Monterrey, Mexico: North America’s ‘New Dongguan’?

During my recent visit to the executive lounge at Dallas-Fort Worth (DFW) Airport, I noticed something striking: the gate for Monterrey was unusually crowded, filled with business travelers speaking English, German, and Chinese. A supply chain manager sitting nearby was enthusiastically discussing the “superfactory” opportunities in Monterrey. Naturally, one question arises: why Monterrey?Our internal logistics and client data confirm the trend: Monterrey, an industrial city in northern Mexico, is rapidly becoming one of the hottest nodes in the North American supply chain. As the capital of Nuevo León, Monterrey is located about 900 kilometers from Mexico City and just a two-and-a-half-hour drive from Laredo, Texas, near the U.S. border.From a macro perspective, Monterrey’s rise reflects a global shift in supply chain priorities—from “efficiency-first” to “resilience-first.” Companies are no longer betting all manufacturing on a single country; instead, they are moving toward regionalized layouts with “local production, local supply.”Monterrey itself benefits from multiple factors: timing, location, and human capital. Its emergence is not meant to replace “Made in China” but rather to serve as a global extension of the “China Plus” strategy, effectively positioning itself as the “Dongguan of North America.”Why Monterrey?

The rise of Monterrey as the “New Dongguan of North America” is fueled by the timing and geographic advantages of nearshoring. Geopolitical shifts and post-pandemic supply chain restructuring provided the right timing for Monterrey’s emergence. U.S.-China trade tensions and corporate “de-risking” strategies have forced companies to look for manufacturing bases outside China. The data are telling: in 2023, Mexico surpassed China to become the United States’ largest import source. U.S. imports from China dropped by 20% to $427.2 billion, while imports from Mexico reached $475.6 billion (US Census Bureau, 2023).The pandemic had exposed the vulnerabilities of long supply chains. In 2021, shipping costs from Asia to North America spiked dramatically. Monterrey’s geographical advantage is unparalleled: just a two-hour drive from the Texas border, it is a golden corridor connecting the U.S. and Mexico. Goods shipped from Monterrey via rail or road reach Los Angeles in two to three days and Chicago in about 30 hours—saving up to 80% of logistics time compared to shipments from Asia, with corresponding cost reductions.Additionally, the 2020 USMCA agreement, with its rules of origin—such as requiring 75% North American content for automobiles—provides policy certainty for local manufacturing.Internal advantages also accelerate Monterrey’s rise.

Calling it the “North American Dongguan” is not just about production capacity; it also reflects the formation of a “North American triangle hub.” The core of Dongguan’s model lies in extreme industrial clustering. Monterrey is following a similar path, building ecosystems around automotive, electronics, and renewable energy. It is not an isolated “factory city” but part of a North American triangle hub with California and Texas. In this “triangular bay area,” Monterrey serves as the manufacturing center, Texas provides logistics and energy, and California contributes innovation and capital.The influence of major companies is evident. For example, Tesla announced in 2023 an investment of $5–10 billion to build a “superfactory” in Monterrey. Although the timeline has slowed and production planned for 2025 has yet to be realized, the magnet effect of leading enterprises is already driving the entire ecosystem.Chinese companies are also highly visible. Many Chinese suppliers are entering Mexico, especially Monterrey, to bypass USMCA barriers and access the U.S. market. In appliances, Hisense announced a $250 million investment in 2023 for a second refrigerator factory in Monterrey, leveraging duty-free exports to the U.S. In renewable energy, Trina Solar invested $1 billion in 2023 in Monterrey’s Hofusan Industrial Park to build a solar panel factory, which is ongoing. In automotive manufacturing, JAC Group has started investment in a Monterrey assembly plant, expected to begin production in 2026 under USMCA duty-free conditions for the North American market.

According to industry estimates (Rhodium Group, etc.), Chinese FDI in Mexico exceeded $10 billion cumulatively from 2023–2025, with Nuevo León and Monterrey accounting for a significant share.Comparing Monterrey and Dongguan.Monterrey today shares the “world factory” DNA of early Dongguan. Key advantages include:Industrial Clusters: Beyond Hofusan Industrial Park, Monterrey hosts parks like FINSA, with numerous automotive and electronics firms forming the skeleton of a multi-kilometer industrial chain.Labor Resources: Mexico ranks just behind the U.S. in attracting talent from Latin America. In 2024, average manufacturing wages in Monterrey were around $5/hour—far below $20–25/hour in the U.S. South and even below current Dongguan levels.Challenges Monterrey faces are different from Dongguan’s early years:Infrastructure Limits: Unlike Dongguan’s mature high-speed rail and port networks, Monterrey faces water and electricity shortages. Between 2023–2025, reservoir capacities fell to 43%, 9%, and 1%, limiting water supply; electricity remains unstable.Labor Shortages: Mexico’s demographic dividend is smaller than China’s. Skilled labor is scarce, driving wages up—from $3.70/hour in 2023 to ~$5 in 2024, expected $6.10 in 2025—posing a challenge for especially Chinese companies.Safety & Culture: Security remains a concern.

While Monterrey’s industrial parks are relatively safe (Numbeo crime index 2025: 58.8, moderate risk), labor union culture and community relations require adaptation for Chinese firms.To tackle labor bottlenecks, many Chinese firms are bringing automation: AI-driven production lines tested in China are implemented in Mexico, compensating for local skill shortages. However, this limits local employment, emphasizing the need for ESG and community engagement. Companies must also assess USMCA compliance and local automation while managing new geopolitical risks and diversifying supply markets.The global perspective: Three “Dongguans”.Monterrey’s rise signals the restructuring of global supply chains into regional hubs. Future global “Three Dongguans” may include:North America Dongguan: Monterrey, serving the North American market.Europe Dongguan: Hungary and Poland, serving Germany and the EU.Asia Dongguan: Original Dongguan and Vietnam, continuing to serve Asia and global markets.This is not “de-China-fication,” but the next phase of China’s globalization—“China Plus.” Chinese companies are shifting from export-oriented to glocalized operations. Core equipment and molds in Monterrey often come from Dongguan, forming a “satellite city” effect.For entrepreneurs, overseas expansion is no longer optional. The past forty years taught global firms how to work with Dongguan; the next decade will require understanding Monterrey, a critical lesson for North American and global business leaders.