Moving Manufacturing From China to Mexico: The Complete Guide

When China's COVID-zero lockdowns and its aggression toward Taiwan started spooking foreign companies in 2022, the international manufacturing lawyers at my firm began getting a steady stream of calls and emails from companies looking to leave China. Most wanted to know about Mexico, and some of the companies calling us were themselves Chinese or Taiwanese. The tariff wars since then have given companies more reasons to look south. Mexico makes sense for many of them. But companies that go into Mexico expecting to find China with a shorter shipping route are in for an expensive education.

Starting in 2022, my good friend Andrew Hupert and I wrote a long series of posts for this blog on what leaving China for Mexico actually involves. Nobody was better suited to write about this than Andrew. I first met him in Shanghai in 2003, and over the following two decades I came to rely deeply on his practical business wisdom, especially about China. When my firm stepped up its China practice, he was one of my go-to people on all things China. He was a business school professor who taught negotiation around the world, and he spent more than 20 years in Asia, living and working in Shanghai, Taipei, Hong Kong, and Saigon. Though he had tied his career to China, he, like me, was an early believer in a post-China manufacturing world. He moved to Thailand and then Vietnam, and when Mexico began emerging as a leading replacement for China manufacturing, he moved to Monterrey and then Oaxaca, and became fluent in Spanish. He spent his last years there helping companies, especially companies leaving China, set up and run operations in Mexico. Few people had spent as much time thinking about how the two countries compared, and fewer still had Andrew's willingness to say exactly what he thought.

Andrew died of a heart attack in Oaxaca in October 2024, at 61. I wrote about him and our friendship in Remembering Andrew Hupert. This guide brings our Mexico work together in one place and updates it for 2026. Most of the business and cultural observations are Andrew's, drawn from his years running and advising operations in both countries. The legal and trade analysis is mine, informed by my firm's affiliated lawyers in Mexico City and the United States, and by many of the conclusions Andrew and I reached together over the years. Andrew is no longer here to update his words, so I have done that as best I can. Where events have proved us right or wrong, I say so. When I quote him, the words are his as he wrote them. I want readers to understand where his observations came from and why I continue to think they matter.

Why Companies Are Leaving China

In early 2023, Andrew and I wrote that running a supply chain entirely through China had become a bet against the house, the kind that ends with the gambler up a ton at midnight and borrowing bus fare home by morning. The trade numbers seemed to argue otherwise. U.S.-China trade had hit a record $690 billion in 2022, and plenty of companies took that as vindication of their decision to stay. Multinationals were reading the situation differently. Their supply chain planners, the Lean Production and Six Sigma people who treat unnecessary risk as a sin, were piling into Mexico, as Unilever's $400 million commitment to a new plant in Nuevo León showed that same month. When a Chinese surveillance balloon was shot down over the United States that February, we predicted that cooler heads would not prevail. Washington, we said, would keep changing the economics of China supply chains by every means available, and Beijing would answer each new U.S. restriction with its own. We saw little reason to expect either government to put the interests of companies caught in the middle ahead of its own political priorities.

We put governments at the top of the list of likely supply chain shocks and said the damage would most likely come through mistakes, meaning bad regulations written and enforced for non-economic goals. Would governments knowingly hurt their own economies for a good soundbite? "Yes. Of course they would. We expected U.S. customs to demand ever more detailed proof that your goods were not made with forced labor in Xinjiang. Complying would trap your China staff in a catch-22, because trying to trace the origin of your materials could get them "invited to tea" by the authorities. We also expected Beijing to retaliate, since, as we put it, "Beijing will not apologize; it will reply." China has a long record of using trade to punish countries that anger it, including Japan, Norway, Canada, South Korea, Australia, and Lithuania. And we warned that after the disruptions of 2021 and 2022, no owner or fiduciary could credibly claim a China supply chain disruption was impossible to foresee. Many of our clients already had China exit and evacuation plans, and we told readers they should too. That advice was based on what we were already seeing companies struggle with, long before the current tariff battles. See Doing Business with China and Your Reputation Risks and Repeat After Me: Trade Relations Between the United States and China Will Only Get Worse.

Tariffs and trade restrictions have since vindicated much of what we wrote. In 2023, Mexico overtook China as the top source of U.S. goods imports, at $475.6 billion to China's $427.2 billion, with China's total down 20 percent from 2022. Real U.S. imports from China fell 28 percent in 2025 alone, and by year-end the average U.S. tariff on Chinese goods was near 50 percent, up from 21 percent when the second Trump administration took office. Beijing retaliated most effectively with rare earth export controls. It suspended its expanded October 2025 controls for one year, until November 10, 2026, but its April 2025 controls on seven medium and heavy rare earths remain in force. The forced-labor scrutiny we predicted has also become a basis for tariffs. In July 2026, the U.S. Trade Representative imposed tariffs on goods from 60 economies, China and Mexico among them, after finding that they had failed to impose and effectively enforce bans on imports made with forced labor. Our biggest mistake was assuming North American trade would remain politically protected. We underestimated just how willing Washington would be to make life difficult for companies manufacturing in Mexico, a subject I discuss below.

Companies that left China early told us their decisions had paid off. In that same 2023 series, Andrew and I passed along what clients who had moved their manufacturing elsewhere were saying. One said he slept better, both because he worried less about his supply chain and because he felt better about no longer supporting such a brutal regime. Another had left before COVID, which let it avoid the China tariffs, underprice its competitors, and take a good chunk of market share while those competitors scrambled to catch up. Others said they were hiring people who chose them because they had nothing to do with China. Still others had customers choosing them because their products did not come from China, whether to reduce supply chain risk or reputational risk. These were business owners explaining what had happened to their companies, and their experiences were far more persuasive than another consultant's presentation about geopolitical risk. We also said the most unforgivable sin foreign companies committed in China was going there without an exit strategy. I still believe that, and I would build an exit strategy into any Mexico plan from the start as well.

Which Manufacturing Risks Can You Actually Control?

One of the most important differences between manufacturing in China and Mexico is how much control you have over the risks your business faces. Every country has problems. Factories lose power, employees leave, suppliers fail, and shipments get delayed. You can reduce many of these risks by investigating your suppliers, choosing your location carefully, and making sure you have alternative sources of supply. You can never eliminate every manufacturing risk, but there is a great deal you can do to keep ordinary business problems from becoming disasters.

