César was surrounded by animals on his father's ranch when he was a child. There is a red monolith with the words " Hofusan Industrial Park" on it.

Hofusan is located between Mexico's industrial capital and the US border and has become a haven for Chinese manufacturers looking to sidestep US tariffs and shorten supply chains. The country dubbed the world's factory now also exports white-collar managers to set up and run operations in places such as Vietnam, Thailand, and Mexico as part of the latest chapter in Chinese capitalism.

There was a single building on the site three years ago. According to the park's officials, 10 Chinese companies have plants there and three more are being built. They think there will eventually be 15,000 people working at Hofusan and that 10% of them will be Chinese managers. More than $1 billion in investments have been made in this area.

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César Santos turned his father’s ranch near Monterrey, Mexico, into an industrial park whose tenants are all Chinese companies.

Electronics company Hisense, furniture businesses Kuka Home and Sunon Furniture, auto-parts maker Hangzhou XZB, and garden equipment manufacturer Skyish are among the tenants in the park. Simon Huang, country manager for Kuka Home, says that if you want to do business with America, you need something close to the market.

Mexico has a number of selling points, including proximity to the world's biggest consumer market. Thanks to the country's free trade pact with the US and Canada, a chair made at Kuka's factory in Hofusan can travel across the border duty-free, whereas one shipped to the US from China would be hit with a 25% tariffs.

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Kuka Home is China’s biggest home furniture company.

When Donald Trump took office, Chinese investment in Mexico went from $150 million to $271 million. More Chinese companies invested in Mexico last year than in any other country in the Pacific, as a result of the supply-chain snarls and the angst caused by the Chinese president.

Shannon K. O'Neil is a columnist and author of The Globalization Myth: Why Regions Matter. Chinese companies are setting up shop in Mexico.

The Mexican secretariat of economy is located in Mexico.

This isn't a top-down initiative like "Belt and Road," which has financed power plants, bridges, and ports across scores of countries Chinese policymakers have supported the drive by low-margin businesses to offshore production as Beijing focuses on fostering advanced manufacturing industries. The document encouraged international cooperation on production capacity.

China is not the first country to seek shelter from US tariffs. In response to a series of import restrictions that began under Ronald Reagan, Japanese automakers opened plants in the country in the 90s. There is a similar mix of sticks and carrots that is making relocation to North America attractive for some companies and industries.

A 63-year-old real estate lawyer who dreamed of turning his father's ranch into an industrial park was one of the victors from this shift. A Chinese investment fund was looking for a site close to the US border. The park officially opened in 2016 after a joint venture with two Chinese investors. Hofusan is a combination of the partners' names: the Holley Group, the Futong Group, and theSantos family.

After Trump imposed duties on Chinese imports in order to shrink the trade deficit, some of Hofusan's tenants moved into the building. Skyish executives came to look for a place.

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The entrance at Hofusan Industrial Park.

Wages in China are growing at a faster rate than in Mexico, which has led to a narrowing of the gap between the two countries. The economic advantage of manufacturing in China has been eroded due to Trump's tariffs and a surge in freight rates.

Construction of Sunon Furniture's new $80 million factory on the site will be the same cost as in China once maritime transport is included. We have an advantage. Delivery time from the company's headquarters in China to the US is around 10 weeks, compared to four weeks from Mexico.

The Holley Group, which didn't have a park in Mexico before Hofusan, is now looking for sites in other parts of the country. A park in Thailand is one of the things the company is working on.

Chinese investors are looking for places in Mexico. An industrial park is planned near the Port of Lzaro Crdenas in the Michoacn state. The world's biggest maker of batteries for electric vehicles, Contemporary Amperex Technology, is considering locations in Chihuahua and Coahuila for a plant that could cost as much as $5 billion to build.

Mexican President Lpez Obrador has been criticized for not taking advantage of US companies' desire to decrease their dependence on China. Nearshoring could boost Mexico's exports by $35.3 billion a year, according to the Inter-American Development Bank.

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Kuka Home factory workers at Hofusan.

It looked like that scenario was overly optimistic. The $31.7 billion of foreign direct investment Mexico booked last year was the lowest in two years. The country made $19.4 billion in the first three months of the year, making it the second most successful quarter of the century.

China overtook Mexico as the top exporter to the US in 2003 but Mexico has been regaining lost ground since the US imposed tariffs. China shipped more goods to the US than Mexico did. Through the end of June, the gap was $129 billion.

Vietnam and Thailand seem to be taking up a lot of manufacturing investment that could have gone to China. The combined exports of the two countries to the US increased in value by almost $90 billion over the course of the last four years.

The 12-month average was trailing.

The data is from the US census.

If AMLO hadn't scared off investors with his nationalist rhetoric, Mexico would be getting bigger rewards, according to some. Mexico is a clear winner in the move to nearshoring, but macroeconomic indicators have yet to reflect that, according to a recent note.

"We could be catching a 10-foot wave, but instead we are catching a 3-foot one, which is better than nothing." Gonzalez says energy issues are a big problem.

Ivn Rivas is the economy minister of the state of Nuevo Len, where Hofusan is located.

Many Chinese businesses have experience in emerging markets, so they are less likely to be frightened by the habit of railing against foreign companies. They know how to negotiate and invest with governments that aren't so friendly towards investment. She says they're investors in Africa and Latin America.

Mexico has a federal government that has never made much effort to lure Chinese companies to its shores because it has long viewed them as manufacturing rivals and to avoid creating tension with the US, according to Rangel. Chinese investment was just 3% of the $14.8 billion that American companies spent in Mexico last year.

Some Mexican states are trying to get Chinese investors. One of the highways being built by Nuevo Len is to serve Hofusan. Many of its neighbours on the border offer payroll tax exemptions for companies that meet certain criteria. He said that between 15% and 20% of investment is from China. It wasn't even 5% before

Chinese companies have had difficulties in Mexico. The US-Mexico-Canada Agreement requires a higher proportion of the value of any good to come from North America to be eligible for free trade.

Unlike China, Mexico doesn't have a large network of suppliers. Sunon, the furniture maker, says it has been unable to procure the kind of upholstery fabric it uses in China, and the Mexican producer of a chair part can only supply 2000 a month. A potential client from the US decided to go to Vietnam to find suppliers.

Some of the new arrivals have other problems. The Mexican workers at Kuka Home are more inquisitive than their American counterparts. Mexican people are always asking why. I don't understand why I should do that. The man says something. They want to know why. Employees in China are willing to work 16-hour days, but Mexican workers don't. He says this isn't life for them.