China’s Lingong Machinery Group (LGMG) is embarking on a significant investment project in Mexico’s northern state of Nuevo Leon to generate $5 billion in investments. This marks another instance of expanding Chinese investments in Mexico, particularly in Nuevo Leon, strategically located near the U.S.-Mexico port of entry in Laredo, Texas.

LGMG’s project encompasses a 25-acre industrial park that will host the company’s manufacturing facility and create three “clusters” to attract further foreign investments in manufacturing, warehousing, logistics, and business support services. LGMG will locate its factory and industrial park near Monterrey, emphasizing the city’s transportation and logistics infrastructure and its proximity to the United States.

The governor of Nuevo Leon, Samuel Garcia, revealed that approximately 120 enterprises have already expressed interest in participating in the LGMG project, potentially generating over 7,000 local jobs. This investment comes on the heels of Tesla’s announcement to build a $5 billion assembly plant in Nuevo Leon, highlighting the region’s significance for nearshoring.

Mexico has been a beneficiary of nearshoring, with foreign direct investment (FDI) reaching a record $40 billion in 2022. In the first half of 2023, FDI in Mexico increased by 40%, primarily driven by automotive and industrial manufacturing projects. Nearshoring can potentially boost Mexican manufacturing exports to the U.S., reducing dependency on China.

China’s trade balance with Mexico has seen a recent uptick, suggesting that Chinese firms may be rerouting exports through Mexico to bypass tariffs and sanctions imposed by the U.S.

In summary, LGMG’s investment in Nuevo Leon is part of a broader trend of growing Chinese investments in Mexico, positioning the country as a nearshoring hub and reflecting China’s strategic response to trade challenges with the U.S.

Inspired by: https://www.freightwaves.com/news/chinese-manufacturer-investing-5b-to-expand-production-in-mexico