Many of Mexico's biggest manufacturing risks fall into that category. Security is a serious concern, but you can investigate specific locations and arrange safer transportation. Labor laws are demanding, but you can hire Mexican employment lawyers and structure your operation to comply with them. Infrastructure varies considerably, but you can check whether a proposed site has reliable power and water before committing to it. None of these precautions guarantees that your operation will run smoothly. They do, however, give you meaningful ways to reduce your exposure.

China presents some risks that no amount of good management can bring under your control. You can investigate your suppliers and trace your materials, but you cannot eliminate the possibility that U.S. Customs will detain your goods over forced-labor concerns. You cannot prevent Beijing from imposing export restrictions or Washington from raising tariffs. You can prepare for a crisis involving Taiwan, but you cannot prevent one. A company can do everything right inside its Chinese factory and still find its business badly damaged by a political decision made thousands of miles away. That is what makes these risks especially troubling. The company has very little ability to influence the decisions that create them.

Mexico has political risks of its own, as the 2026 USMCA review and the latest tariffs demonstrate. A Mexican manufacturer cannot control what Washington decides about North American trade any more than a Chinese manufacturer can control U.S. policy toward China. I would never suggest otherwise. But when comparing countries, I would pay particular attention to which risks you can realistically manage and which ones can overwhelm your business regardless of how carefully you operate. That distinction is one of the strongest reasons many companies have decided they would rather manufacture in Mexico.

Who Can Still Stay in China

Andrew's test turned on what you make and who buys it. Several kinds of companies can probably stay in China: those that provide services to Chinese B2B markets, produce for sale in China and Asia, or specialize in multinational supply chains. Companies that depend on an end-to-end global presence, such as hotels, travel companies, and financial services firms, can also stay, as can those big enough to run separate supply chains for separate markets. Companies that need materials, components, technology, or processes available only in China are a maybe. Their position keeps deteriorating, and nobody should want to be the last international manufacturer in China. A company running a low-cost strategy built on small runs of pre-sold products, less-than-container-load shipping, probably cannot stay. The important question is whether your own business falls into one of the categories that still makes economic sense there.

Is Mexico Right for Your Company?

Andrew's starting point, from the first post of our series, was that comparing China and Mexico is not comparing apples to apples. The same product may leave the factory gate in both countries, but setting up and running operations in them involves very different systems. China's economy is highly structured and centrally planned. Mexico's is decentralized and reactive, and much of what China's government arranged for you, you arrange yourself in Mexico. Had you matched the two head to head on operational effectiveness and site selection in 2010, China would have won handily. But Mexico is becoming a major commercial and manufacturing center, but it is not trying to be the factory of the world. It offers excellent trade access and an emerging-market cost structure, though getting started there is rarely quick or easy. Companies accustomed to China's manufacturing infrastructure need to understand just how much work Mexico expects them to do themselves. The learning curve is steep, even for companies that have spent decades manufacturing overseas.

Andrew liked to illustrate the difference with his Shanghai years. China earned its factory-of-the-world title at the start of the century, when anyone with a widget design scrawled on a napkin and a few thousand dollars could get it made. Much of that came from tightly integrated clusters of manufacturers and distributors bound together by informal personal relationships. When something went wrong, four or five engineers would huddle in a stairwell with a pack of Zhongnanhais. Twenty minutes later they came back with a workaround, a part they had sent the youngest team member pedaling off to get, and the name of the guy nearby with the machine or know-how they needed. Andrew saw that sort of informal problem-solving so often that he came to regard it as a defining feature of China's manufacturing system.

Mexico does things differently. Glitches and supply chain adjustments go up through established official channels, often running through Dallas, Detroit, or Deerfield, Illinois. Mexico is a world of ISO 9000-series certifications and the Toyota Way, and its factory managers treat verifiable performance as the only valid proof of a process. We used to describe business in China with an old expression, "Everything is possible, but nothing is easy." Mexican managers do not say this. A Chinese factory will take a job if it is reasonably sure it can do it, and in China someone is always willing to take your money and then figure out how to meet your requirements. A Mexican factory manager will turn down projects that feel improvised or hard to replicate. He or she will expect you to arrive with a complete operating plan covering your product, supply chain, bill of materials, and sources. Companies accustomed to the improvisation of Shenzhen or Dongguan often have trouble understanding why a Mexican factory refuses a project that looks perfectly manageable to them.

Andrew and I put it bluntly in 2023. The international brands succeeding in Mexico show up with capital, equipment, a supply chain, and above all a plan. Early China entrants could figure things out on the ground or lean on their factory to figure things out for them. That approach generally fails in Mexico, where the expectation is that you have already figured out how your product will be made. Companies that have spent years letting a Chinese factory fill the gaps in their plans often discover that most of their own specifications live in the factory's files, not theirs. In return for that rigor, the projects that do go forward tend to be well managed, because it is unusual to invest in Mexico without an independent feasibility study and business plan.

Production-Ready Companies Do Best

Start with your industry. Andrew's rule of thumb was that a company making the right kind of product (autos and auto parts, aerospace, or labor-intensive goods) the right way (through a wholly owned subsidiary) for sale in the United States can boost its profits in Mexico and "rescue what's left of your sanity." Companies that assemble electronics, produce medical devices or EV and green technologies, or make furniture or certain textiles can do well there too, though they will have to put together pieces China already provides. The closer your existing operation is to a fully documented production process that you control, the easier the transition usually becomes.

Production people in Mexico told Andrew they distinguish between companies that are "production-ready" and "companies with products." You are production-ready if you control your own production process, sourcing, and logistics and have the molds, the IP, the supplier list, and the data needed to start production yourself. Production-ready companies send operations specialists who arrive with detailed information on the product, the parts, the process, and the people, and they want Mexican partners to build facilities, handle regulations, and help with staffing, accounting, payroll, and HR. They are usually in autos, aerospace, or large-scale assembly, and there is a good chance they already have facilities in Mexico. Mexico's standards here were set by the maquiladoras along the border, essentially U.S. factories that happen to be in Mexico. GM, Caterpillar, Ford, and other heavy hitters of process engineering run plants there with engineering standards that are very high and, by China standards, not very flexible.

Our clients who go to Mexico with an established process have done well there. Our clients who do not really know manufacturing have not.

