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Startups Benefit From Mexico’s High-Tech Manufacturing Industry

04 February, 2016

Mexico’s high-tech manufacturing industry and tariff free imports have attracted a growing number of startups in recent years,wrote Governor Bill Richardson for Wired

“During a recent business trip to the Mexican state of Jalisco,I became intrigued by the number of foreign young professionals that I saw from the moment I deplaned at the airport in Guadalajara,” Richardson shared. “Most of these folks were Americans either working at one of Jalisco’s high-tech multinational companies,or running their own startups.”

This is,at least in part,the long-term result of the North American Free Trade Agreement (NAFTA),which was negotiated more than 20 years ago when Richardson was serving in Congress. A host of reforms that were prompted by the agreement opened a new era of investment in Mexico’s technology industry.

For example,hardware companies were finally allowed to funnel money through international banks,so they invested heavily in capital-intensive manufacturing lines and equipment design. In addition,software companies and app developers enjoyed full protection under the law thanks to Mexico’s stringent copyright and patent laws.

Today,the emerging software industry in Jalisco presents a golden opportunity for U.S. startups,who are able to meet the needs of a new business to business market while simultaneously adding to cash flow by saving on overall operating costs.

“For these startups,a move to Mexico can mean surviving that dreadful gap between initial investment and revenue generation known as the Valley of Death,” wrote Richardson. “Jalisco is not only welcoming these entrepreneurs,but actively recruiting and incubating them,including small companies from Silicon Valley.”

Jalisco Governor Jorge Aristoteles Sandoval even created an Innovation Department upon taking office and is dedicated to leading a revitalization of Guadalajara’s historic downtown. Here,a 940-acre multi-media-oriented hub will host companies specializing in television,film,advertising,video games,animation,interactive multimedia and e-learning,according to Wired. To date,startup companies doing business in Jalisco include Ooyala,Wizeline,3DMX,Kaxan,Inzomnia,Ocelot and Metacube.

“The existing tech industry base in Jalisco is already formidable,with firms such as IBM,HP,Oracle and Latin American media titans Televisa and TV Azteca,” wrote Richardson. “Startups that land these corporations as customers can secure an immediate revenue stream,not only helping them overcome their startup curve,but gaining them long-term stability for growth.”

Domestic industries in Jalisco,such as agribusiness,traditional manufacturing and the service sector,are also increasing the technological component of their operations. At the same time,tech-savvy venture capitalists and business advocacy organizations are moving to capitalize on the nation’s sound telecom infrastructure and the hundreds of bilingual high-tech college grads in Mexico who regularly enter the workforce. The community is already home to around 40,000 American and Canadian expats and its location at just a half-day flight from home is an added plus.

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