I was introduced to young Mexican entrepreneur Andrés Díaz Bedolla by the American Chamber of Commerce of Mexico during a conversation about nearshoring and the move of foreign direct investment from China to Mexico.
The team at AmCham said that Andrés was most definitely someone to “keep an eye on” and who I needed to talk to.
I began our conversation with the provocative question I posed in my column last week: What if everyone benefits from nearshoring in Mexico except Mexicans?
Andrés recently founded a fast-growing Mexican startup called Yumari, with a clear objective to make sure Mexicans stand to benefit from nearshoring.
To understand the business, it is first important to understand why so many companies moved manufacturing to China, which comes down to two reasons: it was cheap and easy.
Even though it meant a much longer supply chain, the fact that it was cheap and easy made up for it. Since companies are now concerned about the supply chain, we all know that they are looking for other places to produce their goods — places with a shorter supply chain, and ideally, that are cheap and easy to work in.
Mexico is obviously a much shorter supply chain in proximity to the United States, Mexico is competitively priced — but Mexico is certainly not as easy as China.
“Chinese companies can give you a price including all of the logistics to your doorstep and give you all the specifications you need on the same day,” said Andrés. “Mexican companies take two weeks to get you a price, then another two weeks to get you the specifications that you need, then another two weeks to quote you the freight cost to Laredo.”
His concern is that Chinese companies, recognizing their ability to move quickly and make working with them easy, will try to replicate their factories and ease of doing business in Mexico. This attractive option for the buyer could create a scenario in which Mexican companies are outplayed and lose out, not only on new opportunities for growth but on the existing business that they already have.
The solution, according to Andrés, is to help make Mexican companies faster and easier to work with. In other words, helping make them a viable alternative to Chinese solutions.
This is where his new company Yumari is focusing its efforts.
Andrés worked for a decade in China before moving back to Mexico to run the Latin American operation of the Chinese company Alibaba.com.
In this role, Andrés recruited Mexican businesses to join the Alibaba.com platform in order to connect them with Chinese businesses. In theory, the model was to help Mexican buyers source from Chinese suppliers and vice versa. In reality, it just provided Mexican buyers an easy path to source from China — Chinese buyers had little interest or incentive to source from Mexican companies.
With this realization, and with the nearshoring boom underway, Andrés came up with the idea of creating a North American version of Alibaba.com, a platform that would connect U.S. and Canadian buyers (who previously had bought from China) with Mexican producers.
Yumari is focusing on providing not only buyer to seller connection, but also working with the Mexican producers to help them learn the efficient processes that their buyers have come to expect in working with China.
In other words, this Mexican entrepreneur is providing the platform, the tools and the experience to help Mexican companies benefit from the nearshoring opportunity.
Yumari is just getting started, but I think that it is safe to say that they are in the right place at the right time.
Companies from around the world are looking to manufacture in Mexico. The big companies just move entire factories to Mexico. The smaller companies will look for sources of supply in Mexico. If they can’t find it locally, they might look elsewhere or they might ask their current Chinese supplier to move to Mexico.
Companies like Yumari can provide the experience and training to help make Mexican companies competitive and meet customer expectations.
I’m betting on Andrés and his team being successful in ensuring that Mexican companies are ready to compete, and that Mexicans maximize their benefit from nearshoring.
Travis Bembenek is the CEO of Mexico News Daily and has been living, working or playing in Mexico for over 27 years.
I’m sure Mr Díaz Bedolla and Yumari will be a great help to potential investors looking at setting up operations in Mexico. However I wish I could be as enthusiastic about the much hyped “opportunities” that near-shoring may bring to Mexico. I say this because of the “M Factor” (“el factor México”) which basically means that the chances of things going sour are in direct proportion to the opportunities given for them to do so.
Don’t get me wrong; I love this country which has been my home for many years but I can’t help feeling sad about its uncanny habit of shooting itself in the foot every time it gets the chance to really take off in a big way. It’s a bit like a Ferrari with an empty gas tank and I doubt it will ever change.
