SMEs growing on IT injection.

Hong Kong suppliers of electronics goods could do well to read the findings of a report from the US-based Boston Consulting Group (BCG) in conjunction with Mexico's thin developments in IT-based supply chains.

BCG believes European companies are facing increasingly fierce competition from emerging countries such as China, India and Mexico, with little-known companies punching above their weight when investing in research and development, energy and components.

But then, of those up-and-coming world beaters, companies in Mexico seem particularly behind the wave, with almost 70% of the country's small- and medium-sized firms still using pencil and paper rather than computers and only three out ten companies having graduated to computers, faxes and other technologies.

The scenario would imply a huge wave of technological product demand in Mexico is nearing, since market penetration is at just 2.2% at best, while the world average stands at 5%, according to the Mexican Association for the IT industry.

Many Mexican firms would like to seem themselves emulating China's TV maker Hisense or Mexico's automotive engine maker Nemak, both relatively-little known firms that are starting to develop formidable research and technology features.

Nemak, which specialises in the production of aluminium cylinder heads and block castings for auto internal combustion engines, has tech centres in both Mexico and Canada. They each house research and development, product engineering, programme management and prototype development, aiming to maximise innovation and cut costs. Nemak's goal is to make the most high-tech aluminium components.

This would be viewed with some alarm in traditional car making countries like Germany, for example, since such firms' price to earnings ratios have risen 150% in the six years to 2006, according to BCG.

Mexican companies are expected to invest between US$10,000 and US$15,000 more per year on their technology upgrade, distributed evenly between hardware and software/training.

The Mexican government is joining the private sector to design campaigns to encourage SMEs of the benefits of IT. Studies reveal that one computer would allow the SME to save 10% of its staff's time and make the decision-making process 35% more efficient.

Mexico's Ministry of the Economy has established an SME fund, through which it hopes to grant 55,000 credits worth US$900,000.

Trade body APEC has also set up a technology portal for SMEs to offer IT training, while a non-profit maker, International Network for Small and Medium Sized Enterprises (INSME) is aiming to help set up pilot projects.

from Vicky Acevedo, Mexico City Consultant

Contact:
INSME Association platform: http://www.insme.org
Nemak: http://www.nemak.com