The term "nearshoring" refers to a business strategy aimed at increasing operational efficiency and reducing costs. This practice involves relocating a portion of production to a nearby country, allowing companies to benefit from various advantages, such as reduced transportation times and optimized supply chains. This not only leads to lower logistical costs but also strengthens their connection with local markets. As a result, it enhances their responsiveness to consumer demands.

Mexico has established itself as an attractive destination for nearshoring, thanks to its geographic proximity to the United States,robust infrastructure, availability of skilled labor, and numerous trade agreements. These advantages have created a conducive environment for various industries, such as manufacturing, technology, and the automotive sector, to thrive under these circumstances.

This is exemplified by Ford Motor Company's investment in Mexico, which has become a benchmark for nearshoring strategies in the automotive sector. The purpose of this decision was not only to optimize production and reduce costs but also to meet the growing demand of the North American market. However, Ford's entry into the Mexican market has also presented a series of challenges that underscore the need for a robust approach to corporate law. These challenges include adapting to a complex regulatory environment, managing labor relations, and complying with environmental standards, highlighting the importance of having well-defined legal strategies to ensure the success and sustainability of operations in the country.

Legal Considerations in Nearshoring Strategies

Corporate Structure:

When establishing operations in Mexico, it is essential for companies to choose the appropriate legal structure, whether it be a variable capital corporation, a limited liability company, an investment promotion corporation, or another type of entity. This choice not only influences the legal liability of the owners but also determines tax obligations and the ability to attract investment. An appropriate structure can facilitate business management and maximize growth opportunities in the local market.

Registration of Foreign Investments:

Companies established in Mexico with foreign investment are required to register and comply with regulations set forth by the Secretariat of Economy through the National Registry of Foreign Investments (RNIE). This registration is essential to ensure transparency and monitoring of investments, and compliance is crucial for legal operations in the country.

Commercial Contracts:

The drafting of precise and detailed contracts is essential for establishing solid relationships with local suppliers and consumers. These agreements should include key aspects such as payment terms, delivery conditions, and dispute resolution methods, ensuring compliance with Mexican legislation. A well-structured contract not only protects the interests of the parties involved but also promotes effective and transparent collaboration.

Tax Compliance:

Companies must consider the tax implications of their operations in Mexico. This involves identifying both local and federal tax obligations, as well as developing appropriate tax planning strategies. Effective tax management is key to ensuring regulatory compliance and optimizing the tax burden.

Intellectual Property Protection:

Once companies decide to start operations in Mexico, it is essential to protect their intellectual property, especially if technology or knowledge is shared with local partners. Companies are obligated to register their patents and trademarks in Mexico and to establish agreements that clearly define the management and protection of these assets.

We are at your disposal for any advice or questions related to this matter. At VILA, we have a team of professionals who can support you in providing legal assistance for all your commercial transactions.