When a multinational seeks to set up a store in Mexico to expand its business to export to the United States, it also has to gauge the costs of the move.

The most important thing for companies that decide to make large long-term investments in the country is the rule of law and the long-term visibility of the economic, political, and legal environment in Mexico, political transition and effective governance will be crucial to maintain confidence, agree investment strategists.

Although the so-called nearshoring phenomenon is already occurring in the country, experts anticipate that it is happening in gradual stages and we are just entering the first one.

According to Janneth Quiroz, Director of Economic, Exchange, and Stock Market Analysis at Monex, new investment has not increased as much as reinvestment of profits.

The companies that were already established, and that already know how to operate in Mexico, are maximizing the use of supply chains, increasing their workforce, their trained personnel, and the infrastructure they already have.

Investment Strategy Director for the Americas, Julius Baer, and Esteban Polidura considered nearshoring to be an opportunity with great potential for economic impact, but it requires time for its effects to materialize fully. “We believe that within 3 to 5 years significant economic impacts will start to be observed, with deeper and more sustainable benefits visible in a period of 5 to 10 years.”

However he noted that there are challenges that could affect the speed and magnitude of the impact of relocation, including the need to improve infrastructure and connectivity, address security issues, and ensure adequate power and water supply. In addition, political transition and effective governance will be crucial to maintain investor confidence and facilitate the business relocation process.