free stats

Chinese expatriate entrepreneurs find a new gold rush destination in Mexico

4

“They come to me for all kinds of business, some are looking for warehouses, some for stores, some wishing to join the company, some asking how to come to Mexico. All kinds of questions,” said Lin, 45. “If I don’t look at my phone for an hour, there will be 100 unread messages.”

Entrepreneur Lin Yun, who is originally from Fujian province, stands at the entrance of his office in Mexico City. Photo: Siqi Ji

For many small Chinese merchants, Mexico has become a new gold rush destination, contrary to the common stereotype of the country in Chinese society: a remote and dangerous place plagued by drug trafficking and gang warfare.

This has led to an influx of Chinese expatriates. Some were part of the Chinese diaspora from Europe or other Latin American countries facing a saturated and slow-growth market amid inflation pressure; others came directly from China, where a growing industrial overcapacity and insufficient demand in the post-pandemic years forced them to venture out.

Sebastian Ho is one of them. The 44-year-old was in Mexico for more than 10 years before going back to his hometown in Guangdong province in 2016. Two years ago, he came back to Mexico City and later rented a space on the first floor of Izazaga 89, or Yiwu City – Lin’s biggest wholesale centre. At 16 storeys, it is named after the world’s largest small-commodities market in eastern China – selling products ranging from keychains to water bottles.

“Nowadays in China, it is very hard for people without higher education to earn money. There is too much pressure, and it’s very juan,” Ho said, using a word that translates to “involution” – a term originally used to explain a process in which additional input cannot produce more output.

Made in Mexico? Taiwan’s multinationals seek greener pastures away from China

And the involution has already spread to Mexico City as more Chinese merchants arrive. Many were lured by Lin’s videos promoting the country’s vast economic opportunities posted on Douyin, the Chinese version of TikTok.

A key destination for US nearshoring, Mexico’s economy grew by 3.2 per cent in annual terms in 2023. Within the same year, the country became the 12th largest economy in the world after advancing two positions, according to data from the International Monetary Fund.

“Too many people are coming [to Mexico]. It was much easier to earn money a year ago. Now our profit is very thin,” Ho said.

Still, in Yiwu City, many stores are currently under renovation, rushing to open their doors within weeks. Newcomers looking for space to rent are also a common sight: they usually go all the way up to the 16th floor, and take the stairs down to inspect every level.

The China Guangzhou International Commercial City’s Wholesale Centre in Mexico City is one of Lin Yun’s markets. Photo: Siqi Ji

According to data from Mexico’s Ministry of Tourism, the Mexican government granted temporary resident visas to 5,018 Chinese migrants in 2023, more than double the previous year’s number.

With the latest statistics, China became the third most common country of origin for migrants to Mexico last year, following the United States with 10,782 migrants and Colombia with 6,734.

Chinese is an often-heard language at the shopping malls in Nuevo Polanco – the central business district of Mexico City – where one of the office buildings houses a cluster of Mexican headquarters for major Chinese multinationals, many of which are on the US backlist, including Huawei and Hikvision.

Monterrey, the main industrial city near the border with the US, has so far benefited the most from nearshoring, with Chinese businessmen – many in sweatpants and trainers but talking on their phones about investments worth millions of dollars – a familiar scene in its luxury hotels.

China’s Latin American investments downshift to smaller, more strategic projects

“When I first came to Monterrey 20 years ago, I barely knew any Chinese here,” said Zhang Yijian, the Chinese translator for the state government of Nuevo Leon, of which Monterrey is the capital. “Now you can see them everywhere.”

The influx of Chinese migrants has yet to spark a major backlash from the local population, unlike post-pandemic American remote workers who have led to the gentrification of neighbourhoods, and the growing number of Haitian immigrants fleeing their crisis-torn homeland, said Eduardo Tzili-Apango, professor of China studies at Mexico’s Metropolitan Autonomous University.