Companies With Products Can Make It Work

If you are willing to invest in your own production or assembly operation, you can probably find people to help you source materials and set up production. You will face a Catch-22, though. The people you hire to help you figure everything out will expect you to supply plans, answers, and solutions on the very topics you know least, and they prefer a tried-and-true solution everyone understands beforehand. You are also hiring your own factory management. The local version of the guy who took care of things for you in Shenzhen is now on your payroll and looking to you for ideas. Andrew saw an upside for China veterans, whose time in Asia gives them a talent for spotting opportunities and underdeveloped relationships. The downside is that ideas that seem mundane to you may get indifferent shrugs from Mexican managers who see no point in innovating for innovation's sake. You can make this model work, though you should budget for far more management time and preparation than you needed when your Chinese manufacturer was handling most of the details.

Virtual Storefront Companies Usually Can't

Plenty of plucky entrepreneurs built brands in China on "virtual factories" that were really just a string of contract manufacturing agreements. You can probably still do that in Shenzhen. You never could in Mexico, and you almost certainly won't be able to anytime soon. If your business depends on small quantities, customized output, and low-cost materials, you have been relying on production and logistics features unique to China. Your small runs ride on the tail end of a larger customer's order or fill excess capacity in busy production centers, and that kind of short-term, informal access to capacity is rare in Mexico. Start with a feasibility check before you spend money on anything else. There is little point in negotiating Mexican factory prices until you know whether the sort of manufacturing arrangement that made your China business possible even exists there.

Small and midsize businesses need to be particularly careful here. A large multinational can afford to build a factory, hire local management, and absorb production problems while it gets things working. A smaller company usually has far less money available for mistakes and often depends heavily on one manufacturer. Losing that supplier or discovering that a Mexican operation requires much more capital than expected can put the entire business at risk. If you have spent years relying on a Chinese factory to handle production for you, find out what replacing that arrangement will actually involve before committing to Mexico.

Contract Manufacturing in Mexico

Contract manufacturing exists in Mexico, and on a large scale in some industries. Electronics manufacturing services companies run big plants around Guadalajara and along the border, and plenty of plastics, metal, and assembly shops serve automakers and appliance makers. What Mexico lacks is China's ecosystem of factories that will take a sketch, a small order, and a modest deposit and figure out the rest. Mexican contract manufacturers generally want established customers with complete technical packages, predictable volumes, and real commitments. The vocabulary is different too. Andrew found that people in Mexico often used "OEM" to mean a wholly owned subsidiary. He once visited a Caterpillar plant in Coahuila that the locals called an OEM, though he would call it a subsidiary, since it was a Caterpillar plant with Caterpillar employees making products only for Caterpillar. For most small and midsize companies leaving China, the realistic choices are a shelter arrangement or your own subsidiary, both discussed below. Companies that insist on finding the Mexican equivalent of their Chinese contract manufacturer can spend a great deal of time looking for something that simply is not there.

Whichever arrangement you choose, investigate the companies you will be relying on before you commit. That means confirming that a proposed manufacturer or shelter company actually has the facilities and resources it claims to have, and finding out whether it has a history of disputes or financial problems. Look at who owns the business and whether it has experience handling the kind of production you need. Do not assume that a polished presentation or an impressive industrial park address tells you much about the company itself. See our Foreign Company Due Diligence Reports practice page.

What About Vietnam or India?

Andrew and I warned in 2023 that the alternatives were filling up. Vietnam works for many companies, but by then many of its factories and logistics providers were at capacity, and a call from Samsung gets local officials moving in a way a call from a midsize company does not. Vietnam's tariff edge over China has also narrowed. Since July 2026, Vietnamese goods pay the same 12.5 percent forced-labor tariff as Chinese goods, though not the older China-specific tariffs. India is rising but remains a very difficult place to do business, and many of the companies we worked with that went into India left within a year. We have many clients who love Guatemala for making cotton goods and some food items, but not much else. Colombia, El Salvador, and Peru are showing up more and more, but reviews for more complicated products tend to be mixed. Mexico suits brands selling into the United States and companies in those supply chains, but it too has been filling up, mostly with expansions by companies already there, like Toyota. None of these countries is an automatic substitute for China. You need to determine which one works for your particular products, customers, and way of manufacturing, and you need to do that before you make commitments you cannot easily undo.

What Manufacturing in Mexico Really Costs

U.S. Tariffs and the USMCA as of October 2026

The tariff picture has whipsawed. In February 2026, the U.S. Supreme Court ruled 6-3 that the president had exceeded his authority by imposing tariffs under the International Emergency Economic Powers Act. The White House ended the emergency tariffs it had tied to drugs and migration at the southern border that same day. A temporary global 10 percent surcharge under Section 122 of the Trade Act of 1974 replaced them. When it expired on July 24, 2026, the Section 301 forced-labor tariffs took effect. Chinese goods now pay an additional 12.5 percent, on top of the Section 301 tariffs first imposed on Chinese goods in 2018, which run from 7.5 to 100 percent depending on the product. Mexican goods pay an additional 10 percent, except goods entered duty-free under the USMCA and products already covered by Section 232. Section 232 tariffs of up to 50 percent on steel, aluminum, and copper apply even to USMCA-qualifying goods. A USMCA-qualifying car still pays the 25 percent auto tariff on its non-U.S. content. These overlapping measures make it dangerous to rely on a general statement about what tariffs apply to goods made in either country. The answer depends on the product and how it qualifies under the applicable rules.

A product made in Mexico that qualifies under the USMCA generally enters the United States duty-free, unless it is steel, aluminum, copper, or a car. The same product made in China generally pays the additional 12.5 percent, unless an exclusion applies, on top of its regular duty and any older Section 301 tariff. That gap is the strongest argument for Mexico, and it depends entirely on USMCA qualification. Product-specific exclusions and classifications matter, so run the numbers for your own products. I would never recommend moving production based on a headline tariff comparison without first establishing exactly how U.S. Customs will classify and treat the finished goods.

The USMCA itself is less settled than when Andrew and I started writing. At its first joint review on July 1, 2026, the United States declined to renew the agreement in its current form, while confirming it stays in force pending resolution of the issues or termination. That triggers annual joint reviews until the parties agree to an extension or the agreement expires on July 1, 2036, and USTR has opened public consultation for the 2027 review. Any party can withdraw on six months' notice. U.S.-Mexico negotiations remain unresolved. The fourth bilateral round, planned for Washington in September, slipped into October, and Mexican officials said in early October that a deal cutting U.S. tariffs on Mexican steel and aluminum was close. Nothing has been signed. Companies making long-term investments in Mexico therefore need to pay attention to the negotiations, even if their products currently qualify for favorable treatment.

