2025-05-07
113-2 第二場國關論壇:Tracing Asian FDI in Mexico as a Result of Nearshoring and U.S.-China Economic Decoupling
The second International Affairs Forum of the semester at National Chengchi University was successfully held, featuring Professor Fabricio Antonio Fonseca-Fernández (馮慕文) from the Department of Diplomacy. He presented on the topic "Tracing Asian FDI in Mexico as a Result of Nearshoring and U.S.-China Economic Decoupling," offering a deep analysis of how Asian countries are adjusting their FDI strategies amidst shifting global trade dynamics and geopolitical tensions.
Nearshoring and Theoretical Framework
Professor Fonseca began by introducing the concept of nearshoring, which refers to relocating production facilities from distant markets to locations closer to key consumer markets. He explained that the rise of nearshoring is driven by the impacts of the COVID-19 pandemic, the broader trend of trade securitization, and the U.S.-China economic decoupling. Drawing from Gantz (2024), he described nearshoring as a more neutral term compared to other politically charged terms like "friendly-shoring" or "ally-shoring."
To contextualize the discussion, Professor Fonseca employed John Dunning's Eclectic Paradigm, which outlines four motivations for Foreign Direct Investment (FDI): market seeking, resource seeking, efficiency seeking, and strategic asset seeking. He argued that nearshoring is primarily linked to the "efficiency-seeking" type of FDI, where firms reorganize their supply chains to minimize geopolitical risks while maintaining competitiveness.
Mexico as a Strategic Hub
Since the implementation of the United States-Mexico-Canada Agreement (USMCA) in 2018 and the subsequent U.S. tariffs on Chinese goods, Mexico has emerged as a primary beneficiary of the nearshoring trend. However, Professor Fonseca also pointed out that despite Mexico's geographical advantages and low labor costs, the country faces significant challenges that hinder it from fully capitalizing on these opportunities.
He emphasized that Mexico's overreliance on low-skill manufacturing and the lack of clear federal policies to promote nearshoring before 2024 have impeded the nation's ability to attract higher-value investments. Additionally, he stressed the need for more effective strategies to integrate local suppliers into regional supply chains to ensure long-term economic benefits.
Asian FDI in Mexico
One of the key focuses of the lecture was the development of Asian FDI in Mexico, a relatively underexplored area in academic research. Professor Fonseca traced the history of Asian investment in Mexico, noting that the first significant wave came from Japanese companies in the 1960s. He split the research timeline into two key periods: 2009–2016 and 2017–2023, using data from Mexico's Ministry of Economy to show how Asian companies—initially led by Japan—expanded their presence in Mexico, particularly in the manufacturing sector.
While the U.S. remains Mexico's largest source of FDI, Asian companies' share is steadily growing, especially in the automotive and electronics industries. Japan continues to be the largest investor from Asia, followed by South Korea and Taiwan. Although China entered the Mexican market later, Chinese companies now outnumber Taiwanese firms in Mexico, despite having a smaller investment volume.
Professor Fonseca highlighted that many Asian firms prefer joint ventures or internal trade arrangements to minimize risks, noting that Chinese companies often view Mexico as a "backdoor" to the U.S. market, particularly in industries impacted by tariffs.
Conclusions and Forward-Looking Questions
In conclusion, Professor Fonseca emphasized that the trends of nearshoring and U.S.-China economic decoupling appear to be structural and long-term, regardless of changes in U.S. presidential leadership. If Mexico can address its structural challenges, it is well-positioned to continue attracting Asian FDI and solidifying its role as a key manufacturing hub in North America.
The session concluded with a lively Q&A segment, where participants engaged with Professor Fonseca on the global supply chain implications of these trends, China's evolving investment strategies, and the potential impact of a second term for former President Trump on Mexico and the global economy.
The next International Affairs Forum will take place on May 8th, with Mr. 董雪松 presenting on the topic "歐亞金融危機之殤:美元霸權的地緣狙擊"
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(Written by: Jyuan-Ping Jhang | Photography by: Jyuan-Ping Jhang)
Professor 李佳怡from the Department of Diplomacy serves as the host, delivering the opening remarks.
The speaker, Professor Fabricio Antonio Fonseca-Fernández.
Professor Fabricio Antonio Fonseca-Fernández presents on the topic "Tracing Asian FDI in Mexico as a Result of Nearshoring and U.S.-China Economic Decoupling."
Visiting Scholar in attendance ask questions during the Q&A session.
Professor 李佳怡asks questions during the Q&A session.
Professor in attendance ask questions during the Q&A session.
Group photo taken after the forum