The time and procedures to open a business, as well as to get construction permits are critical factors for international business success. Likewise, efficiency at international trade procedures are key to take advantage of the opportunities when participating in global business. At the same time, in case of closing a company, the optimal recovery of the investments facilitates the decision making process, since it reduces any risk.
In Mexico, an investor needs only 8 procedures in order to open a company. This number is significantly lower than in Germany, India or Brazil.
In Mexico, a business can open in 8.4 days, while in China and Brazil 8.6 and 20.5 days are needed, respectively.
In Mexico 15 procedures are required for construction permits, which means that it is easier to obtain them here than in India, Brazil and China where more of these procedures are required.
In Mexico, construction permits are much quicker than in India, China and Brazil. While in Mexico it takes 82.1 days, in China investors need 155.1 days or 434.0 days in Brazil.
To export from Mexico, only 20 hours are required for border compliance. This includes the time for obtaining, preparing and submitting documents during port or border handling, customs clearance and inspection procedures.
To import to Mexico, only 44 hours are required for border compliance. This includes the time for obtaining, preparing and submitting documents during port or border handling, customs clearance and inspection procedures.
In Mexico creditors can recover their credit in 1.0 years, which less time than the one needed in Czech Republic, Brazil and India.
The recovery rate is recorded as cents on the dollar recouped by creditors through the bankruptcy, insolvency or debt enforcement proceedings.
Additionally, the recovery rate for closing a business in Mexico is 81.8 cents, 40.2 cents more than Chile and 67.2 cents more than Brazil.
Workforce and operation costs
Aside of labor costs, other factors that affect operation costs (and the companies’ profitability) are the corporate tax rate and the number of tax payments (which implies administrative costs). Mexico observes advantages in these concepts.
Mexico offers significant savings in labor force costs compared to other potential investment locations in America, Europe or Asia. Transferring operations from US to Mexico may generate savings in labor force costs.
In fiscal matters, Mexico has significant savings compared with India, China and Brazil. Companies with productive activities in China could benefit with a 11.9% tax rate reduction by transferring operations to Mexico.
In Mexico requires only six tax payments per year, ranking above countries such as Brazil, USA and India.
Besides the lower freight costs, a smaller distance implies savings on transit inventory and on stock inventory. It also gives great capability to respond to unexpected changes in market conditions.
Days of maritime transportation to the main consumer and distribution centers
|Nueva York||Los Angeles||Rotterdam||Yokohama||Shanghai|
Source: Sea Rates, 2018.
Mexico is located in between the main global consumer markets. It shares a border with the United States of more than 3,000 km; has quick access to the European market through the Atlantic Ocean and to the Asian market through the Pacific Ocean.