A factory you expect to run for fifteen years now sits under a trade agreement reviewed every year. At least one prominent trade analyst expects most companies to respond by putting their plans on hold. Mexico still drew a record $40.87 billion in foreign direct investment in 2025, driven largely by reinvested earnings, which fits Andrew's view that Mexico favors companies that already know how to operate there. I would not build a Mexico business case that only works if the USMCA stays exactly as it is, and I would not let the review freeze you either. Nothing in the review so far points toward the United States making Chinese goods cheaper relative to Mexican goods. What I would do is test the investment against less favorable tariff assumptions and decide whether the economics still justify moving ahead.

Chinese Components Can Sink Your Mexico Plan

Early on, many companies were coming to our international trade lawyers after setting up in Mexico expecting major tariff savings. Only then do they learn that their products would not qualify as made in Mexico or, even if they did, would still face substantial tariffs. Moving final assembly to Mexico while continuing to buy most of your components from China does not make your product Mexican. We would much rather have that conversation before the company commits to a factory, because by then the options for fixing the problem are usually much better. Fortunately, more companies understand this now.

Two separate questions are involved, and they follow different rules. Whether a product enters the United States duty-free under the USMCA turns on the agreement's product-specific rules of origin. Those rules generally require that non-North American inputs undergo a specified tariff classification change in North America and, for many products, that a minimum share of the product's value be regional. The auto rules show how demanding this can get. Under NAFTA, a car or truck qualified if 62.5 percent of its content came from the three member countries. The USMCA raised that to 75 percent and added a labor rule requiring that 40 to 45 percent of a vehicle's content come from workers earning at least $16 an hour. You need to apply the rules to the actual components and production process of your product, rather than assume that performing a certain amount of work in Mexico is enough.

Under 19 CFR Part 102 rules (which CBP formally applied to Section 301 determinations for Mexican and Canadian imports in 2021), origin is determined by specific tariff-shift requirements rather than a general substantial transformation test. While Part 102 standardizes country-of-origin marking and Section 301 treatment, simple assembly of Chinese parts in Mexico that fails the required Part 102 tariff shift will leave the product subject to Section 301 tariffs upon entry into the United States. A countertop appliance whose motor, circuit board, and housing all come from Guangdong does not become Mexican simply because workers in Monterrey fit the pieces together and box it.

Declare it Mexican anyway and you face back duties and potential penalties. Before you commit, get a binding ruling from U.S. Customs and Border Protection on your product's origin. I would want that answer in hand before making any significant investment that depends on escaping the China tariffs. See U.S. Customs Compliance: Your Ultimate Guide to Avoiding Costly Delays, Penalties, and Seizures and Why Following Your Chinese Supplier's Tariff Advice Could Land YOU in Jail.

The Trump administration has repeatedly accused Mexico of being a "back door" for Chinese products, and the USMCA review has increased scrutiny of whether goods processed in Mexico genuinely qualify for USMCA treatment. If your company is Chinese-owned, build your origin and compliance documentation as though U.S. Customs will audit it, and plan on the rules for Chinese content in North American goods getting tighter. The political attention directed at Chinese investment in Mexico makes careful documentation especially important, regardless of how legitimate your manufacturing operation is.

Mexico's Own Tariffs and the Limits of IMMEX

Effective January 1, 2026, Mexico raised import duties on more than 1,400 tariff lines, at rates from 5 to 50 percent, on goods from countries with no trade agreement with Mexico. The covered goods include autos, auto parts, textiles, clothing, plastics, and steel, and most face rates of up to 35 percent. China is the main target, but the tariffs also hit South Korea, India, Indonesia, Russia, Thailand, Türkiye, Taiwan, and Brazil. A second decree in April 2026 added 185 more tariff lines, and the first decree is written to run through December 31, 2026. Companies that planned their Mexico operations using the older Mexican tariff schedules need to recalculate their costs before relying on those earlier numbers.

Mexico's IMMEX program, which people use interchangeably with maquiladora, lets manufacturers bring in materials for export production without paying import duties. Companies certified for VAT purposes also get a credit offsetting the VAT on those imports. Many companies assume that protects them from Mexico's new duties. Where most of you will operate, it doesn't. USMCA Article 2.5 caps IMMEX duty deferral on non-North American materials used in products exported to the United States or Canada at the lesser of the Mexican duty on those materials or the U.S. or Canadian duty on the finished goods. If your finished product enters the United States duty-free, there is little or nothing to offset. A maquiladora can owe the full Mexican tariff on a Chinese part that goes into a U.S.-bound product. Mexico's PROSEC sectoral programs can reduce the Mexican duty on some non-North American inputs, but they are no blanket fix. Chinese inputs now get taxed at the Mexican border and put the finished product's USMCA status at risk at the U.S. border, so run the tariff math at both borders before you sign a lease. A company that looks only at the U.S. duty on its finished product can miss a substantial part of what its new Mexican production arrangement will cost.

Calculating Your Real Landed Cost

The unit price on a Mexican quote tells you very little on its own, and comparing it with a Chinese unit price tells you even less. A real comparison needs every cost from factory to customer for each country. At a minimum, your model should account for all of the following:

• Freight and transit time
• U.S. tariffs on the finished product
• Mexican duties on any non-North American inputs
• The inventory you carry while goods spend weeks on the water instead of days on a truck
• Labor under Mexico's new workweek rules, including mandatory profit sharing
• Productivity and scrap during the ramp-up
• The cost of moving or replicating tooling
• Customs and labor compliance staff
• Management travel
• Security
• Exit costs in China, including final orders and any fight over your molds

Companies that leave out half of these routinely pick the country with the cheaper unit price and end up with the higher total cost. Build the model before you commit, and have a trade lawyer check the duty assumptions, because duty is where some of the most expensive mistakes hide. I have seen too many companies treat tariff savings as a certainty when they are still only an assumption. See DDP Shipping Risks: What Boise Cascade's Guilty Plea Means for U.S. Buyers.

How to Set Up Manufacturing in Mexico

Choosing a Location

Mexico's relatively weak central government means each state has developed its own industrial strengths, largely independent of national policy. Guadalajara, in Jalisco, is the Silicon Valley of Mexico. Saltillo and Monterrey anchor autos, appliances, and heavy industry in the northeast, and the Bajío states of Querétaro, Guanajuato, and Aguascalientes host auto and aerospace clusters. The border cities from Tijuana to Matamoros remain the heart of maquiladora assembly. Ports, highways, and rail lines decide where industry goes, so you have many options, but you have to research and organize your own facilities. Choosing a Mexican location requires far more attention to the specific requirements of your manufacturing operation than simply deciding which city has the lowest wages. See our Mexico Law practice page.

