Business

BORDER WORLD'S MOST DYNAMIC

NO ADVANTAGE IS INSTALLED CAPACITY

Of the 48 Promexico offices, located in 31 countries with important economies, three have the most cha- llenging goals: Los Angeles, Frankfurt, and Shanghai. Frankfurt due to the dynamism of the automobile sector, Shanghai due to the influence of light manu- facturing, and Los Angeles for being anchored in the seventh largest economy in the world- California. California is where Promexico pushes six priority sectors: aerospace, automobile, medical device, creative indus- try, advanced manufacturing, agro-industry, and pro- cessed products.

"In only the last sector, the Los Angeles Supply Central reported that in 2015, purchases from Mexico amounted to $824 million dollars," remarks Juan Carlos Briseno, Commercial Advisor for Promexico in Los Angeles.

"In three years that I have represented ProMexico in LA, investors keep coming to the office with the same question: what is the certainty that what I want to do in Mexico is legitimate? Regarding terrain pur- chase: how do I know if I am buying from the owner and not whoever seems to be the owner? How can the federal and state government work together to assure my investment?"

From there Briseno celebrates the ratification of Carlos Sada Solana as ambassador for mexico in the United States, whom he qualifies as a pro-investment and tra- de ambassador.

Continuing with the topic of perception tied to the creative industry sector, he indicates that mexico wants more Titanics. The last big movie with more than

$100 million dollars in budget filmed in Aztec lands was James Cameron's movie, which was filmed at Baja Studios 23 years ago. "When asking a high executive from Burbank why Mexico is not on the preliminary list of locations to film, he answered: four years ago, during the last night of filming for the movie "Chi- huahua" in Tijuana, the main dog was kidnapped… he never reappeared," he shares.

Taking on the hard facts, Juan Carlos Briseno, emphasizes that from 1999 to 2013, FDI from mexico to the

U.S. was $15 billion dollars, from which only $393 billion went to the state of California, only 2.5% of the investment. On the other hand, FDI from the U.S. to mexico during this same time period was $175 billion dollars, 44% in the manufacturing sector, from which only 11% came from California. This represents 6% of the total investment in 14 years from the U.S. to mexi- co. This tells us that 22 years after NAFTA, we are still not taking advantage of the proximity or the installed capacity that exists at this border, the most dynamic in the world.

As a result, says Juan Carlos Briseno, it is fabulous that CEOs and VPs of American companies are going to the office in Los Angeles, not to ask if they would have to move their advanced manufacturing from China to mexico, they already know they should, but to ask to which city, which state, with which management, with which companies. Why do they know they have to do it? "Because in August of last year, for the first time in history, mexico is more competitive in operation costs than mexico. Now the competition is with Indonesia," he indicates.

Another challenge for the American companies that manufacture in China, he comments, is the speed with which electronic commerce moves. Ten years ago, what people bought on the internet took three weeks to arrive, today one waits two days; this means better inventory management and a lower contribution mar- gin. As a result, companies keep saying "I need to ma- nufacture in Mexico, but how and with whom."

China, of course is not staying still, he says, it is iden- tifying the niche that mexico is taking back through near shoring, investing in mexico, opening production plants in our country at a faster rate than us, and iden- tifying opportunities that not only the TPP but also the Alliance of the Pacific proposes. This will allow com- mercial opening from mexico towards Peru, Colombia, and Chile.

From all this, jumps out the question, why haven't the economic authorities of Baja California, except for the Ministry of Tourism, set foot in Los Angeles?

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