With $14 billion in vegetable exports and another $11,5 billion in other food exports, Mexico ranks among the top agricultural producers in the world. Rural Mexico is an economic heavyweight. But aside from producing agricultural goods, just how advanced is the “rest of Mexico”?
Part of the plan of Mexico’s president AML Obrador is to decongest the country’s capital city by moving many government agencies (at least 60) to other cities. While some Mexican cities are modern, developed urban areas with diversified economies, others are rather unknown and raise pessimism regarding their ability to host full-bodied government agencies. The Mexican Association of Real Estate Professionals argued that only 6 cities were developed enough in Mexico to receive new government agencies.
What’s the state of technology outside of DF? Does it have what it takes to create new technology-driven cities across the country and fulfill its struggle against centralism.
1. Guadalajara, “Silicon Valley” of Mexico
Historically, Guadalajara has been the Mexican extension of the Silicon Valley. IBM, HP, Intel, all major US technology players were front-line players in the development of the region’s technology sector. To adapt to the newtech economy, Guadalajara revamped its tech appeal a decade ago by developing a startup and innovation economy.
Guadalajara quickly turned into geek city. With +600 tech startups and growing, the city is home to Voxfeed, WePow (acquired by Outmatch), Yotepresto, Ooyala (acquired by Telstra), Kueski, … Many software companies operate from Guadalajara: iTexico, Blue Trail Software, Luxoft, Wizeline, Cognizant, Tiempo, … Intel’s unique Latam research lab is in Guadalajara.
The state and city governments have developed favorable conditions for the development of tech startups. The city invested in tech poles, data centers, and smart city solutions to lead the digital revolution in Mexico. In 2012, IBM inaugurated Mexico’s first smart data centers in Guadalajara. In 2016, a private/public partnership led to the launch Creative Digital City, a 100,000 square feet high-tech complex that symbolizes the city’s leadership in innovation.
Tagged as the Silicon Valley of Mexico, the city outperforms by far its runner-up, Monterrey.
2. Monterrey, Mexico’s “most Americanized city”
The state of Nuevo Leon, where Monterrey is located, is home of 100+ industrial parks. In 2007, the Indian software giant Wipro chose Monterrey to set up its Latin American base. The city, a direct competitor to Guadalajara for the title of Mexico’s most hype tech scene, is home to 2 major IT outsourcers : Softtek and Neoris. The latter recently opened its own Innovation Lab in Monterrey’s Digital Hub to boost the city’s digital transformation.
Monterrey is home to major Mexican corporations such as Cemex, Femsa, Banorte and BanRegio, Soriana, Farmacia Benavides, and many more that have the means to invest and conquer markets rapidly. Femsa and Coca-Cola have been supporting local startups since 2014. Cemex signed a $500 million deal with Neoris in 2013. In August 2018, US-based software company Digital On Us, which already has Mexican offices in Saltillo and Guadalajara, announced a $40 million investment to create an office in Monterrey.
An estimated 28,000 people worked for 320 companies of the IT sector in Monterrey in 2017. Thanks to its short distance to the US border, its wealthy local economy, and its intention to become a fully-fledged digital hub, Monterrey is definitely on Mexico’s digital map.
3. Tijuana, “just a step away” from the US
Just like Monterrey, Tijuana is located very close to the US border (1.7 mile exactly), facing San Diego (20 minute ride) on the other side of the border. The San Diego-Tijuana Metropolitan Area is an economic hotspot, its combined GDP is comparable to the one of Ireland ($230 billion). The technology manufacturer Busta Corp is headquartered in Tijuana, and 3DRobotics chose Tijuana to grow outside of Berkeley.
In 2011, the city opened the BIT Center, its own digital hub that now hosts more than 60 tech companies. In 2014, the city launched a binational working space, HUBSTN (Hub Station), where the old Mexicoach bus station previously stood. Uber and Yelp have offices in the building. In 2014, tech accelerator Mind Hub launched its first call for projects in Tijuana.
The gist of Tijuana’s competitiveness in the Mexican tech race is its direct access to San Diego and the US. The city stands as a physical revolving door between North and South. Felipe Fernández, CEO of Sonata Services MX, concurs that tech workers in the tech sector in Tijuana are literally “one step away” from being hired by a US company.
4. Querétaro, “the NAFTA Highway”
Nested about 150 miles north of Mexico DF, Querétaro is located in the center of the country. The region is economically boosted by the “NAFTA highway” and centralizes a lot of the nationwide activities that fall under this agreement. This drove the development of aerospatial activities in the area, turning Querétaro into a new hub for aerospace in Mexico and collaterally into a tech hub.
Unlike Monterrey and its 100+ technology and industrial parks, Querétaro just has a little over 20 ones. But Axtel’s multiple investment in its Querétaro data centers shows just how fast the situation can evolve in Central Querétaro.This is just the tip of the iceberg : In 2014, the Chinese tech manufacturer Huawei announced a $1.5 billion investment plan to build 4 ICT facilities in Querétaro, China’s largest investment in Mexico ever! Daewoo followed a year later with a $100 million investment to build a new platform in the Metropolitan area. In 2017, after the USA, Romania and India, Deloitte chose Querétaro in Mexico to set up its 4th regional Technology service center worldwide. Ericsson from Sweden and Safran of France launched operations in Querétaro in 2013, where Tata Consulting was already established.
While its economy is definitely booming with technology-oriented activities, Querétaro lacks a newtech spirit. Its startup scene is fairly unknown, no major tech brands emerged from Querétaro. The area is usually described as charming, calm, and an alternative to DF’s dense urban area. Querétaro holds a great tech potential, but needs to up its game regarding entrepreneurship and its startup ecosystem to become a true innovation pole.
5. Cancún, Mexico’s cosmopolitan city
Cancún’s airport is Mexico 2nd busiest airport (4th in all Latin America) with 25 million passengers in 2018. 95% of its economy is based on tourism. But now the city wants to diversify its revenue to secure its growth. After Microsoft launched a Microsoft Innovation Center (MIC) in Cancún in 2015, the city launched the Cancún Tech City program in 2017 which aims to promote Cancún as a legit destination for tech companies. That same year, US-based software developer iTexico led the way by opening new offices in Cancún.
As a traveling capital of the continent and a vibrant destination for millenials, Cancún is lively and attractive enough to develop a newtech sector. According to Matt Edwards of CancunIT, a Cancun-based software development company that’s been around for 15 years, “The number of technology companies is growing, which is attracting more people to the area.” Others argue there is already a mass of freelancers, nomad workers and tech entrepreneurs living in the vicinity of Cancún, living in beautiful Yucatan and managing their business remotely.
However, like Querétaro, the newtech ecosystem does not exist yet. One mobile application made-in Cancún, Quiero Taxi Exotic, got a little buzz as it aims to become the Uber of luxury cars. The small electronic invoicing company Pyme is also based in Cancún, but according to its founder, “Cancun is not precisely what you’d call a hotbed for tech startups”.
Cancún’s technology culture is heavily diluted in tourism, and the city is still strongly perceived as a beach party city. However, if Cancún was willing to sober up to become a more serious IT destination, it would have the potential to become a tech capital overnight.