News Article

Forging the Silk Road to Mexico

Wed, 04/25/2018 - 14:12

Although many people associate Chinese companies in Mexico with behemoths like Huawei and Lenovo, Sergio Masse, Partner and COO of China Campus Network, told the audience at Mexico Talent Forum at the Sheraton Maria Isabel hotel in Mexico City on Wednesday that there is an increasing number of Chinese companies entering the country and if Mexico wants to see even more investment, it needs to have a ready pool of talent.

“More and more Chinese companies are arriving and over time they will have much more relevance,” Masse said. “If we have a pool of talent ready for these companies, this will detonate investment and will mean Chinese companies are much more likely to choose Mexico over other countries.”

He uses the example of China National Offshore Oil Corporation (CNOOC), which won two of the 10 deepwater Perdido blocks on offer during Round 1.4 of the Mexican bidding rounds. The offers made by the NOC greatly exceeded the minimum requirements, meaning the company is expected to bring a great deal of investment to the country.

China Campus Network is a global initiative set up to promote Chinese business abroad. Masse explained that the country wants to move away from its traditional image of poor quality and low-cost manufacturing. “There is a concerted effort to move from Made in China to Made by China,” he said. “In terms of manufacturing costs, Boston Consulting Group actually found that it is 19 percent cheaper to manufacture in Mexico compared to China.”

In 2013, Beijing announced a plan to create a commercial corridor between China and Europe, but over time these plans became more ambitious. The plan now encompasses three “wings:” Western Europe and Africa to the West and Latin American countries to the East, with Eastern Europe, Southeast Asia and Australasia comprising the main axis. “Any organization or country that supports the initiative is part of the initiative,” explained Masse. The cost of the entire project is expected to be between US$4-8 trillion. “To put that into perspective, the GDP of Germany in 2016 was 3.5 trillion,” he said.

Of course, a project of this magnitude demands skilled human capital, and Masse listed the two main challenges as access to local information and recruitment of local talent. “China knows it is of the utmost importance to prepare and attract talent locally,” he said. With more than 16,000 Chinese companies working abroad, it was necessary to create incentives for talent attraction.

He admitted those incentives differed by country, but as a general rule, in developing countries, Chinese companies adopted the strategy of paying higher-than-average salaries. “This has been found to generate much more loyalty among employees and studies have found that employees are much more willing to endure a little more stress for the higher salaries,” he said. As a result, Chinese companies now employ 1.5 million local workers around the world.