Infrastructure deserves more scrutiny than most companies give it. Mexico's industrial park association identifies energy supply as one of the main infrastructure constraints on nearshoring in 2026. Water is a real issue in parts of the north, as Monterrey's shortages in 2022 showed. The busiest industrial corridors compete hard for skilled workers. Before you sign a lease or buy land, confirm the available power, water, workforce, transportation links, and land-use and environmental permits for the specific site. Also ask whether it falls in one of the government's new incentive zones. Under Plan México, the government has designated Polos de Desarrollo Económico para el Bienestar, development zones that offer tax incentives through 2030, including an extra 25 percent deduction for research and development and training. Zones include a site in Ciudad Juárez focused on electromobility, semiconductors, and medical devices. The existence of a government incentive should never substitute for determining whether the location actually works for your manufacturing needs.

Security

Mexico's security risks are real business risks, and companies need to evaluate them as seriously as any other operating cost. Organized crime extortion of businesses in Mexico has grown in scope and target size. Cargo theft fell 21 percent in the first five months of 2026, but attacks have turned more violent, with at least 14 truck drivers killed this year. Eighty-two percent of 2025 truck cargo thefts involved violence. The State of Mexico and Puebla account for the largest share of incidents, and Jalisco has become a major hotspot. I would reject both the idea that every part of Mexico is too dangerous for manufacturing and the equally foolish assumption that these problems will never affect your business.

Foreign manufacturers operate successfully in Mexico every day, and the better-run ones make security part of their operating plan. They look at the actual risks for their facilities and transportation routes instead of relying on national crime statistics or general impressions of a city. At a minimum, that means:

• Diligence on the specific site and its industrial park's security
• Vetted logistics providers
• Guarded routing, secure parking, and daylight movement on exposed lanes
• Appropriate insurance
• Financial controls tight enough to catch attempts to infiltrate your operation

Shelter, Subsidiary, or Contract Manufacturer

For many product companies, a shelter company is the most realistic way to start, and Chinese manufacturers use the same route to get into Mexico fast. A Mexican shelter company provides the legal entity, the IMMEX registration, the workforce on its payroll, and the customs, tax, and labor compliance. You supply the equipment, materials, and production know-how, and you run the manufacturing. You pay a fee and get into production without first building a Mexican company from scratch. That arrangement can make an enormous difference for a company entering Mexico for the first time, especially one that needs to get production running without spending months building its own administrative operation.

A shelter arrangement still leaves you with legal and operational risks that need to be addressed before you sign. Mexico's 2021 outsourcing reform sharply restricts personnel subcontracting and permits only specialized services or works under defined rules. The choice among a shelter, a direct subsidiary, and specialized service providers can therefore determine who carries labor-law exposure and whether the model works under current rules. You also give up a measure of direct control, because your workers and your compliance sit inside someone else's company. Those are serious considerations when you are deciding how your operation will function over the next several years.

Say a midsize outdoor gear company starts production in Querétaro through a shelter company. The arrangement works well for three years, and the company decides to form its own Mexican subsidiary. Only then does it read its shelter agreement closely. The agreement says nothing about who owns the improvements made to its production line or how its equipment and inventory leave the shelter's IMMEX program. Nor does it say how its 150 workers move to the new company with their seniority and benefits intact. Every one of those questions is now a negotiation with a counterparty that has no reason to make it easy. Your shelter agreement should settle them at the start, covering who owns the equipment and IP, who is liable for what, how you get your assets out, and how the workforce transfers. You need an agreement that works just as well when you want to leave the shelter as it does when you are excited about moving in. See How to Use Mexico Shelter Manufacturing to Replace Your China Manufacturing.

Your own subsidiary will usually be a sociedad anónima de capital variable (S.A. de C.V.) or a sociedad de responsabilidad limitada de capital variable (S. de R.L. de C.V.). The choice has U.S. tax consequences, because the United States treats an S.A. as a corporation, while an S. de R.L. can elect to be treated as a partnership or a disregarded entity. Your tax advisors should also look at transfer pricing and at whether your Mexican operation could create a taxable presence in Mexico for your U.S. company, which Mexico's maquiladora tax rules address directly. They should check whether you qualify for Plan México's accelerated deductions for new investment as well. Get them involved before you form anything. Changing the structure after you have begun operating can be far more troublesome than choosing the right one at the outset. See A Mexico Company Formation Guide.

Customs Compliance After the 2026 Reform

Mexico's Customs Law reform, widely viewed as the most significant since 1995, took effect on January 1, 2026. It ended the protection customs brokers had when their clients supplied false or inaccurate information, so expect your broker to scrutinize you far more closely. IMMEX companies must now keep files covering not just customs records but financial flows, contracts, logistics costs, and production process records, and penalties have gone up substantially. Many foreign companies buying from China never thought about export customs compliance because their factories and freight forwarders handled it. In Mexico you will need people and systems doing this work from day one. A business that has relied on its Chinese supplier to handle virtually every customs detail needs to recognize that its responsibilities in Mexico will be considerably greater.

Mexican Employment Law

At least half a dozen Mexican lawyers have told us, only half joking, that American companies have far more to fear from Mexico's labor laws than from the cartels. Those laws just got more demanding. Mexico amended its Constitution on March 3, 2026, and its Federal Labor Law on May 1, 2026, to cut the maximum workweek from 48 hours to 40 with no reduction in pay. The cut phases in on January 1 of each year, so companies planning their staffing and production costs need to account for the following schedule:

Overtime may be spread over no more than four hours a day on four days, and regular and overtime hours combined can never exceed 12 hours a day. Starting January 1, 2027, employers must electronically record when each worker starts and ends the workday and provide those records to the authorities on request. Any Mexico cost model built on a 48-hour week is already out of date. The shorter workweek also needs to be reflected in production scheduling and hiring plans well before the final reduction takes effect.

