Disruption Report #71: Mexico On the Rise, Hong Kong Is Back, Inflation Eases

China Eases Its Covid Protocols and the Hong Kong January In-Person Show Is a GoJust remember to bring a mask

The Hong Kong Toys & Games Fair is a go for 2023. Hong Kong, which has been essentially shut down due to China’s tight controls on access to the former colony, is opening back up. Visitors will no longer have to quarantine and restrict their movements upon arrival.

This is good news for Hong Kong and the toy industry. The not-so-good news is that, as expected, Covid infections are increasing due to the loosening of restrictions. So, go to Hong Kong, but you would be wise to bring a mask or two

Inflation Eases in November

The Consumer Price Index

Source: U.S. Burearu of Labor Statistics and The CPI Inflation Calculator

Food was the inflation culprit in November, as costs increased by 10.6% for groceries. Fuel, however, was down while non-food products fell into low single-digit increases.

Is Mexico On the Rise As a OEM manufacturing Source for north america?

Near-shoring is alive and well and taking place right next door in Mexico. That’s according to a Freightwaves article, “Could Mexico replace China as top global manufacturing exporter?” by Noi Mahoney. The article quotes Mexican Economic Minister Raquel Buenrostro as stating:

More than 400 North American companies have the intention to carry out a relocation process from Asia to Mexico,” Buenrostro said at an appearance before Mexico’s Senate last month. “This is a sign of the importance of the United States-Mexico-Canada Agreement, a trade pact where ties with the U.S. and Canada have been strengthened, and where an institutional framework was established that grants legal certainty to investors, businessmen and consumers in the region.”

Buenrostro’s words are, however, too vague for my taste. “Have the intention to carry out a relocation” is not the same as actually relocating. I am not alone in being skeptical. The same article quotes Jorge Canavati, a principal at logistics and trade consulting company J. Canavati & Co., as referring to near-shoring as a fad term.

He sees trade moving from China to Viet Nam or India, but not to Mexico. Mr. Buenrostro cites concerns around personal safety, and a lack of digital and physical infrastructure development as handicaps for Mexico.

Interest in Mexico as a manufacturing source is definitely on the rise. I know that from the inquiries I receive. But is it ready to take manufacturing away from Asia? The answer to that is, to quote Magic 8 Ball, “Ask again later.”

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