It is no secret for transnational companies that the Mexico and California strategic relationship is something to be considered when thinking of expansion or even new businesses. As the state with the highest GDP in the United States, California’s economy is itself the 5th largest economy in the world. Mexico, on the other hand, is the 14th largest economy. According to the California Chamber of Commerce, Mexico is California’s No. 1 export market, purchasing 16.5 percent of all its exports.
International trade between Baja California and California alone results in a 70 billion dollar cross-border trade value from manufacturing operations, tech centers, and other businesses. The binational region comprises Baja California, San Diego County and Imperial County in California. It has over 90 universities and colleges and more than 3.8 million jobs. Particularly, Baja California’s competitive business environment; skilled labor force; and strategic location make it California’s best ally and natural nearshoring destination.
The California and Baja Mega Region has become a very popular destination for companies seeking an increase in their logistics and manufacturing efficiency, as well as business opportunities in Mexico. Its proximity to major consumer markets and adoption of nearshoring strategies have fueled its attractiveness. As the #1 exporter manufacturer state in Mexico, Baja California has:
- +60 years of manufacturing experience
- +120 industrial parks
- X3 seaports available (San Diego, Long Beach & Ensenada)
- X5 ports of entry to the USA (a sixth one under construction)
- X3 International airports (San Diego, Tijuana & Mexicali)
- Mexico’s 29 Agreements for the Promotion and Reciprocal Protection of Investment (APPRIs) with 30 countries and 14 Free Trade Agreements with 50 countries
Settled industries in Baja California
How do maquiladoras work in Baja California? Companies settling here have access not only to logistical facilities, but normative benefits thanks to government plans and programs to promote foreign investment in Mexico. Among these we find:
- Tax exemptions for maquiladoras
- No tariff rates for maquiladoras
- Agreements with the federal Ministry of Economy
- Subsidies for employee training
- Exemption from payroll tax (25% -100%) from 1-5 years to new projects or large extensions
- Plus many more incentives particularly for the city of Tijuana
All these considerations have resulted in +150 contract manufacturing companies from different industries (such as Foxconn, Bose, Samsung, Medtronic, Toyota, Sanyo, Hyundai, among others) settling in Baja California.
The example of Medical Device manufacturing
In the last couple of years medical device manufacturing in Mexico has increased to the point of becoming one of the world’s most important hubs. Particularly, Baja California is the leader of medical manufacturing in America with over 100 global companies. On the other hand, the biotech cluster of San Diego is one of the most prominent in the United States. Because of this, in the last couple of years, the integration of this region’s expertise, knowledge and technology has become a binational goal.
Be it electronics, aerospace, medical devices or other options of manufacturing, now is the best moment for Starting a business in Mexico. If you are interested in the Mexico and California strategic relationship and want to learn more about it and contract manufacturing solutions, know that Tijuana EDC has over 30 years of experience advising foreign companies in this, and they know all the requisites and benefits that involve setting up a plant in Baja California, particularly in Tijuana.