
Mexico: The New China - ldayley
http://www.nytimes.com/2013/01/27/opinion/sunday/the-tijuana-connection-a-template-for-growth.html?_r=1&&pagewanted=all
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meej
I was surprised that this article seemed devoid of historical context.

Surely I am not the only person who remembers that twelve years ago, it was a
big deal that the Xbox was being assembled in Mexico by Flextronics -- heck,
Wired even published an article about it:
<http://www.wired.com/wired/archive/9.11/flex.html>

Or we can go back twenty years, when Maquiladoras were kind of a big deal. And
over the last decade, there was a lot of recognition that China posed stiff
competition for them. For example, here's an 2003 article from The
International Economy titled "How China Is Eating Mexico's Lunch":
<http://www.international-economy.com/TIE_Sp03_Rosen.pdf> If you google
'maquiladoras china' you can find other articles with the same theme.

In other words, over most of the last decade, China was the new Mexico. I can
believe that the trend might be reversing now, but writing an article with the
title "Mexico: The New China" without mentioning any of this history seems...
disingenuous? uninformed? I'm not quite sure what to think about it. The most
charitable explanation I can come up with is that the space constraints of a
NYT opinion article didn't allow for a discussion of it. Whatever the reason,
it strikes me as odd. Am I the only one?

~~~
rgbrenner
If you want to see where US goods are being manufactured, then just visit the
Census bureau.

Trade in Goods with Mexico 1985-2012 <http://www.census.gov/foreign-
trade/balance/c2010.html>

Trade in Goods with China 1985-2012 <http://www.census.gov/foreign-
trade/balance/c5700.html>

And the rest <http://www.census.gov/foreign-trade/balance/>

~~~
erickhill
Actually, the columnist - not reporter - is Chris Anderson. He used to run
Wired for years, but now (as he states in the article I assume you didn't
read) runs a company called 3D Robotics.

The column is based on his personal experience running a company that requires
high tech manufacturing. It's interesting - you should read it.

~~~
rgbrenner
Irrelevant. Mexico is not the new China. China's exports to the US are nearly
2x more than Mexico's, and in the past year, China has increased its exports
to the US by 25billion vs 15billion from Mexico.

Compare this to a decade ago when Mexico exported 135b vs 125b from China.
Mexico is not the new China. Mexico is the China of last decade. It's not
going to retake that position any time soon.

China is as big as ever, and one mans story doesn't change that.

~~~
meej
Thank you for the links to the census figures. Having read recent buzz about
"rehoming" offshore operations, I might have been too credulous about the
plausibility of Anderson's hypothesis; plus I was so focused on the
possibility that he is unfamiliar with the recent history of US-Mexico trade
that it didn't occur to me to check whether the numbers support his argument,
which clearly they do not. I am suspicious that he just doesn't really know
what he is talking about.

~~~
rgbrenner
If you're concerned about "rehoming" then it's worth pointing out the balance
of payments for Mexico and China. In the past year, Mexico's has been REDUCED
by 3b (so even though Mexico's exports increased by 15b, their imports
increased by 18b). Compare to China: an INCREASE in the imbalance of 20b (so
+25b in exports to the US vs +5b in imports).

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pasbesoin
Mexico was "China" before China was "China" (for scoped values of "China").

<http://en.wikipedia.org/wiki/Maquiladora>

My limited understanding and impression are that, now that China and
transportation have become expensive enough (both in direct costs and in
logistics and support issues), Mexico is warming up again -- for the present.
I seem to recall that, actually, a significant portion of this activity is now
backed by Chinese concerns, including for the favorable effects of NAFTA and
whatever else I have some vague recall of having read.

As for this marking the "recovery" of U.S. industry... No more so than
watching Zenith implode (personal case), a decade and more ago. IMHO.

P.S. I also have not kept track of the following in a manner to argue it well,
but my impression is that part of Mexico's narco-state problem was exacerbated
(not caused) by the vacuum left when China's rise sucked the life out of the
maquiladoras in a matter of a few years, transforming these localized pockets
of relative, if uneven and risky, economic success into economic wastelands.

I guess the overall lesson might be not to trust in such tenuous economic
relationships and advantages. Here today, gone tomorrow.

~~~
hakaaaaak
Maybe, but China is just better suited for production work than Mexico if you
look at the following factors:

1\. Food, water, shelter. Lack of these means infrastructure will be tough to
setup and you are making it harder on imported human resources.

2\. Culture, infrastructure and security. These go hand-in-hand. If you don't
understand and play by the rules of the culture, security is compromised, and
without security, infrastructure is at risk. Without infrastructure things are
much more costly. A less liberal government (one that enforces conviction of
drug lords that make security a nightmare) may result in better security and
therefore better infrastructure.

3\. Resources. Access to labor, materials, etc.

