For air tank factory, choose Mexican or Brazilian market?

Many air tank factories tries to explore Mexican and Brazilian markets, but due to capital and risk concerns, most may only focus on one market. So, for air tank factory, choose Mexican or Brazilian market?

Brazilian market has high demand, but with high taxes and logistics costs,so more suitable for long-term development. While Mexico has a superior geographical location and low tariffs, more suitable for rapid entry into the North American supply chain.

For Small air tank manufacturers, it may be easier to distribute quickly in Mexico through distributors, while Brazil may require more complex local partnerships or factory construction.

The following is the brief analysis of the two markets for air tank factories:

1. Opportunities:

Brazil：

Biggest advantage is volume. Brazil has big. As a South American giant, its oil, gas, mining, and agribusiness sectors generate enormous domestic demand. The air tank factory needs to develop strong local relationships and serve local giants of air compressor manufacturers etc.

Mexico:

The advantage is its location, as factory of North America, the USMCA agreement makes it an excellent production base for the US and Canadian markets. The target customers should be multinational companies with factories in Mexico and their local suppliers.

2. Challenges

Brazil：Biggest challenge is funds and Time. Tax is the biggest obstacle, comprehensive tax rates can reach as high as 40%-60% of the CIF price. So local production is inevitable, but this requires a huge initial investment. The second challenge is bureaucracy, the registration, customs clearance, and certification processes in Brazil are slow and complex.

Mexico: the biggest challenge is safty, and business relies on personal relationships and it takes time to build trust. Also NOM certification is a mandatory requirement, but the process is clearer than in Brazil.

For air tank factories who produce and customize small air tanks, The Mexican market may be a better choice:

Firstly, Mexico has a mature and extensive distribution network for hardware tools and industrial equipment.Small air tanks can easily reach thousands of small and medium-sized enterprises, repair shops, and workshops through these channels.

Secondly, Mexican customers are price-sensitive, the Chinese air tank manufacturers’ advantage on cost-effective is obvious, and logistics costs are also relatively low.

Thirdly, the large number of small and medium-sized supporting factories spawned by "nearshoring" are the perfect target customers for small air tanks.

For most Chinese air tank factories, especially those who produce small and medium air tanks, Mexican market offers lower risks and faster returns.