China's average manufacturing wages, when adjusted for
productivity, are above those in Mexico now, according to a
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
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
ISHARS-MEXICO (EWW): ETF Research Reports
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