The workweek is only one piece. Mexican employers must share 10 percent of their taxable profits with employees every year, and executives hearing about it for the first time often mistake it for a negotiable bonus. Terminations cost far more than U.S. companies used to at-will employment expect. Treating Mexican workers as independent contractors without careful legal analysis invites trouble. Under the USMCA's Rapid Response Labor Mechanism, the United States can bring facility-specific complaints over workers' rights to organize and bargain collectively. Your Mexican operation needs Mexican employment counsel, employment contracts and internal work rules that comply with Mexican law, and a plan for the shorter workweek before your first hire. Any foreign managers you send also need Mexican immigration status that allows them to work, so start that process early. These are matters to resolve while designing your operation, because waiting until you have employees on the payroll makes fixing mistakes much more difficult.

Contracts Written for Mexican Law

Mexico is a civil law country, and its courts generally apply the code and the contract as written. They do not rescue poorly drafted agreements by supplying business logic the parties never clearly expressed. Termination rights, warranties, tooling and IP ownership, quality standards, inspection rights, and remedies all need to be written for Mexican law and actual manufacturing realities. A translated U.S. contract is still a U.S. contract unless it has been rewritten for Mexican law. Formalities such as who had authority to sign can matter far more than U.S. teams assume. Mexican contracts have far more in common with Chinese contracts than with U.S. ones. The NNN agreement and manufacturing agreement that protect you with a Chinese factory are written for Chinese law, though, so they are the wrong documents for a Mexican supplier, landlord, shelter company, or distributor. Your Mexican contracts need to address the risks of doing business in Mexico, under the legal rules that will actually govern the relationship.

Based solely on what my law firm has seen, protecting your IP in Mexico is easier, cheaper, and more effective than in China. That does not mean Mexico is free of IP theft or that you can rely on Mexican law without taking precautions. You still need properly drafted contracts and Mexican registrations for the rights that require them. But the practical difficulties of protecting manufacturing know-how and enforcing IP rights have generally been more manageable for our clients in Mexico. If you are leaving China because of concerns about your manufacturer copying your products, that difference matters. See It's Perfectly Legal for Your Chinese Manufacturer to Copy Your Products.

Get legal input before you effectively choose your Mexican supplier, not after. Once site visits are done, engineering is aligned, and transition deadlines are set, you have already started losing leverage. Choose dispute resolution based on where your counterparty's assets are and where you would actually need to enforce, and that choice has gotten harder. Mexico's 2024 judicial overhaul moved the country to elected judges, beginning with a June 2025 election for the Supreme Court and hundreds of federal judgeships, with more elections coming in 2027. Nobody yet knows how elected judges will treat foreign companies in commercial disputes, and that uncertainty is a good reason to look hard at arbitration. Mexico is a party to the New York Convention on enforcing arbitral awards. You should make the dispute resolution decision while you still have bargaining power, with a clear understanding of how you would enforce a judgment or award if the relationship goes bad.

Register Your Trademarks in Mexico Before You Talk to Anyone

Like China, Mexico generally follows a first-to-file system, so the first party to register a mark usually owns it. We have seen this play out far too often. A company spends years building its name in the United States and calls us to secure that name in Mexico, only for our quick search to reveal that someone else has owned it for more than a year. The squatter is sometimes a professional, but more often it is someone close to the deal, such as a distributor, manufacturer, or sales agent. Buybacks are costly, administrative challenges take time, litigation is uncertain, and rebranding is disruptive. File your house marks, product names, logos, and any Spanish-language branding before you announce your expansion or share much with local parties. The money you spend filing trademarks before entering Mexico is usually trivial compared with what it costs to recover a brand someone else has registered. See Registering Trademarks in Mexico: What You Need to Know.

How to Leave China Without Losing Your Molds or Your Brand

Leaving China and entering Mexico is one transition, and the two sides need to be planned together. A company tells its China factory too early and assumes the tooling handoff will be routine, and then finds out nothing about it is routine. This happens more than companies expect. The supplier suddenly wants to revisit tooling ownership, release conditions, past balances, and minimum purchases before it will cooperate. Meanwhile, the Mexico side sees the same deadline and negotiates accordingly. Once both sides know you are under pressure, they stop negotiating with your business plan and start negotiating with your vulnerability. We have seen enough difficult China exits to know that the best time to deal with these problems is before anyone at the factory knows you intend to leave. See Leaving China Manufacturing: The Hidden Risks and How to Protect Your Business and Sinosure: The Complete Guide for Foreign Buyers.

Before your China factory has any hint you are leaving, you should take care of four matters that will become considerably harder to handle once your supplier knows what you are planning:

1. Collect your complete technical package: drawings, specifications, bills of materials, and supplier lists.
2. Confirm in writing that you own your molds and tooling, and know where they physically are. See On the Importance of China Mold Ownership and Protection Agreements.
3. Register your trademarks in China if you have not already. China Trademark Registration: The Complete Guide for Foreign Companies explains how, and How to Protect Your IP in China covers the rest of your IP there.
4. Get your Mexico side ready before time pressure starts driving bad decisions.

Most companies will need to keep some production in China while Mexico ramps up, so plan the overlap and your final China orders as carefully as you plan the new factory. Make sure your exit plan covers any employees you have in China as well as your molds and inventory. If your factory holds your molds hostage anyway, How to Sue a Chinese Company lays out your options. The more you can get under your control before announcing the move, the less leverage your existing manufacturer will have over your departure.

What China Veterans Need to Unlearn in Mexico

Planning Without a Planned Economy

Managers with China experience often get stuck in what Andrew called a special economic zone mindset, in which key benefits come pre-negotiated and many decisions come pre-made. When China was on the way up, government-partnered industrial parks offered everything pre-arranged, from tax holidays, land, permits, utilities, and workers to compliance, logistics, and paperwork. The tax holidays are largely gone, but the expectation that someone else will take care of it lives on. Andrew saw that expectation repeatedly among companies arriving in Mexico after years of relying on China's industrial parks and local officials to make things happen.

Mexico does plan. It published a National Development Plan for 2025 to 2030, and Plan México lays out a national industrial strategy with domestic-content goals and the development zones described above. But Mexico has nothing like China's centrally coordinated supplier ecosystem. Announcements are made, regulations proposed, and crises come and go while your local counterparts stay focused on the task at hand, and you will do much more of the practical work of finding suppliers and arranging facilities yourself. The exceptions to Mexico's hands-off approach have always been tax collection and international trade regulation, which is where the reforms described above have hit. Mexico also has no dark plan to steal your IP. As Andrew wrote, "When the Mexican government undermines your business, it will be an accident. And there will be plenty of people who feel just terrible about it." Mexican officials, like those across Latin America, do benefit politically from appearing skeptical of international corporate "plundering," and in Mexico, the companies that become national heroes sometimes get nationalized. Understanding this political environment is part of operating in Mexico, even if you would prefer to spend all your time concentrating on production.

