Mexico has become an attractive destination for Taiwanese auto parts manufacturers. The breakdown in global supply chains, which began in 2020 as a result of the pandemic and intensified in 2022 due to Russia’s invasion of Ukraine, has led economies around the world to rethink location, accommodation and performance of their value chains. Taiwan is no exception.
Armando Cheng, ambassador of Taiwan in Mexico, asserts that, due to its geographical location, the country is its main investment destination in Latin America, highlighting that there is a special emphasis by investors on making a place for themselves in the Mexican automotive sector, especially in the auto parts segment.
In January of this year, a group of delegates from the island visited Ciudad Juárez, Chihuahua, after being attracted by the dynamism of component production in the border city.
Ambassador Cheng describes the geographical location of Mexico as “strategic”, due to its proximity to the United States and Canada, in addition to the existence of the T-MEC. These advantages, added to the trade war between China and the United States, and the shock that the pandemic gave to global supply chains, have fueled the desire of “many Taiwanese companies to want to be out of China. “Mexico stands out as the best option for investors”, he asserts in an interview.
According to data from the Ministry of Economy, Taiwan occupies the 27th place in the list with the highest arrival of capital to the country according to the figures of Foreign Direct Investment (FDI); however, the ambassador underlines that in the last two years companies have shown “a special interest” in Mexico.
“In the last two years, honestly, we received a wave of investment. Many of our companies want to know more about the country, they want to come and invest. There are many interested parties and some have already finalized”, he expresses.
According to statistical reports from the National Foreign Investment Commission presented to the Congress of the Union, from January to March 2021, Taiwan accumulated FDI of 0.6 million dollars, a figure that for the same period in 2022 reached 11 million.
At an event organized by the National Auto Parts Industry last week, the ambassador presented 23 component categories, ranging from automotive electronics to tires and pneumatic tools, from 10 Taiwan companies. Most of them have been awarded for the Development of Foreign Trade in that country and now have the objective of joining the value chain of the sector in Mexico.
The assemblers give the “go ahead” to the Taiwanese capitals
José Zozaya, president of the Mexican Association of the Automotive Industry (AMIA), which groups 22 assemblers installed in the country, points out that, in the last five years, 20 of every 100 dollars invested have been allocated to this sector, one being of the main generators of foreign exchange.
“The assembly companies are integrators of technology from different countries of the world and this is the clearest proof of what we do in the automotive sector, an integration”, he expresses. “Hopefully our friends in Taiwan will deliver more of their auto parts and we will have smoother trade,” he adds.
The ambassador highlighted the interest of Taiwanese companies in investing in the border area with the United States; however, he said that investors are also considering Guanajuato and Aguascalientes to invest their capital. These states house assembly plants of General Motors, Honda and Nissan, among others.
The island is well known within the global automotive sector for the Taiwan Semiconductor Manufacturing Company, the largest global semiconductor manufacturer. “Let’s remember that Taiwan is one of the largest suppliers of microprocessors that are so lacking in the market, I hope they are encouraged to set up a plant here,” said Zozaya.
The automotive sector accumulates 18 months of shortage of semiconductors for the assembly of vehicles worldwide. In Mexico, this led to vehicle production falling to 2,979,276 units in 2021, a number that was well below the country’s installed capacity, which is capable of assembling more than five million units a year.
In total, Taiwan has 300 companies of various kinds in Mexico, among which are the manufacturer of servers, connections and other computer components, Inventec, and the electronic products company Foxconn, both located in Ciudad Juárez, Chihuahua.
