Reverse Engineering Market Penetration

November 11th, 2009

Ricardo's blog

photo from Ricardo's blog

The worst Chinese food I’ve ever had was on the border between Mexico and Texas, at a maquiladora. It was Chinese food “with Mexican characteristics”. Now, Golden Dragon, a Chinese copper tube manufacturer, has invested in a USD100m pipe plant in Mexico. The 200,000 sq meter plant should bring about 900 jobs to the Mexican town of Coahuila. The move is similar to the American manufacturer that had disassembled its maquiladora back in the Americas to re-assemble it in Suzhou three years ago, only to re-disassemble the China operation to re-establish its place back in Mexico during the trough of the global economic downturn. Rising labor, materials and transportation costs had made the China-investment uneconomical. The Chinese investment, though, is proactive; not reactive, like the American project. The Chinese plan puts its operation within striking distance of the U.S. and Central American markets in a commoditized industry in which it can compete on market share, not profits. I can only hope the Chinese investors improve their new home’s Chinese culinary offerings.

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