Mexico’s CI Market Can Benefit from More N. American Interplay

June 30, 2009

Invited to contribute our perspective, as a Mexico City-based company, of what is happening in the electronics systems market is an immense challenge, especially when all we read about is the imminent crisis the global economy is facing. In fact, we are now feeling the effects of this downturn, because many of our products are imported overseas, and pricing is tied to a foreign currency.

Manuel Suero is director of NTX, a custom integration firm based in Mexico City, Mexico.
To cope with the international economic recession, the Mexican government has adopted contra-cyclical measures meant to ensure the balance of public finances and investment in infrastructure, which will total $600 billion pesos this year--funds that will be used for both public and private investment, including extending credit to small and medium firms through the Bank of Development.

Looking South
There needs to be improved competitiveness in North America to not only speed up economic recovery, but to ward off pressure to implement protectionist policies in our commercial sphere. Threats come for all corners and are difficult to identify, while opportunities are less evident, especially those that will allow us to maintain growth in the industry. Mexico and most of Latin America is still a prosperous market for the electronic system market.

Mexico’s market share of electronic systems has grown substantially. Last year Best Buy opened its second-largest store worldwide in the suburbs of Mexico City, with plans to expand its presence in Mexico with several more metro-area stores, including Guadalajara, in 2009.

With economic instability, constrained spending budgets, and the uncertainty about what else is to come, imported goods and services are suffering. The strength of the dollar, which has gone up approximately 40 percent in value against the stable peso, has contributed significantly to this contraction.

Under this optic, Mexico and Latin America, in general, offer a major opportunity for North American manufacturers who can actively take advantage of the positive exchange rate, geographical convenience, and reduced labor and transport costs. Just look at larger companies like Sony, Sharp, Shure, Bose, LG, and Samsung, all of whom are assembling their products near the Mexican border or in other locations in the country where they have found competitive pricing and have obtained business benefits from the local authorities.

Seeking Alternative Channels
We all have read stories about Mexico’s violence and insecurity, which lends credence to the potential grow market that security systems present. Although they have been around for many years now, the pricing of these systems has dramatically dropped and getting CCTV and remote access to a security system is much more affordable these days.

Another area of opportunity is in the reduction of commuting costs. By using last generation electronics systems such as video-conference systems, for example, Mexico-based end users can reduce travel-related costs and improve their carbon footprint at the same time.

The Money Gap
The disparity of income in Mexico is so vast that our country now includes some of the wealthiest people in North America. Even though the use of custom integrated systems is new in Mexico, through education and experience, architects and residential owners have started to understand the value of adopting integrated systems into their lives. Consumers embrace the experience that goes beyond the use of some isolated electronic gadgets and demand more comfort and simplicity in their day-to-day activities. Global influences and trends are rapidly adopted in the Mexican market and also expand very quickly around the county.

We believe that even though there are multiple challenges to be faced in the near future, there are as many opportunities to be created by the electronics industry. Manufacturers and distributors should take advantage of their CEDIA membership to get into the Mexican and Latin American markets, by supporting education and promotion of the technologies offered by local distributors and companies.

Once again, forging strategic alliances will become important, with each partner taking advantage of each other’s strength, while minimizing liabilities. It is true that each country has a different way of doing business, but our industry generally follows the same trends. It is often only the timeline and scale that separates us.

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