The global business landscape has undergone rapid transformations in the last 3 years, driven by factors such as supply chain disruptions and trade tensions. Amidst these changes, many American companies are seeking strategies to enhance efficiency, reduce costs and diminish dependency to China.
Nearshoring is gaining traction–it involves shifting operations closer to the United States, such as in Mexico. The strategy has significant implications for the relationship between the USA and its neighbor to the South, particularly in terms of trade. In 2022, the total trade volume between Mexico and the United States reached an impressive $779.3 billion, up 27% from 3 years ago. Notably, in the first quarter of 2023, Mexico was the largest trading partner of the United States, with exports totaling $115.5 billion. The trend is expected to continue as nearshoring gains further prominence: around 97% of private industrial parks in Mexico are occupied, and 45% of them are held by North American companies.
With the neighbors experiencing a significant increase in trade, nearshoring is reshaping the cross-border landscape. Expanding business operations across the southern border presents unique challenges, including legal, cultural, trade, and regulatory complexities. Transportation, electricity, water, and telecommunication infrastructures must be carefully analyzed before exploiting the nearshoring opportunity.
Pacifica Advisors stands out for its deep understanding of both countries. Aside from its managing partners holding citizenships across NAFTA (USA, Mexico, and Canada), the firm enjoys a strong network of established partnerships and a comprehensive grasp of local laws and regulations. This ensures a streamlined and efficient process tailored to each client's unique needs, providing invaluable support for companies seeking to capitalize on nearshoring opportunities. Contact Pacifica Advisors today and explore the transformative potential of cross-border M&A.