There are different operating structures for manufacturing in Mexico. As a company, you must adopt anyone to start your operations here. Take a look at them:
The standalone model
It means your company is free from third parties. It works as a standalone unit in Mexico and can outsource roles carried out efficiently by other companies, such as payroll, accounting, recruitment, and more. Most companies choose to develop an administration team to deal with management, labor, and leadership.
A standalone model needs the formation of a new legal entity in Mexico. It is answerable for its taxes, compliance, employment, and trade compliances. The company can manage it by hiring competent specialists for the jobs.
The direct investment in developing a new manufacturing unit involves major risk for companies lacking a level of uncertainty if their unit will meet their objectives or not. However, such models have complete control and are only chosen by brands with full confidence in their capability to do it all.
The shelter model
The shelter model was founded in the 1980s to help international companies produce in Mexico with limited risk and a lot of assistance for compliance and administrative functions, which every company in Mexico should perform.
Consider it a hybrid between a standalone and contract model, where the foreign company has complete control of its production and assets. Still, the shelter company handles the administrative and non-production roles.
Working in Mexico with a shelter company, the company holds and controls its manufacturing, engineering, quality check, and supply chain. Still, the shelter company handles the legal entity of record, compliance, and other administrative tasks.
The word “Shelter” means protecting the foreign company from exposure to taxations and trade and labor regulations. It is a good way for foreign companies to enter and manufacture in Mexico.
The Mexican government offers income tax, I/E benefits, and consumption tasks to shelter companies and clients.
The contracting model
The contracting model in Mexico is the same as in any other country. Just the opposite of a standalone model, the contract manufacturer has their production asset, controls the production, and works on the fee of the foreign company to produce goods. They are quite common in the textile and apparel industry.
The acquisition model
The merger of a foreign company with a Mexican company or its acquisition is an approach to set up a manufacturing operation because of the good manufacturing laws and conditions in Mexico.
A merger can reduce the lengthy and expensive learning curve of manufacturing in Mexico; it will possibly limit your management and leadership practices.
The joint venture model
While an acquisition or merger is like marrying two companies, a joint venture works as a partnership in which both partners add their unique strengths to accomplish a common objective.
A joint venture may benefit when the foreign company has a good market, and the Mexican company has the asset and expertise to meet the demand of its partner and produce.
These are the 5 manufacturing Mexico models to choose from. Choose the one that serves you the best.