Frequently Asked Questions

Some challenges include navigating complex regulatory procedures, cultural differences, language barriers, understanding local market demands, and finding reliable local partners. It is vital to have physical presence in Mexico who represents your interests - we from Mexecutin LLC and our pre-selected partners who support you in the whole expansion process.

We have already pre-screened the best local partners for your expansion process to Mexico. Our partners are trustful, reliable, and have a wide proven (international) portfolio. In addition, they speak English.

No! You decide with how many partners you want to work with - we are totally flexible and adapt us based on your needs. You may have already a legal representative or headhunter but no Import & Export partner - so based on your needs we analyse which partner could be the best fit for your business.

Yes! Thousands of foreign companies manufacture in Mexico, benefiting from a range of programs designed to ensure the safety and security of employees, equipment, and operations. These initiatives are carefully implemented to maintain high standards of protection, making Mexico an attractive and reliable location for international manufacturing.

Regulations in Mexico span various operational facets such as employment, import-export, environmental conservation, occupational health and safety, and taxation. These laws differ from those in other nations. The Mexican government facilitates compliance with regulations by offering efficient mechanisms and procedures for manufacturing companies to access information, request authorizations and permits, and obtain necessary assistance. Among the most rigorously enforced regulations in Mexico are industrial health and safety standards mandated by the Mexican Labor Law, followed closely by environmental and trade regulations.

Mexico's environmental legislation bears similarities to that of the U.S., yet it extends further by implementing additional provisional regulations. The General Ecological Law in Mexico, known as LGEEPA, comprehensively addresses various environmental concerns, encompassing water, air, and soil pollution, resource preservation, and environmental enforcement. Three primary industrial requirements pertain to air pollution, water pollution, and hazardous waste management.

The direct labor minimum wage for manufacturing in Mexico is around $1.90 USD per hour, including benefits, based on an exchange rate of 18.5. In contrast, China’s average labor cost is $3.60 USD per hour, including benefits. Additionally, Mexico has a 48-hour work week compared to China’s 40-hour work week, making labor costs in both countries roughly equivalent at about $500 USD per month. However, Mexico provides an additional day of productivity. Overtime pay regulations in both countries also affect labor costs. Both Mexico and China require overtime pay at double the regular wage for hours worked beyond the standard work week, with Mexico having strict labor laws that are rigorously enforced. This means that, while base wages may be similar, Mexico's additional productivity and strict adherence to labor laws can make it a more cost-effective option for manufacturers.

Absolutely. Mexico is witnessing a rise in the number of lower-tier suppliers offering commodities like metals, resins, and other raw materials. Nevertheless, the bulk of raw materials and equipment utilized in maquila operations are still sourced from outside Mexico, predominantly from the U.S., Canada, Europe, and the Far East.

Absolutely. Ground freight traverses modern highways comparable to those found in the U.S. and Europe. Moreover, Mexico boasts a well-established infrastructure facilitating the movement of goods via air, waterways, and rail. Numerous major U.S. carriers operate services across the U.S.-Mexico border, leveraging partnerships with Mexican carriers to facilitate seamless transportation of goods. For companies in need of warehousing or distribution space, ample options are available in both major cities and second-tier urban centers throughout Mexico. While class A space may be limited, class B and C facilities are abundant and accessible.

Sending employees to train or work in Mexico is generally as safe as sending them anywhere else. However, it's advisable to take some precautions, such as ensuring employees understand cultural norms and providing them with essential phrases to navigate their surroundings. When sending employees to Mexico, safety precautions should mirror those taken when sending them anywhere in the U.S. Company policies and guidelines should transcend borders, and employees should be held to similar standards regardless of their location.

Yes, foreigners can purchase real estate and land in Mexico. However, managing all aspects of the facility's infrastructure, utilities, taxes, and regulations can be challenging for first-time owners. Some companies that own their manufacturing facilities in Mexico opt to utilize third-party resources to assist with administrative management and certain regulatory functions. Property taxes, known as Fixed or Real Property taxes, are levied based on property ownership and can be deducted when calculating corporation tax liability. Furthermore, compliance with environmental and safety regulations is essential when managing a facility in Mexico.

From a logistical standpoint, border cities offer lower freight costs when goods made in Mexico are destined for the U.S. or Canada. However, the interior of Mexico might provide better proximity to some supply-chain networks and easier access to seaports. In the interior, labor availability is generally higher with lower costs, but logistics to suppliers and consumers in the U.S. may require more effort. Conversely, the border region experiences high turnover and higher costs, yet it offers unparalleled proximity to U.S. customers and suppliers. The interior and central regions of Mexico have a lower turnover rate and possess manufacturing skills comparable to their border counterparts. Recent federal investments in training and industry development in these areas have attracted more foreign direct investment, boosted manufacturing activity, and driven overall GDP growth. Although these locations are deeper within the country, they benefit from a robust infrastructure network connecting them to the rest of North America.