Imagine an investor toying with the idea of setting up shop here and suddenly realizing that an initiative as fundamental as a much needed new international airport for Mexico City ( which was over 30% completed) can be cancelled at the whim of the current President before he even assumed office. Worse still is the realization that were no powers or counter-balances that could stop such an insane and destructive decision. Then look at the anti-investment attitude towards companies who would want to participate in the energy sector. The loss making PEMEX and CFE must be protected. The absence of any viable judicial resource in the event of a dispute and the lack of guarantees would require a strong stomach before taking such a risk. Add into the mix the fact that before a business is even established there’s likely a Trade Union to deal with who will try to dictate how the business is run and you have an interesting cocktail.
I hope I am wrong and the new government takes a different pro-business attitude after October but it’s probably better to prepare to be disappointed rather than surprised.
So well expressed. Let’s both hope young Mexicans like Andres succeed.
The system seems rigged against them.
Having now lived full time in Mexico for 6 years and dabbling in new business ventures, I understand and concur with Mr. Hutchins concerns completely. I would add that additional layers of bureaucracy (and frankly, corruption) are a major impediment. Having said that, I have seen more of an entrepreneurial spirit in the younger generation that could spur change. Whether that change can occur in time to take advantage of this historical opportunity remains to be seen.
You are assessing risk and trying to find ways to manage it. That’s not cynical, it shows a healthy skepticism and the need for a plan for these possible risks to be overcome if they would occur
a Chinaman is sweet talking, this guy is getting rich selling your country to the Chinese Communist Hold onto your ASS!!!
Mexico can’t compete with China because Mexican poverty will increase worst with the low “salaries” needed in Mexico to compete with Chinese workers. If you want to compete with China, Mexico will lose the battle. What should happen, is “kick” China out of Mexico and don’t let them invest in Mexico. The biggest mistake the Mexican government can make, is “team-up as a close friend, “and “budd” with the Chinese. MEXICO SIMPLY CAN’T TRUST THE CHINESES. Don’t be fooled by China anymore. WAKE-UP MEXICO”, AND OPEN YOUR EYES”. China will win and the Mexican people and workers will lose” at the end.
Mexico can’t compete with China because Mexican poverty will increase worst with the low “salaries” needed in Mexico to compete with Chinese workers. If you want to compete with China, Mexico will lose the battle. What should happen, is “kick” China out of Mexico and don’t let them invest in Mexico. The biggest mistake the Mexican government can make, is “team-up as a close friend, “and “budd” with the Chinese. MEXICO SIMPLY CAN’T TRUST THE CHINESES. Don’t be fooled by China anymore. WAKE-UP MEXICO”, AND OPEN YOUR EYES”. China will win and the Mexican people and workers will lose” at the end.
Ben Reina
[email protected]
Houston, Tx.
I can see the Chinese huipiles competing with the with the Mexican artisans. It’s already happening. Mexico should focus on promoting their own products that are well made and not cheap Chinese copies. When Mexico embraces its own culture, and creates innovation instead of trying to be like Americans, then we will prosper. Please stop selling our lands to foreign investments, and let’s get creative and find ways to buy from our own instead of the costcos and corporations. Let’s support and invest in local small businesses.
I concur with Mr Hutchison after having done initial market research for importing EU products into Mexico -> time-consuming, costly and some indication that greasing of palms would be the practical way forward -> I opted out.
My Mexican father-in-law always said that Mexico (and the world) would eventually be outsmarted and dominated by the Chinese – and I believe they should not be underestimated.
I hope there is a new generation of young Mexican entrepreneurs out here that can shake things up and give Mexican bureaucracy a good kick in the behind.
Mexico has so much talent and beauty in its traditional culture and handcrafts, surely there must be a market for this beyond the local tanguis and tourist venues.
Last but not least, there are legitimate Mexican businesses already succeeding and expanding abroad
e.g. Piñeda Covalin -> modern fashion blended with traditional Mexican design