In the vast ocean of the global economy, Mexico is emerging as a brilliant new star in manufacturing. With its unique geographical advantages, open trade policies, and immense growth potential, it has attracted the attention of numerous Chinese enterprises.

On November 20th, under the guidance of the Commerce Division of the Hongqiao International Central Business District Administrative Committee and the Hongqiao Overseas Service Development Center, a successful event focused on "Opportunities for Chinese Manufacturers Expanding to Mexico: Industry Giants and Professionals Discuss the Future" was held. As a leading enterprise in China's HCM SaaS+ platform, CDP Group was invited to co-host the conference and deliver a speech, sharing valuable insights and future perspectives for Chinese enterprises aiming to expand into Mexico.

Lv Wei, Chairman and CEO of CDP Group: Analysis of the Current Situation, Opportunities, and Challenges for Chinese Enterprises Expanding to Mexico

Lv Wei, Chairman and CEO of CDP Group, provided attendees with profound and comprehensive insights on the theme of "Analysis of the Current Situation, Opportunities, and Challenges for Chinese Enterprises Expanding to Mexico."

She believes that as the globalization of Chinese enterprises accelerates, many have chosen to expand overseas. Among them, Mexico, as an important economy in Latin America, has attracted the attention of numerous Chinese enterprises and become a popular destination for overseas expansion.

According to data, among Chinese enterprises that have expanded overseas for more than a decade, nearly half have overseas staff exceeding 5,000, and the proportion entering the Mexican market through the establishment of entities or mergers and acquisitions is over 60%. Particularly noteworthy is the outstanding export performance of Chinese enterprises in the field of new energy vehicles. In the first seven months of 2024, China exported about 1.17 million new energy vehicles, a year-on-year increase of 25%, undoubtedly demonstrating the strong competitiveness of Chinese new energy vehicles in the global market.

However, Chinese enterprises also face many challenges in the process of overseas expansion, with the complexity of human resource management being particularly prominent. Lv Wei mentioned that the scarcity of international talent, communication barriers due to cultural differences, difficulties in the recruitment process, unfamiliarity with local regulations, and ineffective use of global management tools are urgent issues that enterprises need to overcome. Among them, the scarcity of international talent, significant cultural differences, and lack of global management tools are generally considered the top three most challenging issues during overseas expansion.

Addressing these challenges, Lv Wei proposed three stages and strategies for global HR layout. In the start-up stage, enterprises are often fragmented, may not have established entities or are only in the initial stage of construction, and management is relatively passive. As enterprises rapidly develop and enter the rapid growth stage, they need to establish a complete management mechanism, transforming passive management into active management and paying more attention to cost-benefit analysis and optimization. When enterprises enter the strategic layout stage, they should focus on people, focus on the proactive layout of the global industrial chain, and lay a solid foundation for long-term development by improving efficiency and ensuring compliance.

When discussing the investment environment in Mexico, Chairman Lv Wei provided detailed data and analysis. Mexico, with a GDP of approximately $1.3 trillion, is expected to grow at a rate of 2.5%, and foreign trade accounts for about 70% of its GDP, demonstrating its open economic system and strong international trade capabilities. From 2015 to 2023, an average of about 65 Chinese enterprises chose to invest in Mexico each year, mainly in economically active areas such as Mexico City, Yucatán, and Jalisco. These investments cover key industries such as manufacturing, aerospace, finance, and insurance, showcasing the extensive layout and in-depth development of Chinese enterprises in the Mexican market.

Lv Wei's sharing and insights not only provided valuable analysis of the current situation and challenges for Chinese enterprises expanding to Mexico, bringing profound inspiration and reflection to attendees, but also pointed out the direction for enterprises expanding in overseas markets.

Song Dongqin, Senior Consultant for Global Compensation and HR Digital Transformation at CDP Group: Overview of Global Human Resource Management for Chinese Enterprises Expanding to Mexico

Song Dongqin provided attendees with an insightful and informative sharing, starting with Mexico's employment policies. She first led the audience into the core areas of Mexican labor law, interpreting in detail the basic framework and key clauses of the country's labor law.

Song Dongqin emphasized that Mexican labor law centers on protecting workers' rights and interests, consisting of the Constitution and the Federal Labor Law, supplemented by collective bargaining agreements, labor contracts, and other industry practices. It has strict and detailed regulations on the signing of labor contracts, working hours, compensation and benefits, dismissal procedures, etc.

