Global Business
References Environment Case (First Item)
July 5, 1994
This, then, is how quickly Mexico is moving into the Information Age: Even the poorest of the poor are rushing to embrace the technologies used to gather or spread data. The surge of interest in information changes the climate for anyone trying to do business in Mexico.
"Mexican firms-and not just firms but also hospitals and private institutions such as universities - need to become radically more competitive" and are finding that information technology is the key, says Roberto Batres, head of Mexican operations for consultant Arthur D. Little Inc.
Mexico has been known as an opaque place to do business. Companies were typically family-owned and resisted providing data on their finances. Any published accounting typically wasn't very helpful, either, at least to non-Mexican eyes. The reason is that Mexican companies, more than those in developed nations, tended to mingle private and corporate assets and managed their businesses to generate cash, since there were no shareholders to demand profits or dividends.
Now, though, companies such as Standard & Poor's Ratings Group and Dun & Bradstreet Corp. are setting up shop or expanding their operations in Mexico to help sort out the finances of Mexican businesses and explain them better to potential suppliers, customers and competitors. S&P recently bought a credit-rating company here. Dun & Bradstreet expanded its staff so it could increase its list of potential customers here to 300,000 from 75,000.
The companies should have good luck prospecting for data, too, because so many Mexican enterprises are now selling stock or raising money internationally; to do so they have to comply with the much more rigorous.information requirements outside the country. In addition, dozens of Mexican companies have gone public here and need to report their finances.
Several government agencies, including the commerce ministry, have tried to expand the availability of information by setting up a big electronic database on Mexican companies. That way, firms can find a supplier or customer, even if it is a small business operating out of a home.
On the customer front, TRW Inc. and Trans Union Group of the U.S. are setting up credit bureaus that will, for the first time, provide data on the risk of lending to individuals.
All sorts of other information services are springing up, too. Infosel, a unit of the Monterey newspaper El Norte, distributes on line what it calls an " information buffet " of business articles and statistics, using a network of satellites and the unused part of the FM radio spectrum.
The parent newspaper and its recent progeny, Reforma, based in Mexico
City, have also exploited technology to create a network of newspapers throughout the country and through all of Latin America that share articles.
"A country isn't in the First World because it has better people or better manufacturing or better systems," says Jorge Melendez Ruiz, an executive holding positions at both Infosel and El Norte/Reforma. "It's in the First World mainly because it has better information."
A branch of the Internet, called Mexnet, has started up in Mexico, helping people to swap information. CompuServe, the U.S. on-line service owned by H&R Block Co., has set up a local number in Mexico, making it easier for Mexicans to dial into U.S. companies' bulletin boards, chat lines and information services.
Local bulletin boards are sprouting, too, and they seem as fully developed as their American counterparts, whether in terms of graphics, ease of use or even the mild repartee that often marks bulletin board conversations in the U.S. One board run by Servicio Total en Computacion recently carried a conversation in which one young man was complaining that tourist haven San Miguel de Allende seemed to be filled with American grandmothers; another young man responded, 'Just remember that American grand mothers tend to have American granddaughters."
The boards are starting to fill business needs, as well: Another board run by Servicio Total en Computacion, for instance, answers technical questions about computer maintenance.
Numerous companies are also finding that they can—and must-supplement the publicly available information by starting to do market research on their own.
"Market research used to consist of asking our father whether a certain place was a good spot for a building," says Dionisio Sanchez Carbajal, son of the founder of Grupo Sare, one of Mexico's biggest real-estate-development and construction companies. "If he said yes, we put up a building. If he said no, we didn't." With Sare and its competitors facing a real-estate glut, though, the company is becoming much more rigorous.
When Panamerican Beverages bought its first personal computer in 1983, it took eight months to persuade someone to try it, says Francisco Sanchez-Loaeza, chief executive of the company, which is officially registered in Panama but based in Mexico City. Now, Panamerican Beverages has almost one PC per person in its headquarters.
Mexico's government has likewise taken an interest in computers, it is spending $1 billion on a new voter-registration system, including a network of state-of-the-art workstations, that is designed to prevent the sort of fraud that tainted the 1988 presidential elections.
Together, companies and the government are investing so heavily in computers that, even though Mexico is the 13th biggest economy in the world, the nation has become the sixth- or seventh-biggest personal computer market, according to Microsoft Corp., the U.S. software maker.
International Data Corp., a computer research firm based in Massachusetts says that information technology in Mexico has become about a S2.5 billion market - roughly the same size as the market for Mexico's ubiquitous tortillas. And IDC expects the industry to grow 26% a year for the next five years. Some software companies expect such rapid growth that they are investing each year amounts equal to that year's sales, according to Steve Tirado, general manager for Sun Microsystems Inc. in Mexico.
One of the big problems here is that the phone lines are still so inadequate that callers frustrated by crossed lines sometimes start out saying, "Where have I reached"
The government also announced measures Friday to allow other companies to compete with the telephone monopoly, forcing it to start to address its many problems.
The new fascination with information technology stems mainly from one very good source: fear.
With borders opening and Mexican companies facing stiff foreign competition for the first time, people here know they need to catch on quickly to international ways of doing business. Mexican banks, for instance, have had few means to handle money transfers automatically, and have generally relied on motorcycle messengers carting checks. But knowing how heavily automated foreign competitors are, the banks have jointly begun investing in a clearinghouse.
Commerce ministry officials have added impetus to the interest in information, partly through jawboning and partly through an extensive spending program that attempted to set a good example. The ministry went from 10 personal computers six years ago to more than 2,800 today. Partly as a result, it managed to shrink itself to 6,000 employees from 12,000.
The ministry has also undertaken some ambitious pilot programs, such as one designed to make Mexican farms more efficient. A trip to one of the pilot sites shows just how thoroughly computers are permeating Mexico.
The drive goes deep into the poor southern state of Oaxaca to the village of Jalapa de Diaz. The road, meandering past the Bridge of the Dirty Faces and the Tire Repair Restaurant, plunges into one of the remotest parts of Mexico. Past a ghostly misty lake and a series of villages with thatched huts, the road finally reaches a two-room schoolhouse, where a nine-year old named Eder keeps the keys.
Yet inside is a new, up-to-date Hewlett Packard PC connected to an elaborate communications system. Because the area is so remote, to be linked to the outside world the computer has had to be connected to a 60-foot-high microwave tower, next to the outhouse. But the result is that these poor farmers can track the prices, in Mexico and internationally, for the apples, limes, papayas and mangos they grow.
The dozens of farmers within a few miles of the schoolhouse are encouraged to use the computer to write proposals for government aid or for bank loans, or to do their budgets. The computers also track how much coffee each of the farmers is growing, so that, for the first time, they can increase their bargaining power by selling their coffee as a group.
The PC seems to have, at the least raised the farmers' awareness of the outside world. On one wall, someone has posted the latest scores from the National Basketball Association.