China's foreign direct investment in Mexico's auto parts-automotive industry:: location determinants

Abstract

In 2020 China displaced the United States as the main country of origin of cross-border M&A type investments and ranked fourth as the origin of new greenfield projects. In the regional context, since 2010 Mexico appears as the second destination of Chinese direct investment directed to manufacturing and as the first destination in the automotive auto parts industry (AAI). The article examines the determinants of Chinese direct investment in Mexico from a regional perspective and from the case study of the Chinese multinational Minth based on Aguascalientes, Mexico. The results allow us to conclude that the growing presence of direct investment by Chinese private companies in the AAI is explained by the favorable prospects for demand generated by the presence of global assemblers in Mexico and geographic and institutional variables such as the proximity whit United States, the agglomeration economies presence and benefits of the United States-Mexico-Canada Agreement (USMCA).