4\. Heat. In hotter climates, humans are rewarded physically by not working as
hard by the fact that they don't get overheated. This is engrained in almost
all of us, but even more so when evolution and natural selection also have
rewarded lazy behavior. I will probably get downvoted multiple times for
saying this, and it isn't true everywhere, but I believe that it happens and
can become a cultural phenomenon. Ever heard of a siesta? I know it is just a
"break", right...

~~~
PakG1
My day job is in a Chinese office of a multinational. After lunch, everyone
takes naps. Some people even take them for an hour. From what I understand,
post-lunch naps are common across the country. I think Chinese people
understand siestas quite well. ;)

~~~
tome
I'm curious: where do Chinese office workers take naps? In their chairs? Do
they have beds?

~~~
barry-cotter
Everywhere and anywhere.

www.sleepingchinese.com

------
huherto
It is nice to see an article like that, lately most articles are about the
violence between the drug cartels. Also, after 9/11 Mexico has been ignored by
the general media, and the public attention focused in the middle east.

It is not fully recognized that the US and Mexico have complementary
economies. The US is able to compete with China by taking advantage of Mexican
labor. Furthermore, Mexico is a big market for american products. The ideal
situation is to have american companies opening the Mexican market and at the
same time take advantage of the available labor. There many advantages, the
younger generation of Mexicans is very open and understanding of american
culture(music, movies, sports, video games, clothing, etc) and they are
willing to learn, travel is done as easily as traveling with in the US, times
zones are the same, etc.

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overgun77
Mexican here. Living in a city very near the border (3 hours away), work in a
offshore software developing agency, friends and my father works and used to
work at Ford's maquiladora and other industries.

For a very long time, foreign investment have played a large role in our
economy, since early in the 1900, there is a lot of investment in minery
particularly on the states near the border. With the modern age, a lot of
"maquiladoras" exists in the cities that are near the border, Tijuana, Juarez,
Monterrey, Hermosillo, Nogales. The labor hand is incredibly cheap, and it's
not only because the companies like Ford or Motorola or Samsung wants to pay
low wages, the government plays a large role since not very long ago our
economy secretary considered that a person who makes ~$500 a month can afford
to have a car, a good house and send their kids to private schools (which is
of course a stupid lie). A typical laborer works 48 hours a week and is
expected to change schedules as the needs changes, often working more than
these 48 hours sometimes pulling up to 60 hours a week or even more. The
average salary for a laborer in a month is around $600, which is around $3 an
hour. It is enough to live a fair life. To put this in perspective, the
minimun wage is around $4 a DAY. The article says the average wage is $6 an
hour, but I find that inaccurate from what I can see every day.

A laborer typically hasn't finished their school, probably dropped before
going to college or are graduates who studied something with not a lot of
demand, like administration (probably the most studied grade) or graduates
that fail to find a job for what they studied. In the eyes of the big
companies, the laborers are just disposable people, there's always more from
where they came from. People settle with the first opportunity they see, a lot
of people dream is to find a job in the government and retire 40 years later.
There is a lot of apathy and I think that's one of the reasons we don't
progress as a country (Our president is a disgrace, for example).

Luckily the software industry is MUCH different. It's one of the best paid
professions here, very flexible hours and working Monday to Friday and the pay
is 4 times greater than that of an industry laborer and even then that's less
than a junior level engineer would earn, all you need to know is how to speak
English and learn some web development. A well paid software engineer with
around 5 years of experience, earns around $14 an hour, which is I think
around twice the minimum wage in USA? An entry level engineer earns around $5.

Life here is much cheaper, I can go out with my girlfriend, eat something
fancy, buy a 3 liters of beer and go see a movie with $25 and still have some
money left.

~~~
flyinRyan
>Life here is much cheaper, I can go out with my girlfriend, eat something
fancy, buy a 3 liters of beer and go see a movie with $25 and still have some
money left.

But if you're good at software development you could be earning around $1k
_per day_ and retire in less than a decade. Are you really happy just chugging
away like this for 40 years just so some rich CEO's can get even more money
they can never spend?

~~~
wazoox
Your message reminds me of the famous joke of the Mexican fisherman and the
investment banker... [http://financialmentor.com/true-wealth/the-parable-of-
the-me...](http://financialmentor.com/true-wealth/the-parable-of-the-mexican-
fisherman-and-investment-banker/2422)

~~~
flyinRyan
That parable doesn't work very well when we're talking about someone working
40+ hours per week. If you can really live so well on $500 a month then just a
year or two making actual market wage would be enough to finally do all the
things this Mexican fisherman could do that the GP can't today.

------
vorg
Haven't read the article because the NY Times is blocked in China, so not sure
if the article says it but...

There's almost no foreign transport costs for manufacturing just south of the
US/Mexico border. Fuel for shipping can only go up over time.

If Mexican workers get too expensive, Mexico would find it easier politically
to take in immigrants from poorer countries than the US would.

