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When companies decide to outsource to Mexico, choosing the right entry method is key to success. There are multiple modes of entry to manufacture in Mexico, and there’s no one-size-fits-all approach.  Each mode of entry brings unique benefits and challenges. 

manufacture in Mexico modes of entry

The choice you make impacts everything from costs and control to risk tolerance and timelines. It is absolutely essential that you understand the primary ways to manufacture in Mexico so you can choose the one that best suits your company’s situation. Here’s a look at three most popular and successful popular ways to enter the Mexican manufacturing market and how they stack up.

  1. IMMEX Shelter Provider

A favored choice for many foreign manufacturers, working with an IMMEX shelter provider offers fast and efficient entry into Mexico’s manufacturing sector. The IMMEX program is unique to Mexico, providing foreign manufacturers with significant savings in cost, time, and compliance headaches.

The main advantage of a shelter provider is that the foreign company doesn’t need to set up its own legal entity. The shelter service holds the necessary permits, including IMMEX registration and VAT certification, which saves months of bureaucratic delays. This VAT certification exempts you from the 16% value-added tax on temporarily imported materials, goods, and machinery. In short, you hit the ground running, with minimal red tape.

A shelter service also takes care of all the local administrative tasks—hiring, payroll, tax compliance, legal matters—leaving you free to focus on production. You maintain full control over your product and operations, while the shelter provider handles the local complexities. This makes shelter manufacturing a great option for companies looking to save time and minimize risks while getting production up and running quickly.

For businesses aiming to streamline their entry into Mexico with minimal upfront investment, a shelter provider is often the best route.

Pros:

  • Speedy startup (weeks instead of months)
  • No need to set up a separate entity
  • VAT tax exemptions
  • Complete operational control
  • Reduced legal and tax risks

Cons:

  • May not be as beneficial for companies with fewer than 20 or more than 500 employees.
  • Doesn’t leverage current company capital.
  1. Contract Manufacturing

Probably the most popular of the modes of entry to manufacture in Mexico – especially among smaller or less committed companies – is contract manufacturing. This method involves partnering with an established manufacturer in Mexico who handles production on your behalf. This is ideal if you don’t want the commitment of building or managing your own facility but still want to tap into Mexico’s manufacturing benefits.

Contract manufacturing can be particularly beneficial for companies with straightforward production needs—think injection molding or metal stamping. Your partner takes care of the factory operations, allowing you to scale production quickly. However, there’s a trade-off: you give up some control over quality and production processes, which can be a sticking point if protecting your intellectual property is a priority. 

If you prioritize speed and cost efficiency, but don’t mind relinquishing some oversight, contract manufacturing might be a good fit.

Pros:

  • Fast startup
  • Low upfront capital investment
  • Ideal for companies with predictable, high-volume production needs

Cons:

  • Less control over manufacturing processes
  • Potential intellectual property risks
  • Limited flexibility
  1. Standalone Factory

For those who prefer maximum control and independence, opening a standalone maquila factory in Mexico might be the best choice. Known as a maquiladora, this type of factory allows you to fully own and manage your production operation in Mexico, reaping the benefits of lower labor costs and tariff-free trade agreements. You import raw materials, oversee all factory operations, and export finished goods, all under your own brand’s umbrella.

The upside? Total control over every aspect of production, from quality assurance to intellectual property. But the downside is the complexity and time required to set up. You’ll need to handle everything—legal paperwork, labor laws, and compliance with Mexican regulations. Startup times can stretch into months as you establish your entity and deal with the learning curve of a new country.

This option is perfect for companies looking for long-term investment and maximum oversight, though it requires more upfront effort and financial commitment.

Pros:

  • Full control over manufacturing and processes
  • Better protection of intellectual property
  • Long-term savings

Cons:

  • Steeper learning curve
  • Higher startup costs
  • Longer setup time (months or years)
  • Full responsibility for regulatory compliance

Making the Right Choice

Each of these three entry modes of entry to manufacture in Mexico – IMMEX shelter provider, contract manufacturing, or a standalone factory – has its own strengths and weaknesses. Your decision depends on your company’s size, product complexity, timeline, and risk tolerance. 

A shelter provider offers a fast and low-risk way to break into the market. Contract manufacturing is a great option for those seeking efficiency without full ownership. And a standalone entity is ideal for those seeking complete control, even if it takes longer to get started.

Whichever path you choose, Mexico’s manufacturing sector offers numerous advantages, from cost savings to proximity to key markets. Just be sure to match the method with your company’s goals for the best possible outcome.

It’s easier than you think.

Get in touch and we’ll show you how.