When you land for the first time in Mexico City, the first thing one realizes is that how large a city of 25 million really is. During the drive to the city, I saw a mix of both old and new buildings right next to each other just like many cities in emerging countries. 

After meeting with various entrepreneurs and investors in Mexico City, it was clear that the future of Mexico is bright:

  • It’s a county of 120 million people and has enough of a domestic market for local companies to to break even.
  • The proximity to the US offers a huge opportunity for local companies to win one of the most sophisticated and largest market .
  • The majority of Mexico’s exports are to the US. Growing the US economy will help Mexican companies expand in the US.
  • The growing cost of Chinese manufacturing and the rising cost of transportation will move some of the manufacturing to North America including into Mexico.
  • The growing market for Spanish speaking people in LATAM can be a huge plus for Mexico if it is leveraged in a proactive manner.

Compared to another giant in South America, Mexico’s cost of doing business is much lower. However, there are many challenges, one being security and the perception of security. Not only it is a real issue in parts of the country but more damaging is the perception. Successful entrepreneurs should be able to celebrate their achievements and not worry about the repercussions. 

Another main challenge is the availability of skilled talent. I was surprised at the lack of skilled talent for software development.  I also heard that in many parts of the country, there is a shortage of soft skills. During my visit, the center of Mexico City had tense moments because of the teacher protest and for the first time in many years, the federal police were used to disperse the agitated teachers. There is a manifestation of issue in the education sector. Mexico needs both a global workforce and skilled talent at every level to support the knowledge based economy. This takes time, however in the short term, it will be better to attract international skilled talent to Mexico . This not only will fill the gap of talent but it also creates an exchange of work ethic culture with the local workforce.

Focus on the right clusters. Mexico has some huge advantages as described above, however, the country has to evaluate their resources and strengths in order to be a global player. Without having its own brands, Mexico will continue to be a back-end country for international companies . Existing Mexican companies and new start ups should build their companies as global players. Creating global brands will be critical for the upward mobility of the country . In the short term, Mexico currently does not provide the right working conditions for creating a successful enterprise. It will be better to leverage Mexico as a base for production and beta test the market but establish the company itself outside of  Mexico in a user friendly jurisdictions.