The easiest way to start is to open an office, or a warehouse, on the US side of the border in Otay Mesa. This will give you a local presence that you can use to provide better support to your customers in the region with local stock, or to coordinate shipments that are coming to you across the border from your new suppliers. OMCC - Real Estate OMCC - Warehousing.
As your business grows, you may have some customers that ask you to have local stock that you maintain in Mexico to be able to provide them with better support and a quicker turnaround. In this case, you should look at contracting with one of the many third party logistics (3PL) as it is all handled by companies in the area. A 3PL can give you the flexibility you need to allow your business to grow in this region. OMCC -- Third Party Logistics.
The 3PL companies are usually a division of a US corporation which have a warehouse management software system in place to give you access to your inventory online at any time through their secure servers. By using a 3PL, you won’t have to recruit, and hire local labor to pick, pack and ship your product. You can avoid having to deal with Mexican employment laws, payroll taxes, etc. as its all handling at the 3PL. In addition, most 3PL companies are connected with a customs broker or freight forwarder to make the transport of your goods into their warehouse run that much smoother.
You may even decide that the best option for you is to have your products manufactured, assembled or packaged in Mexico. In this case, there are a number of qualified contract manufacturers that can do this work for you. With the strength of the USD and the rising cost of labor in China, you will find that the total landed cost of your products coming from Mexico will give you significant savings over what you had been paying from China. OMCC -- Contract Manufacturing.
A contract manufacturer is set up to manufacture, assemble or package other company’s products. They have a wide variety of equipment to be able to produce a variety of products. They are usually ISO certified and have approved quality systems in place. They will use a data management system to track their workflow to keep track of all of the jobs they would be running for different clients and to maintain control of any special client supplied materials that may be required to complete their client’s products efficiently.
For CM’s to be successful they must be flexible. To achieve this they have a diversified, well- trained staff that you wouldn’t be able to replicate in your operation. This workforce allows them to quickly move from platform to platform and keep the overall cost to you at a minimum.
If you do consider moving a product line to a contract manufacturer, it is usually best to start with a mature product line that has a complete data package that will be easier for your team to provide training to the CM on the best way to build your products.
When your operation finally demands that you need to set up a more permanent presence in Mexico, there are a number of professional services that you will need that you can easily obtain through the OMCC membership.
A corporation can be set up relatively easily in Mexico and for that you will need an attorney. The tax laws in Mexico are very complex and will need to be prepared and filed with a certified accountant. Depending upon your business needs, you may need real estate brokers, insurance professionals, bankers, contractors, etc. and these are all available through the chamber. OMCC -- Law Firms/Legal Services OMCC -- Accounting Firms OMCC -- Banking OMCC -- Insurance Services.
In addition, there are companies locally that can provide a full service approach to setting up your legal presence, finding and building a suitable location, to maintaining your accounts, and finally to recruiting, staffing, hiring and managing your employees so this is another option you could look at.
The OMCC Matchmaking Service is a quick and easy way to get started finding the right kind of partner for your business in the Cali-Baja region.
When you are deciding on the right kind of operation to start with, give yourself a lot of flexibility for your business to grow and change as you discuss the best way to do business for your company in this region.
Our experience is that there usually needs to be a very compelling reason to establish a corporation in Mexico as there are so many cost effective services available that can allow you to still achieve your objectives without getting locked into a long term commitment.
Where possible, try to do all of your business dealings in USD to avoid any surprises associated with any currency fluctuations down the road.
Don’t be afraid to ask a lot of questions of other business owners that have already set up operations in Mexico. You can learn a lot from their experience and don’t forget to use the OMCC as a great resource for anything you need in the Cali-Baja region.
Poly (formerly known as Plantronics), a CA based audio device manufacturer has a state of the art manufacturing and design facility in Tijuana. They credit much of their success in this operation to the synergy that has been created between their headquarters in Santa Cruz, CA and their operation in Tijuana that have been working together for 44 years.
Being well established in Tijuana, they felt that the time would come when the labor rates in Mexico would be more favorable than what we were seeing in Asia. They tracked these labor rates on a regular basis and in about 2010 their idea came true and they were ready to take advantage of it.
They had identified key suppliers in Asia and worked with them to set up operations in Tijuana to be able to continue to support Poly and to grow their business in the Cali-Baja region. This plan has worked with a number of their suppliers that are now able to take advantage of the lower labor rates in Mexico that are 30% less than what we are seeing in China today.