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These are
general choices available to your company:
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Contract
Manufacturer
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This option exposes the foreign company to the least
amount of risk and is used for relatively small
operations. Companies that are unwilling to cross into
Mexican territory tend to prefer taking this path, though
the lack of contact with operations has the obvious effect
of limited oversight of quality control and logistics.
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Subsidiary
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In contrast, the establishment of a wholly owned
subsidiary allows foreign manufacturers to maintain
complete control over all aspects of their business. This
involves a long-term commitment and requires a great deal
of knowledge as to how business is done in Mexico, but
also reduces costs in the long-term, especially for
operations with over 300 employees. Start-up costs are
the most substantial. The option is more appropriate for
large multinationals that have had foreign operations for
years and whose personnel are familiar with Mexican
business culture. However, many companies currently
operating as wholly owned subsidiaries in Mexico began
operations through the use of a Shelter, and later
established the subsidiary.
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Joint Venture - A joint
venture with a Mexican partner is an attractive
alternative when the foreign owned manufacturer needs a
partner that knows the local business environment. This
option involves establishing a strategic alliance in which
each party contributes its expertise, technology, or
capital to the jointly owned maquila. However, many
foreign manufacturers shy away from this option, which
explains why the use of a Shelter is a popular option.
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Shelter Operation - The
Shelter performs most tasks associated with establishing
and operating a manufacturing facility in Mexico allowing
the foreign manufacturer to focus on manufacturing
operations. It provides the industrial space, hires all
workers, administers payroll and other services,
coordinates labor relations, pays utilities, obtains
permits and licenses, imports the foreign manufacturer's
equipment, machinery and raw materials and exports all
finished products (see
services). The Shelter provides a relative
risk-free method to begin manufacturing or assembling
product in Mexico (see
benefits). Under a Shelter agreement,
foreign manufacturers can avoid substantial start-up costs
and the getting bogged down in the day-to-day maze of
operating a business in Mexico.
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