Force Multipliers and Power Projection

China's language, culture, law, custom, and distance demand an autonomous approach to management. Successful China operations have typically been led by highly paid, powerful country heads, half a day or more of time difference away from U.S. headquarters. Andrew thought of these operations as force multipliers, self-contained power bases that create their own facilities, networks, partnerships, and even product lines, in places nobody from headquarters could find in a taxi. Yum! Brands is the classic example. Its China operations ran Pizza Hut and KFC with their own products and layouts, and management was so independent that the China business was spun off in 2016. For many U.S. companies, operating in China effectively meant trusting an overseas management team to make decisions that headquarters could barely supervise.

Mexico operations are projections of the U.S. company's power, integrated as closely as possible with their U.S. parents. It's common for a U.S. manager to run teams on both sides of the border. Andrew said the IMMEX program is so favorable to U.S. companies it could have been written by Ford's CFO staff. That integration ties a Mexico operation into chains of command you already know, though it comes with a much greater emphasis on doing things "the right way," meaning the Toyota Production System. U.S.-based China experts, Andrew predicted, were going to have a lot of time on their hands. His point was that the skills needed to run an autonomous operation in China do not necessarily carry over to an operation managed closely from the United States.

Proximity and the Information Gap

It's hard to overstate how closely the U.S. and Mexican economies are integrated in manufacturing and logistics. Andrew said he heard two or three times a day in Saltillo that its auto parts factories are three hours from the U.S. border. Mexico's industrial regions all run within an hour or two of U.S. business hours, which ends the 12-hour games of phone tag. A U.S. manager can fly into Monterrey or Querétaro on Thursday morning, see everyone who needs seeing, and be home for dinner Friday night, without 14-hour flights, jet lag, banquets, or week-long marathon meetings. Andrew counted that among the biggest and most immediate pleasures of moving from China to Mexico. Anyone who has spent years managing a factory on the other side of the Pacific should appreciate how much easier this makes ordinary business communication.

Mexican managers know far more about you and your business environment than you know about theirs. China is covered so intensely that hearsay about the mood of top leadership becomes headline news. The international business press ignores nearly everything about Mexico except narco-violence, illegal immigration, luxury resorts, and, more and more, its food. You need your own strategy for gathering the information that matters to your Mexican operations. That means spending time with people who understand the particular state and industry in which you intend to operate, instead of assuming the English-language business press will tell you what you need to know.

Managing Mexican Managers

Andrew thought this was where U.S. companies have their biggest advantage, because Mexican business culture in the industrial regions he worked in is so closely aligned with U.S. business culture. Tijuana and much of Baja California are so tied to California that people schedule their travel around U.S. school spring breaks. Mexican managers tend to see themselves as on the same team as headquarters in Detroit or Irving, Texas, routinely work on cross-border teams, and expect leadership roles. Chinese managers at foreign companies, divided from headquarters by distance, language, culture, and government policy, often treat the job as a stepping stone to their own company or to a senior post at a Chinese company or in government. Experienced China hands know the tactic of "waiting for the foreigners to leave when times get tough." Ambitious Mexican managers want a better position inside your company and expect good performance to bring recognition and pay. Treat them as low-paid, low-value workers and they will leave for better companies. Andrew believed U.S. executives who understood this difference would have a much easier time building strong management teams in Mexico.

Negotiating With Decisive Skeptics

Negotiation was Andrew's specialty. He described Chinese negotiators as patient pragmatists, who keep a relationship going as long as they see potential value in it and move on only when they decide a counterparty's usefulness is gone. Mexican negotiators were decisive skeptics. They assess you, your offer, and their environment, and then they decide, and to someone used to China the suddenness can be jarring, especially when the answer is no. Many people treat passing on the deal as the default in a Mexican negotiation, leaving it to you to prove the value of your proposal. Andrew called it "almost like a reverse-guanxi situation, where relationships are considered a potential liability." U.S. negotiators, whom he called short-term aggressors, initially look more aligned with Mexican decision-making, until their phone calls stop getting returned. Andrew spent years teaching negotiation, and he regarded these differences as practical problems that foreign companies needed to prepare for before entering the room.

Chinese negotiators avoid a direct no, which in Chinese often comes across as abrupt and impolite. Because they figure you may be useful to someone in their network, they keep relationships alive with phrases like "it's difficult" or "the timing isn't right, but that may change." In Mexico, Andrew wrote, the danger is the quick no, "but in China you need to beware of the endless pause." Networks differ the same way. In Andrew's words, Chinese networks are "wide nets," while Mexican networks are "tall silos that stretch to the US headquarters, but not beyond." Your Mexican counterpart is happy to transact but not desperate for your business. One thing Mexican managers share with Chinese ones is that they respond poorly to being rushed and pressured by aggressive U.S. managers. And once you lose their trust, it is gone for good. Do your research, show up with good questions, and talk up your commitment to the deal. It also helps to recognize that an early rejection in Mexico is often a decision, rather than the opening move in a prolonged negotiation.

Washington, Mexico City, and Beijing

The Politics That Matter Most Are in Washington

At the end of 2022, Andrew and I wrote that the only politics worth watching were in Washington, where U.S. trade law is made and enforced, and that those decisions would generally not favor your business. Our corollary to "all politics is local" was that all international trade is political. Where we went wrong was in thinking U.S.-Mexico trade enjoyed unusual protection. We reasoned that powerful U.S. auto and aerospace interests drove the USMCA, so harming U.S.-Mexico trade meant harming GM, Ford, GE, and Boeing. That protection proved weaker than we thought. The United States declined to renew the USMCA in its current form and has imposed tariffs on Mexican goods that fail to qualify under it, so the protection that remains is the USMCA exemption itself. For manufacturers considering Mexico, decisions in Washington now deserve at least as much attention as the operating conditions in the Mexican state where they intend to locate.