Then there's Turkey for Europe.

~~~
barry-cotter
Fuel for shipping may be on an upward cost trend but shipping is more energy
efficient than more or less any method of transportation requiring an engine.
Trucking stuff across the border takes a lot more fuel per unit weight.

I doubt the point on immigrants too; Mexican enforcement of immigration laws
is a great deal more vigorous than its US equivalents.

~~~
ap3
I would say that Mexico's immigration laws are less open that the US's, but
enforcement is nowhere near the level of US enforcement.

Mexico has no Border Patrol, no DHS, no USCIS equivalents and is more open to
bribes and such.

------
leoh
How safe is Tijuana compared to most Chinese manufacturing cities? I was
always discouraged from visiting when I grew up in San Diego.

~~~
sunnybythesea
TJ as San Diegans call is not as safe as it used to be. But, there is more to
Mexico than TJ.

~~~
cglace
Funny, the comment above you says it is safer than it used to be.

~~~
huherto
Both are right. It was safe, then it was not safe(about four years ago), then
it is safe again.

------
dhaivatpandya
I'm not sure if top notch engineering talent is available in a place like
Tijuana - from what I've read, it doesn't seem like their education system is
churning out engineers a couple a minute like China and India are...

~~~
rayiner
Is top notch engineering talent available in china or India...

~~~
mediaman
Yes, remember we're not talking about web app developers here. Skills such as
CNC programming, injection molding toolmakers, etc are quite abundant and
easier to find than in the US. For manufacturing China has a satisfactory
engineering skill set.

I don't have experience with Mexico so it's hard to say there.

------
ruycer
Mexico is not only about manufacturing, even if this is one of our
strongholds. We are starting to generate a vibrant startup ecosystem. A few
months back, there was an interesting overview in TechCrunch:
[http://techcrunch.com/2012/09/03/mexico-is-happening-at-
tech...](http://techcrunch.com/2012/09/03/mexico-is-happening-at-techcrunch-
disrupt/)

------
xiaoma
I worked at a tech start-up in China for a year. Labor costs definitely are
cheap. That said, considering the high taxes, the extreme levels of
regulation, the rules that make things difficult for foreign-owned businesses,
the necessity of an ICP and the great firewall, it's actually not such an
amazingly cheap place to do business.

I've talked to several who have moved shop to SE Asian countries, but I can
see advantages of Mexico, Chile or other Latin American countries that are a
bit more welcoming.

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guoxiaotian
"most of the flat-screen TVs sold in the United States, from companies like
Samsung and Sony, are made there, along with everything from medical devices
to aerospace parts."

Not sure about medical devices or aerospace parts, but one of the reasons
those float-screen TVs are "made" there is the tax advantage. They were mostly
made in Asia and the final assembly was done in Mexico.

Still, you have to start from somewhere.

~~~
ap3
I believe the Maquiladora principle is that Mexico doesn't charge import taxes
if the finished product is for export. So components come in from Asia, get
put together, and pushed out as a finished TV.

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fatjokes
Very interesting. However---and perhaps maybe I've read too much American drug
war propaganda---I wonder if the cartels would be interested as well if it
turns out to be a profitable industry.

In this regard, China has the advantage of a very strict government.

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TechNewb
Chris Anderson: The New Sensationalist. IMO, this is a weak sensationalist
comparison to compare Mexico, to a emerging superpower of China. The title
should be "Mexico: Learning from China's Success"

~~~
jvm
> "Mexico: Learning from China's Success"

This stuff always drives me a little nuts.

GDP per capita (PPP) (Wikipedia) Mexico: $15,177 China: $9,146

HDI (Wikipedia) Mexico: .77 China: .66

Percent living on $2 / day (PPP)
<http://data.worldbank.org/indicator/SI.POV.2DAY> Mexico: 5.2% China: 28.8%

A quick scan of the quality of life facts would suggest that China has more to
learn from Mexico than vice versa. Perhaps China will escape the middle income
trap, but it hasn't done so yet, and remains considerably poorer than Mexico.

~~~
TechNewb
I don't know much about Mexico or China, I was merely trying to point out that
Anderson has a history of sensational controversial headlines, in Wired, and
now post Wired.

Mexico and China are both curious countries to study. I have not been to
Mexico, but China is developing extremely quickly.

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splicer
> You can drive from our San Diego engineering center to our Tijuana factory
> in 20 minutes, no passport required. (A passport is needed to come back, but
> there are fast-track lanes for business people.)

Oops, I forgot my passport. Now I'm stuck in Mexico!

~~~
jessaustin
Surely there are options at that point? Like go to the USA consulate during
business hours, show a driver's license, and pay a fine? Or even call a family
member and ask her to bring your passport (she should bring her own as well)?

~~~
tsmith
You can just show up at the border with your license / ID. If you have a
passport they can look it up in the system. No fine, maybe a little lecture.
Happens 100s of times a day as lots of people are still not aware that you
need a passport for re-entry (used to be just a DL until a few years ago).

