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Chinese fashion firms are using Mexico as a gateway to the US market

The goods are destined for major US retailers such as Costco and Walmart. But the company is from China, and its Mexican manufacturing plant was built with Chinese capital.

The triangular relationship between the US, China and Mexico is the basis of the buzzword in Mexican business: "near-shoring".

Man Wah is one of dozens of Chinese companies that have moved to industrial parks in northern Mexico in recent years to bring their production closer to the U.S. market. In addition to saving on shipping costs, their end product is considered all-Mexican — meaning Chinese firms can avoid U.S. tariffs and sanctions imposed on Chinese goods amid the ongoing trade war between the two countries.

As the company's general manager, Yu Ken Wei, shows the BBC the huge production site, he says the move to Mexico made economic and logistical sense.

"We hope to triple or even increase production here," he says in perfect Spanish. "Our intention here in Mexico is to reach the level of production in Vietnam."

The company will not arrive in the city of Monterrey until 2022, but already has 450 employees in Mexico. Yu Ken Wei says he hopes to grow to more than 1,200 employees to operate several new lines at the plant in the coming years.

"People here in Mexico are very hardworking and quick learners," says Mr. Yu. "We have good operators and their productivity is high. So, as far as the workforce is concerned, I think Mexico is also strategically very good place".

Of course, near-shoring is believed to be an important boost to the Mexican economy - through June of last year, Mexico's total exports were up 5.8 percent year-on-year to $52.9 billion.

The trend shows little sign of slowing. In just two months this year, nearly half of the annual total in 2020 was announced in Mexico.

Man Wah Sofa Factory is located in Hofusan, Sino-Mexican Industrial Park. The demand for plots is extremely high: every available space is sold.

In fact, according to the Association of Industrial Parks in Mexico, every piece of land to be built in the country by 2027 has already been bought. No wonder China's interest in the country is not a passing fad, according to many Mexican economists.

"The structural reasons that drive capital to Mexico will remain," said Juan Carlos Backer Pineda, Mexico's former deputy foreign trade minister. "I have no indications that the trade war between China and the US will weaken soon"./BGNES

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