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Mexico

Mexico. Chris Stone Courtnie Hallendy Jim Collins Shahar Ben-Dor. Agenda. Socio-cultural/Physical/Demographic Business Climate Business Opportunities. Socio-cultural/Physical/Demographic. Population 106 Million Literacy of 92.2%

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Mexico

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  1. Mexico Chris Stone Courtnie Hallendy Jim Collins Shahar Ben-Dor

  2. Agenda • Socio-cultural/Physical/Demographic • Business Climate • Business Opportunities

  3. Socio-cultural/Physical/Demographic • Population 106 Million • Literacy of 92.2% • Low number of adults with post-secondary education (technology) • Establishing technology based institutions and schools • Spanish • English • Boarders • Northern - US • Southern – Guatemala and Belize • Connects North America to Latin America • Eastern – Gulf of Mexico • Western – Pacific Ocean • Median age is 24 • 63% 15-64 • Gini Index • 53.1 (1998) United States Population: 295,734,134 Total literacy: 97% Gini Index: 45% (2004)

  4. Business Climate • Main industries • Agriculture, food and beverage, tobacco, chemicals, iron and steel mining, textiles, cars and tourism • 3.8% industrial growth rate • Government change in 2000 • PRI was defeated and a new president (Vincente Fox) took office • Shifts in priorities for the country • IT became a major issue • National Council of Science and Technology • Develop and promote modern technology and information systems • PROSOFT • Program for the Development of the Software Industry • IT priority • In the last four years, Mexico has launched and implemented e-government

  5. Mexico's Free Trade Agreements Israel North America Switzerland, Liechtenstein, Norway & Iceland Europe Guatemala, Honduras & El Salvador Bolivia Nicaragua Chile Costa Rica Colombia & Venezuela (G3) 3

  6. Mexico's Position as a Manufacturing Center NAFTA REGION Finished Products, Parts and Components EUROPE ASIA Parts and Components MEXICO Parts and Components SOUTH AND CENTRAL AMERICA MEXICO IS ESTABLISHINGITSELF AS THE ELECTRONICS MANUFACTURING CENTER FOR THE AMERICAS Finished Products 4 SOURCE: 2003 BANCOMEXT

  7. Business Climate • Technology (industry, training, penetration, teledensity) • Microwave relay network, fiber-optic and coax networks • Lack of trained programmers • Graduates only a small percentage compared to China, Russia and India • 35,000 IT related graduates per year from universities and technological schools • 6.8 million Internet users (2002) • Quality of these connections? • Lack of local ISPs • Per call fees or time based fees • 15 telephone lines per 100 people (15 million) • 28 million cellular phones • 80 PCs for every 1,000 people United States Telephones: 181 million (2003) Mobile Phones: 158 million (2003)

  8. NORTHWEST TIJUANA MEXICALI SAN LUIS R.C. TECATE ENSENADA NOGALES NORTH CD. JUÁREZ CHIHUAHUA • No. of companies 233 • Imports $7,120 MUSD • No. of companies 201 • Imports $4,288 MUSD NORTHEAST MONTERREY SALTILLO REYNOSA TAMPICO • No. of companies 369 • Imports $7,348 MUSD • No. of companies 17 • Imports $2,161 MUSD CENTRAL EDOMÉX QUERÉTARO MORELOS PUEBLA VERACRUZ WEST GUADALAJARA AGUASCALIENTES MANZANILLO • No. of companies 75 • Imports $4,408 MUSD Main Electric and Electronics Clusters • TOTAL COMPANIES 900 • EXPORTS $35,000 MUSD • IMPORTS $31,000 MUSD • MAQUILA COMPANIES 837 • NO. OF JOBS 350,000 • LOCAL CONTENT 8% 5 SOURCE: 2003 Preliminary data from Banco de Mexico

  9. Business Climate • IT industry producer characteristics • Manufacturing • Inexpensive source of labor and reduced tariffs • Largest trading partner is the US • $23 billion in IT equipment exported to the US • PC’s, networking equipment and printers • Owned and operated by foreign companies • Flextronics, IBM, HP, etc facilities locally • PC’s routers, switches, keyboards, etc produced locally • Service • Mexican based firms owned by Mexicans – many partnered with foreign firms • Internet connectivity • Largest IT service industry • Telmex • National phone company privatized in 1990 • Controls 99% of local phone lines • No competition • Halting the spread of Internet? • B2B e-commerce • B2C e-commerce • Advertising

  10. Business Climate • IT industry strengths and weaknesses (investment) • Software (weakness) • Majority of software development done by foreign firms • Education of workforce (weakness) • Language barriers • Qualified personnel flight (brain drain) • NAFTA (strength) • Entry point into US or South America • IT industry consumer characteristics • Business • 77% of total e-commerce transactions • Individual • Digital divide • Average income is $5,000/year • Limited disposable income • Government

  11. Trade Balance 2002 – Main Products and Countries (millions of USD) Imports Origin 19,871 Exports Destination 24,556 US 80.4% • PRODUCTS • TVs 25% • PCs 23% • Telecom. Sys. 8% • Radios 4% + South Korea 4.5% Japan 6.1% Malaysia 3.1% Others 5.9% • PRODUCTS • Semicond. 24% • CRT 8% • Passive Comp. 4% • PCB 5% US 96.6% + Canada 0.6% U.K 0.5% Taiwan 0.5% Others 1.8% • Almost 40% of imports from the US, are originally manufactured in Asia. • Almost 17% of all exports to the US end up in Canada, Mexico and Central and South America. 11 Source: World Trade Atlas & Bancomext

  12. Business opportunities evaluated • Tourism (low risk, + capital) • Can be an out-of-the box installation or a monthly service • VOIP or the like • Internet access • Local cell phones • Customer is not necessarily the high-end resorts, they already have this… • More the mom and pop local hotels that serve international guests • Increasing competition • Call center (medium risk, ++ capital) • Provide the location, people, and infrastructure for the Spanish-speaking call center market • For those customers who have Spanish-speaking customers and would prefer a customer service rep who speaks their language • Improving communication – decrease call time – increase productivity • Create a perception that the Spanish-speaking base is important and worth investing in • Not a problem with B2B, more with consumer so the allocation of these resources would be easier to acquire

  13. World Languages • First Language Speakers • Chinese, Mandarin 13.69% • Spanish 5.05% • English 4.84% • Hindi 2.82% • Portuguese 2.77% • Bengali 2.68% • Russian 2.27% • Japanese 1.99% • German, Standard 1.49% • Chinese, Wu 1.21% Source: 2005 CIA World Factbook

  14. Business opportunities evaluated • Software (high risk, +++ capital) • Create/design software • Not able to compete with the big providers yet and probably won’t be able to for a while • Lack of local technical resources • Customization/rewrite for the Latin American market • Culture and language based activity • Availability of trained personnel is limited • Piracy concerns • Expand/use PROSOFT initiatives to gain exposure, resources, and credibility (FDI) • Distribution/logistics (high risk, ++++ capital) • NLM model – minimize empty trucks, gain efficiencies and increase dependability • Mexican firms and maquiadoras • B2B as well as B2C – on the far end • Dependable delivery system of goods (consumers) • Increase on-line shopping and the consumer’s confidence in getting the merchandise • If you build it, they might come

  15. Web sites • Spanish Language • http://minegocio.ibs.aol.com/minegocio/index.php • English Language • http://www.banamex.com/eng • http://www.tourbymexico.com/yucatan/chichen/chichen.htmService

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