Mexico's Own Politics

We also wrote then that Latin America was moving left and that its governments had few qualms about nationalizing industries. Since then, Argentina elected Javier Milei in 2023, and right-leaning candidates won the presidencies of Bolivia, Chile, and Honduras in 2025. Mexico has not followed that swing. Claudia Sheinbaum, from López Obrador's party, succeeded him in 2024. The state-centered instincts we described show up in the judicial overhaul and in Mexico's 2022 lithium nationalization. After that nationalization, Mexico canceled Chinese miner Ganfeng's Sonora concessions, and Ganfeng responded with an investment arbitration. Latin American politics swing back and forth, which is reason enough to build your plans around the trade rules rather than around whoever holds office this year. A long-term manufacturing investment needs to make sense under political conditions that will inevitably change during the life of the operation.

China Is Coming to Mexico Too

At the end of 2022, Andrew and I wrote that China was in Latin America to stay, for its raw materials, for its politics, and because, as we put it, China can read a map as well as anyone, and the 2,000-mile border between Mexico and the world's biggest customer is hard to miss. In 2023, Andrew went further. "Chinese manufacturing is definitely coming to Mexico, probably," he wrote. He worried that Chinese technology, management, money, and market access would change how Mexico does business. "And that could be good or bad for you. Probably bad." He was particularly concerned about how established Western manufacturers would fare if Chinese companies brought their own suppliers and business practices into Mexico.

Andrew saw three kinds of Chinese companies heading south. The first were smaller, fast-moving suppliers using IMMEX and shelters to get around U.S. tariffs. The second were big brands, like Hisense, able to pull their own suppliers along with them. The third were projects big enough to rebuild a Shenzhen-style cluster, like the Chinese-backed Hofusan Industrial Park in Salinas Victoria, just north of Monterrey and about 200 kilometers from Laredo. He warned that U.S. companies could end up third in line for capacity and connections, behind Chinese and local firms. He also worried that U.S. and European negotiators, constrained by anti-corruption laws, would be at a lasting disadvantage against Chinese competitors who are far more "flexible." Andrew had seen how Chinese business networks operate, and he expected those practices to follow Chinese manufacturers into Mexico.

Hofusan has since become one of the main hubs for Chinese manufacturers in Mexico, hosting more than 40 Chinese companies, including Manwah and Hisense, with plans for an additional $1 billion expansion. The bigger wave ran into Washington. BYD shelved its planned Mexican plant in July 2025, citing geopolitical pressure, after China's commerce ministry reportedly delayed approval over concerns the United States could get access to BYD's technology. As of early October 2026, BYD, Chery, MG, Geely, Great Wall, and GAC had all put their Mexican assembly plans on hold over the USMCA's uncertain future, and most new passenger cars from countries without a trade agreement with Mexico now pay a 50 percent Mexican tariff. On October 14, 2026, Mexico waived its 10 percent tariff on imported parts for car assembly for five years. The waiver applies only to automakers authorized to assemble vehicles in bonded facilities, which would include any Chinese brand that sets up an authorized operation, and how Washington will view the move is unknown. Chinese investment in Mexico is therefore caught between Mexico's interest in attracting manufacturing and Washington's determination to prevent Chinese companies from using Mexico to evade U.S. trade restrictions.

Otherwise Mexico has moved toward Washington's position. A Mexico-China free trade agreement is off the table for as long as Mexico wants the USMCA. If any member enters a free trade agreement with a non-market country, the other members can terminate the USMCA on six months' notice and replace it with a bilateral agreement. Andrew predicted that within a few years, Washington would be demanding to know how we lost our own Latin American neighborhood to China. If China was winning, he wrote, it was "mostly just because they are showing up, and the U.S. and Europe pretty much aren't." His warning deserves attention from companies that assume Western businesses will naturally retain their advantages in Mexico simply because they are closer to home.

Before You Commit to Mexico

China used to be the simple answer to just about every business question, offering production, markets, sourcing, and raw materials on the best imaginable terms. Now you have decisions to make. Start with whether you can afford two completely separate operations, one in China and one in Mexico. Next, decide whether you are prioritizing the U.S. market or the Asian market, and what you will do if regulatory or technical barriers keep you from serving both. If you want to sell in Asia, you have to be in Asia, which probably means some presence in China. See Foreign businesses want out of China. But breaking up may be tougher than ever. Then ask whether your business model will work in Mexico at all. The answer needs to come from a serious examination of your manufacturing process and customer markets, rather than from the assumption that Mexico is now the obvious place to go. See China’s Manufacturing Exodus: How Mexico and the U.S. Are Gaining Ground.

Diversifying your manufacturing can reduce your exposure to disruptions in any one country, but only if the new operation actually gives you an alternative source of supply. A Mexican factory that depends on Chinese components remains vulnerable when those components become unavailable or too expensive to import. If both factories depend on the same critical supplier in China, you have not solved that problem by opening a second factory. Find out which materials you can source independently and whether you can maintain production when one part of your supply chain stops working. You want your second operation to give you options when something goes wrong.

Andrew argued that China's central planning had been a safety net for Western business, whether you realized it or not. Chinese state policy wanted your production running, and Chinese managers had strong incentives to sign the deal and get you to invest and share know-how. In Mexico you are much more on your own. The toolkit exists in free trade agreements, tax incentives, cultural similarities, and easy movement of goods into the United States. But there are no off-the-shelf solutions, and it is up to you to do the research and fill the gaps in your plans before you make any deals. You will be expected to know everything about your own production, sources, materials, and supply chain. Your China network may not be eager to help, but learn it anyway, because it will probably be a bigger job than you think and it is something you should know regardless. One of the most useful things you can do before leaving China is to find out just how much of your own manufacturing operation you actually understand and control.

Timing matters. Mexico offers many advantages, but speedy setup is not one of them, and Andrew and I warned in 2023 that the border region was getting crowded and its best real estate bought up quickly. Companies that plan ahead can move their supply chains in an orderly way, and those that wait until a crisis will scramble for capacity and pay for it. After China, as Andrew warned, any other production center is going to seem highly DIY and management-intensive, and you had better "get used to it." Bring in your lawyers before you effectively choose your Mexican supplier, while you still have leverage. Our earlier post Moving Production to Mexico: What U.S. Companies Get Wrong goes deeper on the legal mistakes companies make at the start. I would much rather see a company spend a little more time and money planning its move than see it rush into Mexico and spend years trying to correct decisions it made before it understood how the country works.

Mexico makes sense for many companies looking to reduce their dependence on China, but moving manufacturing there takes more planning, capital, and management than many companies expect. The biggest mistake is assuming that what worked in China will work in Mexico. Before committing, make sure your products qualify for the tariff treatment you expect, your costs are realistic, and you understand what it will take to operate successfully under Mexican law.