Contrast Mexico vs. China Manufacturing
Looking for an analysis of comparative costs and benefits of manufacturing in Mexico vs. China? Many U.S. companies who are exploring manufacturing off shore are considering both Mexico and Asian options, such as, China. Mexico's advantages over Asia include 1-Proximity, 2- Short merchandise transit time, 3-Lower transportation costs, 4-Developed transportation and communications infrastructure, 5-Experienced workforce with many years of manufacturing experience in many industries, 6-Intellectual property protection 7-Easy access to the U.S. markets for executive talent pools and 8- Ease of customer factory visits. China, on the other hand, has lower labor cost than that of Mexico. These and other considerations are summarized in more detail below:
8 Point Comparative Analysis of Mexican vs. Chinese Manufacturing
| Description | Mexico | China |
|---|
| Ability to manage | - At most, a few hour flight away
- At most several hour time difference
- Similar holiday schedule
- Many Mexicans speak English, and Spanish is the most common foreign language taught in U.S. schools. Both languages have the same Latin root.
- Language and numbers use same characters
| - Half way around world
- Time differences of many hours exist
- Completely different holidays.
- While China has many English speakers, the cultures have few common roots and the native languages are not grounded in the same Latin root.
- Language and numbers taught in school use completely different characters.
|
| Visits to plant from U.S. | - Technical, customer or training visits to the plant can be accomplished in as little as one to two days. Transit cost is minimal.
- Work visas can be obtained at the border in as little as 30 minutes for a U.S. citizen
| - Technical, customer or training visits to the plant must be arranged well in advance and probably consume an entire week or more, not to mention the high travel expense.
- Work or travel visas require preplanning and can result in travel delays.
|
| Shipping transit time to U.S. | | - Several weeks not including transit to or from ports. Small quantities can be shipped by air in two days at a high cost per pound.
|
| Other shipping considerations | - Possible to ship in pallet or box quantities allowing flexibility with customer LTL orders.
- Ocean freight not required
- Shipping cost per unit is low and only slightly more than shipping from the U.S.
- In most cases, little or no duties
| - Generally ship in container load quantities limiting flexibility
- Potential dock strikes
- Shipping cost per unit can be high, particularly for bulky items. And given the high demand for containers from Asia.
- Duties can be substantial with rates of 23% not uncommon
|
| Protection of Intellectual Property | - Intellectual property is protected and Mexican courts typically respect and enforce companies' rights to intellectual property.
| - Counterfeits are common in Asia and courts have been slow to enforce or recognize intellectual property rights.
|
| Social Responsibility | - Relatively strict environmental laws
48 hour work week and a low, but livable wage in Mexico. - Tight family circles with employees going home daily
- Provides relatively good jobs in Mexico, helping to stem the flow of illegal immigration to the U.S.
- Reasonably developed employee safety practices.
Strong child labor laws - Reasonable health and safety monitoring and inspections.
| - Less strict environmental laws
- 6 day week 12 hour days are not uncommon. Wage level would, in many cases, not support a family.
- Workers live in factory dormitories and go home for Chinese New Year.
- Outsources U.S. jobs with little social benefit for the U.S. besides low cost products.
- Underdeveloped employee safety practices
- Well documented news reports of child labor and sweat shop conditions.
- Poor health and safety standards and monitoring which allows such things as Lead based paints to be used on toys coming to the U.S.
|
| Availability of qualified workers | - Generally plentiful, with seasonal tight periods.
| - Generally plentiful, with some higher concentration of engineering talent
|
| Fully burdened direct laborer wage rate | - Approximately $2.50 to $3.00 per hour.
| - Between $1.00 and $1.50 per hour.
|
| Government | | |
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