Medical device, plastic injection molding, and electronics manufacturing are among the fastest-growing industrial sectors in Mexico. The highest concentrations of medical device manufacturing companies are in Tijuana and Jalisco. This sector in Mexico specializes in producing a wide range of products for various industry instruments and technologies. Plastic injection molding and machinery are expanding in regions that support multiple sectors. Key states for this growth include Querétaro, Jalisco, Mexico City, Nuevo León, and San Luis Potosí. Electronics and EMS manufacturing are also emerging as significant sectors, particularly in Tijuana, Ciudad Juárez, and Guadalajara. The automotive and aerospace industries, already well-established, continue to thrive. The automotive sector is particularly successful in Mexico's Bajío region, which includes Guanajuato, Querétaro, Aguascalientes, Jalisco, and San Luis Potosí. This region handles all types of production, including parts, assembly, and aftermarket products. The aerospace industry focuses on manufacturing airplane engine components, turbines, and wiring harnesses. States supporting aerospace manufacturing include Sonora, Chihuahua, Baja California, Querétaro, and Nuevo León.

Mexico's Value Added Tax, known as the IVA (Impuesto al Valor Agregado), has been in effect since 1980, imposing a 16% tax on imports, goods, and services. Typically, the standard rate for the IVA tax is 16%, but in the border region, it stands at 8%. However, over the last decade, the IVA tax rate along the border has fluctuated, ranging from 11% to 0% before returning to 16% and currently resting at 8%. Various manufacturing goods and services may qualify for exemption from this tax, including used goods sold by non-taxpayers, financial instruments, gold of at least 99% purity, agricultural machinery and equipment, certain goods between manufacturers subject to special export-oriented regimes, insurance services, qualifying financial services, and professional medical services. To claim IVA reimbursement, several steps must be followed, including saving receipts and registering as an entity with the Ministry of Public Finance and Credit, also known as Hacienda. Monthly sales and purchases are reported on a monthly basis and filed by the 17th of each month, with returns being submitted solely electronically. Any applicable IVA credits can be carried forward.

goods from Mexico. This incentive allows manufacturing firms to conduct "temporary" importations of production parts, materials, and assets without paying the standard value-added tax, which is 16%. Companies registered under IMMEX must export these goods from Mexico within a specified timeframe, transfer them to another IMMEX company within Mexico, or change their imported status to "definitive." To benefit from the advantages of being a registered IMMEX company, certain record-keeping and inventory controls are necessary to ensure traceability during regulatory audits. To become registered under the IMMEX program with Mexico's Department of Economy and to access its incentives, a manufacturing company must directly or indirectly produce goods intended for export.

The Mexican labor law, established in 1917 following the revolutionary war, aimed to ensure clean and safe working conditions. Since then, it has undergone two reforms, in 1970 and 2012, to adapt to changing societal and economic needs. The current Labor Law emphasizes sustainable living standards by improving work relationships, payroll procedures, benefits, contract regulations, and social security provisions. These updates reflect ongoing efforts to enhance worker rights and promote a fair and equitable work environment.

Mexico offers a strategic advantage for companies aiming to strengthen their supply chain and reduce operational expenses. With cost-effective labor and a prime location, it provides excellent opportunities to streamline logistics. The country is home to a well-developed manufacturing sector, a skilled workforce, and modern infrastructure, all within a culture that deeply values industrial production. Additionally, Mexico's extensive network of trade agreements, including the USMCA, enhances its appeal. The country also provides a range of incentives that can lead to significant tax benefits and cost savings.

Depending on your company's labor, logistical, and facility requirements, the best location in Mexico can vary based on several factors. Geography directly impacts logistics, including supply-chain dynamics, transportation infrastructure, and local state regulations that facilitate manufacturing in Mexico. Another important consideration is the local labor market, which encompasses skill demographics, wage structures, workforce stability, work ethic, union involvement, and population density. Access to training and skills development is also crucial when making a strategic decision to manufacture in Mexico. Facility needs play a significant role as well, particularly when it comes to renting or buying industrial real estate tailored to specific operational requirements. We assist you in the process of selecting a location that suits your needs.

