Due in large part to the US-China trade war, Taiwanese supply chains continue to relocate from China and some manufacturers have increased the rate at which they have invested in Mexico to align their operations with the needs of customers and to comply with US policy.
However, setting up manufacturing plants in Mexico is not without its complications, including the language barrier, different cultures, local regulations and finding qualified staff. Accumulating talent with proficiency in Spanish is the first step to developing the market in Mexico, and indeed Latin America as a whole.
Mexico is a good location for three reasons:
First, its shared border with the US. Second, there are relatively low production and labor costs. Third, Mexico is a signatory of the US-Mexico-Canada Agreement (USMCA), so it is covered by the zero-tariff policy while manufacturing within the area, allowing Mexico to play an important role in the US’ automotive market.
To meet the requirements of manufacturing in the US, Mexico has become the best choice for Taiwan’s technology firms to invest and develop.
For this reason, a delegation of representatives from 20 Taiwanese companies, assisted by the Taipei Economic and Cultural Office in Mexico, visited Mexico, and discussed the Interoceanic Corridor Project — strongly promoted by Mexican President Andres Manuel Lopez Obrador — with companies hoping to explore investment opportunities to set up plants in Mexico and along the corridor.
The project involves the construction of a railway network in southern Mexico and the Isthmus of Tehuantepec to connect all ports between the Pacific Ocean and the Gulf of Mexico, and to build 10 industrial parks along the way and infrastructure for local residents.
The US-China trade war aside, customers’ needs was the main reason that companies like Pegatron Corp and Foxconn Technology Group moved production out of China.
Additionally, the COVID-19 pandemic disrupted global supply chains and caused a surge in sea and air freight transportation costs, making short supply chain and nearshoring a trend.
Moreover, with geopolitical conflicts such as increasing tensions between China and the US, suppliers had no choice but to review their production lines.
Also, low-cost labor is the best pull for assembly lines, and that is why Mexico can draw Taiwanese investment. Moving the supply chain from the East to the West would soon become a global trend.
Under the call of Tesla, many domestic electronics foundries have invested in Mexico, and Taiwan’s Tesla suppliers also set up factories in Mexico to seize the soaring opportunities of the electric vehicle market.
Foxconn Technology’s Mexico plant was the largest manufacturer there for producing servers and networking products. Today, with increasing supply to Tesla, automotive products would be another major driver of growth.
The establishment of a plant in Mexico is not only about manufacturing costs, but also related to national security.
After Chinese, Spanish is the second-most spoken language globally, with 490 million native speakers. The Latin American economy has kept developing stably and has been expected to become the area with the most potential for development around the world. Thus, learning Spanish can bring more opportunities for jobs, tourism, lifestyle and social networks.
I have been bringing students to companies in Latin America for internships for many years, and I found that large corporations and small and medium-sized enterprises needed talent with Spanish proficiency to expand their business.
Few people learn Spanish in Taiwan, and as a result, proficiency in the language affords one a competitive edge in the workplace and in daily life.
In recent years, sub-replacement fertility and societal value transformation have had a great impact on many professions like languages and humanities. Some specialized departments have closed in Taiwan, but talent in these professions is still necessary.
The Ministry of Education should motivate schools to keep language departments and set up scholarships to encourage students to study abroad, aiming to nourish talent in Spanish language and culture.
Besides studying the basics of language — like listening, reading, writing and speaking — learning the history and culture of the country is also of paramount importance, enabling us to deepen our communication with partners and expand economic and trade relations.
Ho Kuo-shih is an associate professor in Providence University’s Department of Spanish Language and Literature.
Translated by Chien Yan-ru
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