Topic is \"Debate Merits of Doing Business with either China or Mexico \" Based

Question

Topic is "Debate Merits of Doing Business with either China or Mexico "

Based on your reading Chapter 6 Investing Abroad Directly and Current Articles: (Page 181 in Global Business Ed4 textbook by Peng), research and debate with your fellow peers your opinions of the subject. Discuss the pros and cons of doing business in Mexico and China respectively.

This is a group discussion and a global business class. Thank you

Sorry, thats chapter 6 of the textbook. Can you review current articles instead. Thanks

Explanation / Answer

Answer:

The low cost of labour has long been one of the main advantages of Mexico. But China has become a fierce competitor in this area. The costs of labour in Mexico and China today are rather comparable. It is true that the Chinese were very competitive for some time, but it is no longer the case. The cost of labour there increased rapidly and should continue to climb. Today, the average wage in Mexico is only 20% higher than in China.

The most important comparative advantage that Mexico has over China, however, is its proximity to the North American market, including, of course, Canada. Compared with China, the transportation costs of goods are much lower for Canada when doing business in Mexico.

Mexico has the most free-trade agreements (17 agreements with 49 countries) of any country in the world. Mexico has a lot of free-trade agreements, especially with countries in North America and Latin America, but also with Europe and Japan, among others. This is an advantage for Canadian companies that export products they have made in Mexico and have a Mexican content high enough to fulfill the conditions laid down in these free trade agreements. And this is also an advantage for import: the Canadian companies operating in Mexico can import products from third countries without tariffs or with very low rates.

The main benefit of doing business with Mexico than China is certainly NAFTA. That means you can work without much difficulty among the three countries, to settle in Mexico, import products from the United States, export to the U.S. and Canada and so on. Mexico has an industrial and financial system among the most sophisticated in the world, and represents a market of 110 million people, with a growing middle class. The peso is also a very stable currency.

One sign that Mexico is attractive to investors than Chian: there are already more than 2,400 companies with Canadian interests on Mexican soil.

Despite the presence of large Canadian multinationals in Mexico such as Bombardier, RIM, Goldcorp, Magna and Scotiabank, we find relatively few SMEs. This is a general problem. This is not only the case for Canadian SMEs. This is also true for the Americans and any other country, as well as Mexican women who want to settle in the United States or Canada: SMEs in general have difficulty moving abroad, especially where there is a difference of language and culture. They do not have the same resources as multinationals. It is a combination of lack of skills, fear of the unknown, sometimes a lack of financing or [a case where] credit is less available for SMEs.

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