agreement" improves the country's origin rate, which means that enterprises need to replace parts imported from China with more local raw materials and accessories.

It is worth noting that the "Mexico agreement" stipulates that 40% of the spare parts must be paid by workers in the three countries with a salary of more than 16 dollars, which means that a large number of automobile production and processing may be transferred to the United States and Canada. "If Mexico raises the hourly wage to 16 dollars, that is basically the same as the wage level in the United States, and the cost advantage of Mexico labor will not exist. This is very unrealistic." Zheng Xiaoling said, because there are still several years of transition, how to implement the landing needs to wait and see. "Our factory in Mexico is fully automated, not a labor-intensive industry, and it has little impact on the rise in labor costs."

The "US Mexico agreement" still needs approval from the legislative bodies of three countries to take effect. Mark Keller believes that the agreement is expected to pass this year. If it is not approved by the end of the year, there will be no possibility of passing it in the context of next year's US general election.

Trump has always been unhappy with Mexico's immigration problem. Not long ago, he threatened to impose a 25% tariff on Mexico automobile instead of the Mexico accord. According to Mark Keller analysis, Mexico is the largest trading partner of the United States, and Sino US trade friction has reduced the possibility of the United States breaking up the US Mexico agreement. "But you never know Trump!"

Radiation market in the Americas

A number of enterprises interviewed told reporters that they still hesitated whether the main reason for their investment in Mexico was that the environment on the other side was too strange. HOLLEY group, a maker of manufacturing, is aware of the pain and difficulty of Chinese manufacturing industry going out. "We are very aware of the demand of" going out "by Chinese modeling enterprises, which will provide" one-stop service "for Chinese funded enterprises in the park, so that enterprises can avoid detours and pay less tuition fees. Wu Guangyun said.

Hua Toyama Industrial Park is the first large-scale Chinese Industrial Park in Mexico. It is also the second overseas industrial park developed by HOLLEY group after the Thailand Luo Industrial Park. In 2018, it became a provincial-level overseas economic and trade cooperation zone in Zhejiang province.

Wu Guangyun said that in the location of the park, a country in South America has also been considered. The government is very enthusiastic, but the trade union is powerful, and frequently strikes. Mexico is more stable. Although there is no special tax preference for foreign investment, the tax policy is entirely "national treatment". "Finally, we chose Monterey, near the border between Mexico and Mexico, with well-developed economy and good public order. At the entrance of the park is a highway that runs directly to the US border, directly to the railway marshalling stations and ports in the whole territory of Mexico, and can radiate the Americas market.

According to the introduction, the Park focuses on developing auto parts, information technology, machinery and equipment, electronic and electrical appliances, light industry, new energy and new materials industry. "At present, the wages of Monterey workers are about 4000 yuan (including social security) per month, so labor-intensive enterprises, such as textiles, clothing, shoes and hats, may not be suitable for our parks. These industries are mainly turning to Kampuchea, Burma and Bangladesh." He said.

The planned area of the park is 8.5 square kilometers, and it is expected to absorb 100 enterprises in China and around the world. The investment in the enterprises will reach US $2 billion and provide 20 thousand jobs for the local enterprises. Wu Guangyun said that the 1 phase of the park plans to invest $500 million, and has invested $100 million. Since the start of investment in 2018, 5 enterprises have signed contracts and 2 enterprises have been registered.