The world is currently being reshaped, at least when it comes to geopolitics and economics, but also due to the pandemic and the new technologies that are comming out like AI replacing regular jobs and . What can’t be denied is taht the new landscape will be completely different. It is not easy to know for sure what it will be, however, it is very likely that it will require a closer interaction between the US, Canada, Mexico and the rest of the American continent.
In the following years, China will possibly increase it’s sphere of influence and the remaining countries will most likely have to find a way to step up and through creativity and new technologies compete with the manufacturing monopolization of Asia.
In my humble opinion, Innovation will be the only business of the future, together with medical and other types of services which require personal attention, at least for now. However, as tedious repetitive work starts disappearing and the only slots available for occupation become more and more based on specialized niche knowledge, the creative aspects of the human mind will become the most important value offer to the workplace.
It is very likely that the sole structure of the companies as we know it changes as well, it is happening right now and we’re all experiencing the radical change in office mentality that has been pushed by the last pandemic.
The barriers represented by the office walls are no longer present in many cases, companies around the world . And the need for innovation companies to source talent is pushing them to look for offshore software talent specially from countries such as Ukraine, Brazil and India. This is specially true for software development as we notice many US companies hiring talent in Mexico and the rest of Latin America for remote work offerings. This has entirely changed the work culture.
Another phenomenon is that the US workforce is no longer interested in getting traditional jobs. They’re more interested in more fulfilling occupations like creating new companies that are focused in innovation, creating new products and developing software tools.
Also, currently, the world has created a huge demand of software development, there’s so many new apps coming. And in this regard, India has become a very relevant player (or competitor) in this sphere as more and more Indian companies start creating their software businesses instead of developing software for US companies like it was in the past.
And where does this leave Physical Product Innovation and Hardware Startups? Hardware hasn’t been very appreciated by investors in general, as the risks of having a successful hardware startup are too high. Most of the new products reaching the occidental market are basically white label chinese products that have no IP claims other than their brand and their sales funnels.
You might think that this doesn’t represent an issue. However, there are many risks involved in monopolies in general. I don’t think the world will benefit from there being only one factory. Imagine for example if China decided that they no longer want to export products to a specific country. This is why, just from a philosophical standpoint, it is crucial that the rest of the world develops their capacity to fabricate products. Not only due to geopolitical risks, but also because part of the human nature is to thrive under the excitement of creating something that doesn’t exist. And just importing existing products, exciting as it is, is not as fulfilling.
Plus, the usual china business model will basically have you without any real or functional IP and no control of your product and will make you depend on your factory(ies) until you decide to re-design your whole product from scratch, but more on that on a later post.
This is why, leveraging the existing complimentary nature of neighbooring economies such as the US and Mexico can create very interesting opportunities. Not only because of the USMCA treaty, but also, because Mexico has a lot of engineering talent that is currently being underused, whereas the US has a lot of people with entrepreneurial mindset that want to leave a dent in the world who need access to more accessible talent than the already in very-high demand national talent. I believe that this will translate in a very interesting way when it comes to factories and Mass Production. Mexico does have the Maquila program for example, but new working models will arise, perhaps something more similar to the chinese OEM and ODM models.
According to Tholons Global Innovation Index, Mexico is placed 8th for digital nations for WFH (Work From Home), which is actually a very good score all things considered. At the current time, Mexico is not ready to start creating IP on it’s own, it doesn’t have the financial structures and landscape, on the other hand, the US does have it, but it is recurring to Offshore talent mostly when it comes to software, and for hardware they’re mostly working with Asia, however, we’ve noticed that many companies in the US, pragmatic as they are, are starting to consider the option of working with Mexico due to the issues with the logistics when working with China, it can’t be hard to extrapolate how this fundamental relationship between these two neighboors will eventually become a pillar of their economies.