Pros and Cons of Doing Business in Mexico: What You Should Know

Mexico has one of the strongest economies in Latin America. It has historically been an important trade partner for the US. The country has been a go-to sourcing destination for a range of industries. These include automotive manufacturing, electronics, agriculture, and IT services.

Manufacturing business confidence in Mexico was at 49.5 points at the start of Q2 2025, marking a decline from the beginning of the year. This dip reflects current challenges facing the sector. However, expectations for a recovery in business confidence remain strong in the coming months.

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Table of contents:
What Are the Pros of Doing Business in Mexico? What Are the Cons of Doing Business in Mexico? How to Overcome Business Challenges in Mexico Common Questions About Doing Business in Mexico Try Wise Business: The Smart Way to Manage International Business Finances

What Are the Pros of Doing Business in Mexico?

Mexico has one of the world’s largest economies, and as such, presents a wealth of business and investment opportunities.

Cost-effective labor market

One of the biggest draws of outsourcing to Mexico is the affordable labor costs compared to the US. These can, in some cases, even compete with low-cost manufacturing countries like China.

This makes it easier for companies to outsource work projects and reduce operational expenses. Regardless, they can still gain access to skilled workers. There are various industrial hubs, such as Monterrey and Tijuana, where there’s an abundance of skilled workers. They also have many quality manufacturing processes.

Access to North American markets (USMCA agreement)

As a member of the United States-Mexico-Canada Agreement (USMCA), most products benefit from duty-free access to the U.S. and Canada. With this agreement, you can expect streamlined logistics between the three countries. In addition, you can look for robust trade rules and reduced tariffs.

Government incentives for foreign investors

The Mexican government has put various programs into place to attract foreign direct investment (FDI).

This includes the following:

• Tax exemptions
• Grants for infrastructure
• Support for companies operating in strategic sectors eg renewable energy

You can even find additional benefits in Special Economic Zones (SEZs) such as lower custom duty fees and flexible labor laws.

Expanding middle-class consumer base

Mexico has a growing middle class, and as such, there’s a sizable opportunity for companies to sell to local markets in the country.

Contributing factors to this expanding middle class include:

• Rising incomes
• Urbanization
• Greater demand for consumer goods and technology products

If you cater to this demographic, now is a great time to expand your operations to Mexico.

What Are the Cons of Doing Business in Mexico?

There are a few challenges of doing business in Mexico. Some factors make it slightly more cumbersome, or in some cases risky, to expand your operations to the country.

Bureaucratic and regulatory challenges

Whenever you start a business in a foreign country, there will be bureaucratic red tape to navigate, and Mexico is no different.

In some cases, you may get caught up in complex and long-winded legal and regulatory processes, which can include:

• Business registration
• Obtaining permits
• Paying taxes

This will often depend on the state or municipality you operate in.

Infrastructure limitations in some regions

Mexico has invested a lot in infrastructure improvements in recent years. However, you’ll still find that there’s a significant difference between urban centers and rural regions.

In some cases, you’ll come across inadequate roads, inconsistent electricity supply, and limited access to modern ports.

How to Overcome Business Challenges in Mexico

With all of the challenges associated with doing business in Mexico, there are various ways to overcome them.

Build strong local partnerships

One of the keys to success in doing business in Mexico is building strong local partnerships. These can include suppliers, consultants, and local experts.

The right trusted local partner can help you to mitigate some of the challenges you’ll face doing business abroad. Working with a local partner can help ease your entry into the market. This includes handling bureaucratic processes in Spanish or navigating cultural nuances.

Get help in navigating tax and legal systems

Tax and legal compliance in Mexico can be complicated. Without the right support, it quickly becomes a headache. Experienced legal and accounting professionals can make the process much smoother.

Consider working with local firms, or hiring bilingual staff, so you can confidently work through any challenges that arise as you try to set up.

Invest in secure business operations

It’s worth investing in reliable transportation, warehouse facilities, and on-site security. This way you can sidestep potential issues with safety and security.

Try to set up near major trade corridors, and use risk management strategies to insure your business against potential issues.

Common Questions About Doing Business in Mexico

Here are some answers to commonly asked questions business owners ask about doing business in Mexico.

Is Mexico a good country to start a business?

Yes, Mexico has a strong global economy and robust industrial hubs making it a great option for setting up a business. Low labor costs and a rising middle class make it an attractive place for aspiring business owners or serial entrepreneurs.

What are the challenges of doing business in Mexico?

Navigating local bureaucratic processes and potential infrastructural issues can surface while doing business in Mexico. It’s important to plan ahead, work with trusted local partners if you can, and set up in a strategic location to overcome these challenges.

What industries thrive in Mexico?

Mexico excels in various industries such as:

• Aerospace manufacturing
• Electronics
• Agriculture
• Oil
• Mining

Industrial hubs are situated all across the country, with key clusters in the regions of El Baijo, Baja California, and Guadalajara.

Try Wise Business: The Smart Way to Manage International Business Finances

If you’re looking to expand your business operations to Mexico or somewhere else, Wise Business might be for you. Wise offers a convenient solution for low-cost international payments using the mid-market rate. This means that you can pay for business costs in Mexico, without losing money to bad FX rates.

You can open a Wise Business account 100% online, and there are no monthly subscription fees or minimum balance requirements.

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Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies. You can get major currency account details for a one-off fee to receive overseas payments like a local. You can also send money to 140+ countries.

Some key benefits of Wise Business include:

Major local account details to receive international payments with ease No monthly account fees just a simple one-off fee for account details Receive payments from e-commerce platforms such as Amazon or via Stripe. Free invoicing tool to generate and send invoices. Create invoices using the Wise invoice generator or invoice templates. Accounting integrations, including a QuickBooks Bill Pay connection. Bill payments will be synced, matched, and categorized in QuickBooks for simple reconciliation. Access to BatchTransfer. Fast payment of up to 1,000 people.

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	Editor & Business Expert:
	Panna is an expert in US business finance, covering topics from invoicing to international expansion. She creates guides and reviews to help businesses save time and make informed decisions. You can read more useful business articles on her author profile.

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Sources:

1. tradingeconomics.com
   Sources checked September 2025