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Marketplace®

Daily business news and economic stories

Mexico cracks down on smuggled goods from China — or tries to

Vendors in the Tepito section of Mexico City’s historic center.
Vendors in the Tepito section of Mexico City’s historic center.
Ted Siefer

Mexico is under pressure these days to keep illegal drugs and migrants from crossing into the United States. But the country is facing pressure to crackdown on another front: the trade in smuggled and counterfeit products. 

An older man blue button-up sits at a desk in an office space.
Professor Enrique Dussel Peters in his office at the Center for China-Mexico Studies at the National Autonomous University of Mexico.
Ted Siefer

Late last fall, these pressures came to a head when police in Mexico City descended on a 16-story building and confiscated what they said were 19 tons of contraband mostly from China, including Hello Kitty knock-offs

Mexican authorities said the raid was just the start of ongoing operations aimed at protecting domestic manufacturing and enforcing trade agreements

But for professor Enrique Dussel Peters, who heads the Center for China-Mexico Studies at the National Autonomous University of Mexico, the timing of the raid is telling.

“This is a symbolic stance saying, ‘Mr. Trump, we are following your orders. Don’t worry, we will not become your backdoor for illegal imports,’” he said.

An indoor market with stalls of vendors.
Inside Izagaga 89, the building raided by police in Mexico City last fall.
Ted Siefer

Dussel pointed out that many places are selling imported goods from China in the city’s historic center, where the raid took place. “You have hundreds of blocks, and they just see this one building,” he said.

Reporting by Mexican journalists has revealed that there are dozens of shops, warehouses and plazas selling products from China. Many operate clandestinely and skirt local laws.

Much of this trade takes place in a neighborhood called Tepito. Here, one can find block after block of vendors selling things like scooters, stereo speakers, make up and new shoes, including ones purporting to be Nike Air Jordans for about $20.

A vendor named Francisco, who was one of the few willing to be recorded, said the glut of Chinese products makes it hard to compete. (We’re not using his last name because he fears legal trouble.)

“It’s not good because [the products from China] displace Mexican products,” he said. “There’s no way to compete with them.”

The bigger reality here is that imports from China — both legal and smuggled — have become thoroughly enmeshed in the Mexican economy. Exports from China have doubled over the past five years, to more than $100 billion annually.

“Imagine a video of a day in Mexico without China,” Dussel said. “So we would be walking barefoot without underwear, cellular phones would not work because the antennas are from Huawei, a Chinese firm. Ports, airports and whatever would not work.”

From this perspective, a raid or two might be a light lift for Mexico — considering some of the other tough choices the country faces to stay in the good graces of the United States.

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