By Barbara Kelemen | Ján Slobodník

Summary ▪ Mexico’s macroeconomic stability and abundant natural resources have made the country into an attractive destination for Chinese businesses. ▪ The country still suffers from a lack of internal security, most of it stemming from the Mexican Drug War, an ongoing multilateral lowintensity conflict between the Mexican government and a large number of criminal organizations. ▪ In some of Mexico’s states, pervasive violence and instability have resulted in a power vacuum. With the government being unable to guarantee security, non-state actors such as criminal organizations and/or civilian militias seize the opportunity to establish their own rule. ▪ When foreign companies operate in such troubled areas, they inevitably run into problems caused by Mexico’s security issues. ▪ Within this trend of foreign companies operating in Mexico, some level of tacit cooperation has been observed between Chinese businesses and non-state actors. This cooperation is often an outcome of localized security vacuums that are exploited by alternative security providers, such as criminal organizations, that can fill them and provide operational safety for local businesses. ▪ A growing body of research has identified the existence of Chinese illicit networks and their involvement in the trafficking of people, narcotics, and contraband goods, as well as money laundering and illegal arms trade in Mexico. ▪ Concealed under the guise of legal commercial activity, networks of Mexican criminal organizations and their Chinese business partners exploit the dire security situation in some areas of Mexico. ▪ Despite attempts by the Chinese and the Mexican governments to regulate certain sectors that contribute to the existence of the illicit networks in Mexico, there are still substantial opportunities that are ripe for exploitation by the criminal group-legitimate business partnerships.