In the past decade, Mexico has seen a significant increase in the number of graduates in engineering, manufacturing, and construction fields, nearly doubling from just over 60,000 to almost 114,000. Currently, more than 110,000 engineers graduate in Mexico each year. Local and regional governments have supported specialized training programs to address the demand for skilled workers in advanced technical industries. The manufacturing sector in Mexico has evolved from basic manufacturing and assembly to producing complex products. Mexico ranks as the 3rd-largest exporter in the IT industry, the 6th-largest supplier to the American aerospace industry, and the leading supplier of medical devices to the U.S. Mexico boasts over 2,500 higher education institutions offering well-regarded education and training programs. Some schools collaborate with foreign companies on research and design projects. Additionally, exchange programs with California universities are popular among students in Tijuana and Baja California. Most college-educated workers in Mexico are at least partially bilingual. The Mexican government prioritizes investing in education and training for its workforce, including additional college coursework and well-attended trade schools. They have implemented programs to improve technical skills and facilitate employment, often tailored to meet companies' specific needs. IVEMSA can facilitate connections with universities and help leverage these programs.

Mexico has a robust network of trade agreements, boasting more than 50 international free trade agreements. These agreements cover various regions and countries, facilitating trade and investment flows globally. Some of the key trade agreements include: USMCA (United States-Mexico-Canada Agreement): This agreement replaces NAFTA and governs trade between the United States, Mexico, and Canada. Pacific Alliance: Mexico is a member of the Pacific Alliance, which also includes Chile, Colombia, and Peru. This agreement aims to promote economic integration and cooperation among member countries. EU-Mexico Free Trade Agreement: Mexico has a free trade agreement with the European Union, facilitating trade and investment between the two regions. Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP): Mexico is a member of the CPTPP, a trade agreement among 11 Pacific Rim countries, which aims to reduce trade barriers and promote economic integration. Free Trade Agreements with various Latin American countries: Mexico has free trade agreements with countries such as Costa Rica, Guatemala, Honduras, and Nicaragua, among others, promoting trade within the region. These trade agreements contribute significantly to Mexico's economic growth and competitiveness by providing access to diverse markets and fostering international trade relationships.

One of the primary advantages of manufacturing in Mexico is the lower production costs it offers. This makes it an attractive alternative to operating in China, not only due to cost savings but also because of its convenient location. As a special benefit, companies operating in Mexico can apply for approval under the IMMEX program to exempt them from paying the 16% VAT tax on all their temporary imports. This includes raw materials, components, and equipment. This unique benefit, offered by the Mexican government, aims to ensure that Mexico remains a competitive option for manufacturing and exporting finished goods overseas. All foreign companies operating in Mexico are eligible for this benefit.

Certainly. We can assist you in selecting the ideal location for establishing your operations. We'll support you in optimizing access to your suppliers and customers and guide you towards regions in Mexico where skilled workers with the expertise matching your needs are available.

The Mexican immigration law distinguishes between three different types of residency: Visitante (180 days) Only needs to fill out an entry form and is valid for up to 180 days (for private or business purposes). To allow foreign employees to work in Mexico, the Mexican company first needs a so-called Constancia de empleador, a permission that enables this. In the next step, a work visa can be applied for. But beware, the requirements for a visa may vary from state to state. Residente Temporal For stays of more than 180 days, a visa is required, which must be applied for at the Mexican embassy in the country of origin. After entry, one must report to the local immigration authority within 30 calendar days to obtain a residence permit in the form of an identification card. This status allows a stay of up to four years, after which an application for the Residente Permanente title can be made. Anyone wishing to work in Mexico is required to have a visa from the first day. To do this, a work permit must be applied for. The prerequisite is that there is an official job offer from an employer who is registered as such with the immigration authority.

Social insurance in Mexico operates through the Mexican Social Security Institute (IMSS), which provides health care, retirement, and other social benefits to eligible workers and their families. Employers and employees contribute to the IMSS system through payroll taxes, with the employer typically covering the majority of the cost. Contributions are based on a percentage of the employee's salary, up to a certain cap. In return for contributions, employees and their dependents gain access to medical services, including doctor visits, hospital stays, medications, and surgeries, among others. Additionally, IMSS provides benefits such as maternity leave, disability insurance, and pensions for retirement. The IMSS system is designed to provide social security coverage to all formal sector employees in Mexico, helping to ensure that workers and their families have access to essential health care and financial support when needed.

Over 2500 German companies have already established their production in Mexico spanning various sectors such as automotive, manufacturing, technology, and consumer goods. These companies have chosen Mexico as a strategic location for investment due to factors such as its skilled workforce, favorable business environment, and proximity to the North American market.

Mexico is frequently depicted as unsafe due to media coverage focusing on the violent drug trade. However, from both business and tourism perspectives, the majority of Mexico is considered safe to visit and work in. While larger cities may experience higher rates of petty theft and crime, these rates are comparable to those in other countries worldwide. The most effective approach to ensuring safety in Mexico is to adhere to common-sense security measures, such as avoiding traveling alone in unfamiliar areas.