Can Mexico Become the "New China"? - Real Time Insight

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China's average manufacturing wages, when adjusted for productivity, are above those in Mexico now, according to a study conducted by the Boston Consulting Group (BCG).  BCG forecasts that by 2015, the fully loaded cost of hiring Chinese workers will be 25% higher than the cost of hiring Mexican workers.

Further, Mexico's proximity to the US means that the companies can ship the goods to the customers much faster and at a lower cost. Moreover, the goods coming from Mexico can enter the US duty-free due to NAFTA.

Mexico also has an edge over China in the demographics area. While China's population is beginning to age (median age-33.2 years), Mexico has a largely young population (median age-26.0 years). The difference will worsen in coming years due to China's one-child policy.

As a result, many US manufactures are now shifting production to Mexico from China. Last year, Mexico's manufactured exports were more than the rest of Latin America combined. ( Forget Brazil, Mexico ETF is Hot )

However, Mexico has its own problems. The country suffers from a high crime rate and poor infrastructure. The President-elect has stated that he will continue the current government's strategy against organized crime.

Do you think that Mexico can become the next global manufacturing superpower?


 
ISHARS-MEXICO (EWW): ETF Research Reports
 
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