COVID-19, a reason for Mexico to reduce its dependence on China

MEXICO — For Oscar Albin, president of the National Auto Parts Industry (INA), the shortage of components in automotive plants, caused by the collapse in global supply chains due to the COVID-19 pandemic, is a call to reduce dependence on China as a supplier of electronic components.

“The first call was the tariffs imposed by the United States on Chinese inputs in the middle of last year, the second call was the increase in regional content for vehicles that the T-MEC requires and that forces automakers to buy more auto parts in North America, the third call is the coronavirus, do we really need a fourth call?” said the president of INA

The auto industry in Mexico has spent a decade seeking to substitute imports of Chinese components for local production without much success and during the last 20 years, it has turned the Asian country into its factory for electronic components and dozens of other parts.

During 2019, Mexico made purchases of Chinese auto parts for US$8 billion, which represented 14.5% of total imports, according to INA data.

According to Mr. Albin, although there have already been some investments that have come to Mexico after the pandemic, the vast majority of new projects will land in the United States.

Source: Expansión