For example, in Mexico, labor contracts are usually open-ended, with a maximum probation period of 30 days, which can be extended to 180 days for management or technical personnel. In terms of benefits, Mexican employees enjoy paid annual leave, sick leave for work-related injuries, maternity leave, and other benefits, as well as a 13th-month salary/Christmas bonus and employee profit-sharing.

Regarding employee profit-sharing (Participación de los trabajadores en las utilidades, abbreviated as PTU), the proportion of employee participation in company profits is determined by the Comisión Nacional para la Participación de los Trabajadores en las Utilidades de las Empresas. This proportion has been 10% for many years, meaning 10% of the company's (or boss's) profits from the previous year are distributed to employees. According to Article 123 of the Labor Law, this part of the profit shared with employees is divided into two equal parts. The first part is allocated based on the number of days each employee worked in the profit-sharing year, and the second part is allocated based on the proportion of each employee's salary income in the profit-sharing year.

On April 23, 2021, the Mexican legislature amended Article 127, Paragraph 8, of the Labor Law. The revised content states: "The maximum amount of profit-sharing for workers is equivalent to three months of the worker's salary or the average amount of profit-sharing received in the last three years, whichever is higher." That is, only when the profit-sharing amount calculated according to Article 123 of the Labor Law, which is 10% of the company's profits from the previous year distributed to employees, is higher than three months of the employee's salary, the Labor Law lists two options: 1) three months of the employee's salary; 2) the average amount of profit-sharing received by the employee in the previous three years. The company must pay the employee the higher amount of the two options.

The deadline for companies to distribute employee profit-sharing is May 31st each year, and for individual employers, it is June 30th each year (Article 122 of the Labor Law).

However, in the process of employing workers in Mexico, enterprises may also face various risks, such as improper contract signing, labor ratio issues, wage payment violations, overtime or forced labor, and "digital disconnection" rights disputes. These risks can not only bring legal disputes and economic losses to enterprises but also damage their reputation and image.

Introduction to the Concept of Digital DisconnectionMexico's Remote Work Standard NOM-037 clearly stipulates: "Workers have the right to leave their workplaces (including disconnecting from ICT) at the end of the workday, during non-working hours, vacations, permits, and licenses, and avoid any form of communication with the workplace." (This clause aims to safeguard remote workers' rights to not answer phone calls, messages, or emails outside of their scheduled working hours, protecting their rest time and personal lives. This clause does not apply to all Mexican workers. Some Mexican workers may interpret this clause as having the right to refuse contact from the company outside of working hours, but this is not the intended meaning of the revision.)

In addition, Song Dongqin also mentioned that compliance with IC in Mexico is particularly important. Mexico has strict definitions of IC and requires detailed contracts specifying service scope, remuneration, and other terms. ICs also need to register with relevant departments and report their contract status. Therefore, when using ICs in Mexico, it is essential to strictly comply with local regulations, ensure the legality and compliance of contracts, and avoid legal disputes. She recommended that enterprises regularly invite professional lawyers to conduct labor law compliance reviews to ensure that corporate policies keep up with the latest changes in Mexican law, avoiding risks and disputes due to lack of legal knowledge.

Song Dongqin also emphasized the importance of cross-cultural training. She believes that strengthening cross-cultural communication skills training for employees can promote integration between Chinese and foreign employees and build a more inclusive and harmonious work environment, which is crucial for the long-term stable development of enterprises in Mexico.

Throughout her presentation, Song Dongqin provided attendees with a valuable guide to employment in Mexico based on her extensive professional knowledge and practical experience. Her sharing not only gave attendees a deeper understanding of Mexican labor law and the employment environment but also provided useful references and insights for their future business expansion and operational management.

As a leading one-stop provider of global human resources, CDP offers comprehensive services covering the following three core areas:• Services: Global recruitment, global employment, cross-border dispatch, and multinational compensation management;• Platforms: Global digital employee data management platform, global employee experience platform, global employee benefits and protection platform, global vacation and work calendar system;• AI: AI policy and knowledge center, global operations analysis, and global operations analysis reports.

Through digital management tools and global knowledge sharing, we help enterprises enhance the efficiency of overseas human resource management, reduce employment risks, and support them in achieving their global strategic objectives.

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