Historically, Mexican society has been mostly opposed to Chinese presence. But efforts by the current Mexican government and China’s soft power push have resulted in more acceptance of Chinese culture and immigrants, Tzili-Apango said.

Along with the migrant influx, there has been an increasing exposure to Chinese brands in Mexico.

In 2023, the country became the second largest Chinese car importer, after Russia. Phone makers like Oppo and Honor and electric car manufacturer BYD are now major renters of big advertising billboards at the airport. Ride-hailing giant DiDi has also positioned itself as a formidable competitor to Uber since its Mexican launch in 2018.

Stores inside Yiwu City offer a variety of items for sale, including keychains and water bottles. Photo: Siqi Ji

But those aspiring to emulate Lin’s success elsewhere in the country have faced resistance from Mexican vendors.

In June, local merchants staged a large protest in Tulancingo, in the state of Hidalgo, urging city and state governments to prohibit new Chinese stores.

Hundreds of protesters displayed signs saying “Go away Chinese” and “This is unfair competition” while shouting slogans like “Long live Tulancingo, no to Chinese trade”. Representatives of a merchant union later distributed a petition demanding a ban on new licences, fearing that the entry of Chinese competitors would result in increased unemployment in the city, according to local media reports.

Although the state government has yet to enact any legislation, the city of Huejutla, in the same state, announced in December that it would not renew the operating licence for foreign stores after its expiration, citing “risks to job creation and income for Mexicans”.

Chinese carmaker BYD launches virtual showrooms in Latin America push

Even for Lin, life is not always easy. On a Thursday in mid-March, Mexico City officials ordered the entire Yiwu City to close, blocking access and affixing notices indicating suspended activities.

Local media reported that the operation was in response to complaints about potential smuggling activities and the unauthorised sale of Chinese goods without the required import taxes. The reports also refer to the sale of electronic cigarettes, which are currently unregulated by Mexican health authorities.

But rumours among the Chinese community tell a different story. Many believed it was a matter of “not enough money”, indicating that the seizure was staged by the local government to seek more bribes.

The Mexico City government and Lin did not respond to a query on Yiwu City’s closure. The entire market reopened the following day.

A new Chinese-style wholesale market on Jose Maria Izazaga Street in Mexico City. Photo: Siqi Ji

Despite shrinking profits and the occasional backlash, for many Chinese wholesalers, optimism still prevails: in catering to the local market, they are not vulnerable to pressure from the US, unlike Chinese manufacturers who set up factories in Mexico aiming to tap into the north. Meanwhile, cheap prices are their absolute competitive advantage.

“It is the same everywhere in the whole world, price is king wherever you go,” said Miguel Wen, who runs a store in Yiwu City with his wife, selling apparel including socks from his local factory.

Lin’s ambition does not stop with wholesale markets either. He said he has an “urban creation plan”.

A 45-minute drive from Yiwu City, his first logistics park – covering around 75,000 square metres with 53 warehouses – has been under construction since early February. All the spaces were sold out within six weeks, and warehouse sales at a second logistics park, which is only on the drawing board, have already started, he announced on his social media account.

Lin Yun’s biggest wholesale centre, the 16-storey Yiwu City, is named after a market in eastern China. Photo: Siqi Ji

“All parks will naturally evolve into commercial zones within a few years,” he wrote. “If you don’t have such a vision, you will miss out on important wealth opportunities in Mexico.”

His next goal, meanwhile, is to build an industrial estate accommodating factories for manufacturing. Currently, many products being sold at his wholesale markets, such as apparel, are subject to Mexican anti-dumping duties, which means the containers with these products have a high risk of being confiscated by customs officials during import.

“The massive capacity in China has the urge to go overseas,” Lin said. “If they can set up apparel factories here, hiring local labourers and becoming a local manufacturer, there won’t be any anti-dumping risks.

“And I will provide them with the channel and platform.”

Source

Comments are closed.