PyMEs in Mexico

Thu 08 December 2016

As of 2006 there were about 4 million enterprises in Mexico. Out of those 4 million, 99.8% were small and medium enterprises. About 52% of the Mexican GDP is generated by small and medium size enterprises. While the remaining 48% relies on large enterprises. Small and medium size enterprises contribute with the 72% of the formal employment in Mexico. PyMEs are subdivided into: 15% for Micro, 14.5% for small and 22.5% for medium enterprises.[2]

PyMes can be classified by type and size. There is a manufacturing, commerce, and service type. Within these, PyMEs are classified according to the number of employees—10, 50, 250 and more than 250 respectively—into micro, small, medium, and large enterprises. Service enterprises are classed by those with have 10, 50, 100, and more than 100 employees.[3]

PyMEs throughout the nation are distributed by region. About 38% of them in the central part of the country, 17% locate southwest, 6% southeast, 12% northeast and 27% center-west.

There are two types of PyMEs in Mexico (according to their origin). Those that began as family businesses and those formed by more formal partnership. The ones that start as family business are small and only very few of them have some type of projection abroad. These are usually the ones who search for government support mainly for financial and training purposes. The other type of small and Medium size enterprises in Mexico are those who follow an established path. An example of this could be franchises, these do not have a problem of expanding abroad. Franchises are small projection of big enterprises who have already done the market research before entering a new zone. They have all the possible experience on expanding overseas and very little risk on failing because in most cases they go under the concept of a high brand awareness.

PyMEs have been an important part of the country's development, especially in the area of exports. Due to their small size they are versatile, dynamic and have growth potential. This potential also includes entering international markets. They are a major source of job creation in the country and are the most likely to implement new technologies. Since many are located in different regions of the country, they foment local development. The main contribution to enterprises growth lies on PyMEs. The importance of small and medium size enterprises in Mexico has grown through time due to the positive effect these businesses have had on Mexico's economy. Since these enterprises continue becoming more important, government is focusing a lot on supporting them.

On the other hand, they also have some disadvantages. In general PyMEs have not development the habit of reinvesting to improve production or reinvest in equipment. They do not have enough economic resources to hire specialized employees nor to train current ones. This and lack of foresight can lead to insufficient sales, lack of competitiveness, inadequate customer service, low quality and higher prices. Because of the lack of quality control, legal problems such as dealing with VATs and defective products becomes an issue.[4]

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