What is Nearshoring and how will it attract venture capital investment in Mexico?

Are you familiar with the concept of nearshoring? It’s a buzzword quickly gaining traction in today’s global economy. In essence, outsourcing business operations to nearby countries with lower costs without sacrificing quality or time-to-market delivery.

While various regions have benefited from this trend, none more so than Mexico, an emerging technological hub situated right at the doorstep of Silicon Valley. As such, venture capitalists have renewed interest in investing in Mexican startups and acceleration programs. So let’s dive deep into what nearshoring means for investors looking to break new ground south of the border!

Nearshoring and its benefits

Nearshoring is the strategic relocation of business operations to a nearby country. It offers some benefits, including reduced costs, improved communication, and increased efficiency. It is often seen as an alternative to outsourcing.

Mexico is an attractive nearshoring destination for many companies. Firstly, it has a large pool of skilled labor that can provide businesses with the necessary resources at a fraction of the cost of hiring in developed countries. Secondly, Mexico’s proximity to the United States makes it an ideal location for businesses that want to tap into the North American market.

“Apart from seeing investments in highly disruptive companies, in the case of Mexico, we will continue to see investments in manufacturing, transportation, logistics, and in general everything that has to do with exporting services to the United States,” Alfredo Castellanos, Glisco Partners’ managing partner, said in an interview with Bloomberg Línea.

The country has shown the benefits of the signed free trade agreements, particularly the modernized United States-Mexico-Canada Agreement (USMCA). This has made Mexico an increasingly popular destination for foreign investment, and venture capitalists are taking notice.

Mexico also has a growing number of Free Trade Zones (FTZs), which offer businesses special tax and customs incentives. These FTZs can help attract foreign investment and create jobs in areas that need them most.

CGO Forwarding México is taking advantage of this with Bordermatic

CGO Forwarding México presents its new cross-border trucking service. Bordermatic connects companies in the U.S. and Mexico that pick up and deliver freight across the border. This way, we are taking advantage of the nearshoring made in Mexico, always offering our clients the best.

The benefits of using Bordermatic for our clients are:

Reduced time in transit.
The immediate improvement compared to traditional trucking service.
An alternative to air freight service.
No freight is unloaded at the border. Trailers cross the border as a single unit and are sealed.
The average border crossing is 8 hours.
Reduce the risk of damages.
Eliminate storage & detention charges at the edge.
Customs clearance is done at the airports in Mexico.
Quality and service consistency.

CGO Forwarding isn’t the only company taking advantage of nearshoring in Mexico. In recent years, many other companies have moved some or all of their operations to Mexico, including manufacturing, customer service, and back-office functions. By nearshoring in Mexico, these companies can improve their competitiveness by reducing costs and increasing efficiency.

Nearshoring is beginning to attract venture capital investment in Mexico as businesses recognize the value of flexible, cost-effective labor markets close to home. By nearshoring their operations, companies have access to a diversified and educated workforce that can help them achieve greater innovation and meet organizational goals quickly.

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