Many American companies could soon be shifting their business from China to Mexico

711

As American companies recalibrate the risks of relying on Chinese factories to make their goods, some are shifting business to a country far closer to home: Mexico.

The unfolding trend known as “near-shoring” has drawn the attention of no less than Walmart, the global retail empire with headquarters in Arkansas.

Early in 2022, when Walmart needed $1 million of company uniforms — more than 50,000 in one order — it bought them not from its usual suppliers in China but from Preslow, a family-run apparel business in Mexico.

It was February 2022, and the contours of global trade seemed up for alteration. The worst pandemic in a century had upended shipping. The cost of transporting products across the Pacific had skyrocketed, and ports were choked with floating traffic jams — a stark indication of the dangers of depending on a single faraway country for critical goods.

Among multinational companies, decades of faith in the merits of making things in China had come under scrutiny, especially as animosity intensified between Washington and Beijing.

At his office in Mexico City, Isaac Presburger, director of sales at Preslow, took Walmart’s order as a sign of his country’s evolving role in the economy, and the opportunities that flow from sharing the same side of the Pacific with the United States.

“Walmart had a big problem with their supply,” Presburger recounted. “They said, ‘OK, Mexico, save me.’”

Basic geography is a driver for U.S. companies moving business to Mexico. Shipping a container full of goods to the United States from China generally requires a month — a time frame that doubled and tripled during the worst disruptions of the pandemic. Yet factories in Mexico and retailers in the United States can be bridged within two weeks.

“Everybody who sources from China understands that there’s no way to get around that Pacific Ocean — there’s no technology for that,” said Raine Mahdi, founder of Zipfox, a San Diego-based company that links factories in Mexico with American companies seeking alternatives to Asia. “There’s always this push from customers: ‘Can you get it here faster?’”

Source: El Financiero

Mexico Daily Post