In Mexico, the lack of technological innovation is taking its toll on several national companies.
The Mexican Stock Exchange (BMV) fails to awaken the passion of investors who this year have an affair with technology-based companies. Carlos Slim’s emporium loses ground in residential Internet service. And despite the red flags, the country’s large companies show little adaptability to change.
Since 2017, Mexico’s main stock market indicator, the Price and Quotation Index (IPC), has maintained a downward trend. And although the BMV is one of the cheapest stock exchanges listed in the world, investors view the country with mistrust. The Mexican economy will be one of the most affected in the world due to the pandemic and analysts estimate a slow recovery.
What are Mexican companies doing wrong?
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America Movil loses residential Internet subscribers
For telecommunications companies, the pandemic could mean a growth opportunity due to the increase in the Home Office. However, for the largest Internet provider in Mexico, the story has been a bit different. The lack of technology innovation is costing customers.
According to data from the Federal Telecommunications Institute (IFT), Telmex has lost close to half a million clients this year. Despite the fall, this América Movil company maintains control of 46% of the country’s market.
No one could accuse this telecommunications corporation of not investing in the country. In 2019, America Movil president Carlos Slim boasted that his company was investing two billion dollars in Mexico. Still, these investments have been more focused on the deployment of infrastructure than on technological development.
Despite being one of the largest telecommunication companies in the world, with a presence in the United States, Latin America, and Europe, America Móvil depends on foreign suppliers for its equipment, such as Huawei, which in Latin America has begun to invest in the deployment of data centers and 5G network.
The largest telecommunications conglomerate in the country has not opted to develop technological solutions at home, both in customer service and in equipment. Now, this situation costs the loss of customers, but in the future, it could cost the market.
Lack of development or lack of confidence?
Until now, Mexico has preferred to be an importer of technology than a developer. This situation contrasts with the Mexican talent that foreign companies employ in the country. Cities like Monterrey, Guadalajara, and Queretaro have attracted investment in technology. Spanish technology startups are making their way into the country thanks to the little competition they encounter.
Are there no technology companies in Mexico?
The innovators are in the country. This year, Mexican talent has offered technological solutions to respond to COVID-19.
The startups exist in the country. For several years, Mexico has been one of the main hubs for the Latin American fintech industry.
And the success stories are also in the country. In this month, the first Mexican unicorn emerged thanks to Softbank’s Japanese investment.
But, where are the Mexican investors who bet on technological development?
The transformation must be technological
The current government of Mexico has called for a radical transformation in the country, baptized as 4T. However, the technology sector seems to be forgotten in those plans. Entrepreneurship support programs were withdrawn and now, with the elimination of science and technology trusts, everything indicates that state support will continue to decline.
Both the private initiative and the government should carry out a self-evaluation and recognize that the lack of drive for technological innovation has made Mexico less attractive for investment.
Without a technological transformation in the country, there will be no real transformation and economical growth.