Overview of the Development of Mexico's Digital Economy

The United Mexican States is located in North America, covering an area of approximately 1.96 million square kilometers with a total population of 130 million, ranking 10th in the world. The country is the second largest economy in Latin America, with a GDP of $1.29 trillion in 2021, ranking 15th in the world, and a per capita GDP of $9926.4, ranking among middle to high-income countries. As an important emerging economy in the world, Mexico is also a member of the G20 and OECD. The country's industrial structure is dominated by the service industry, accounting for over 60%, with an industrial proportion of over 30%, and agriculture contributing less than 4% to GDP.

In recent years, Mexico's digital economy has developed rapidly, not only increasing its position in the national economy, but also leading in the Latin American region. In 2021, the number of Internet users in Mexico will reach 88.6 million, the number of mobile phone users will exceed 91 million, the penetration rate of home Internet will be 66%, and the average daily online time of Internet users will be 4.8 hours. With a solid foundation and vast market, the country's digital economy has taken off under the catalysis of the epidemic, with e-commerce and fintech showing the most outstanding performance. In 2021, the added value of e-commerce in Mexico reached 4013 billion pesos (approximately 200 billion US dollars), a year-on-year increase of 27%. According to a report by the China Academy of Information and Communications Technology, the scale of Mexico's digital economy reached 352.2 billion US dollars in 2020, ranking 11th in the world and contributing over 30% to the country's GDP. In 2021, the Mexican government released the "2021-2024 National Digital Strategy" as a guiding document for the current national digitalization process, clarifying two major action plans for government digital transformation and full network coverage.

In 2021-2022, the main achievements of Mexico's digital economy include: further improvement in network penetration, the launch of 5G networks and rapid coverage of major cities across the country; The ICT industry has recovered to pre pandemic levels; E-commerce withstands inflationary pressures and maintains a high growth trend; Start up companies are entering a period of rapid growth, with the number of unicorn companies increasing from 1 to 10. This section will objectively demonstrate the prosperous development trend of Mexico's digital economy from the above aspects.

（1） Large number of netizens and high popularity of the Internet

Mexico has a large number of Internet users, fast growth, high Internet penetration and high popularity of smart phones, which provide a good foundation and huge potential for the development of the digital economy. According to the National Survey on the Availability and Use of Information Technology in Families in 2021 released by the National Bureau of Statistics of Mexico, the number of Internet users over the age of 6 in 2021 will be 88.56 million, an increase of about 5.6 million over the previous year, and the Internet penetration will be 75.6%, including 81.6% in urban areas and 56.5% in rural areas. The overall proportion of Internet users will increase by 11.9 percentage points compared with 2017. In addition, there are a total of 91.73 million mobile phone users nationwide, accounting for 78.3% of the surveyed population. Among them, over 90% of mobile phone users use smartphones. From 2017 to 2021, the number of smartphone users in Mexico increased by 13.8%, with the penetration rate among mobile phone users rising from 80.1% to 93.9%. Mexico's home Internet access rate was 66.4%, an increase of 27.2 percentage points over 2015 (see Table 1). In terms of computers, the proportion of computer users among the population aged 6 and above in China is only 37.4%, a decrease of 7.8 percentage points compared to 2017.

表1 2015～2021年墨西哥网民、手机用户及家庭互联网数量及比例

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Table 1 Number and Proportion of Internet Users, Mobile Users and Home Internet in Mexico from 2015 to 2021

Mexico has not only a large number of Internet users, but also a high frequency of Internet use. In 2021, 89.2% of the 88.56 million Internet users nationwide will access the Internet every day, 8.1 percentage points higher than that in 2017, and the average daily online time will reach 4.8 hours, an increase of 50% compared with 3.2 hours in 2017. The main purpose of netizens going online is to communicate, search for information, and access social networks. In terms of devices, smartphones remain the most important device for Mexicans to access the internet, accounting for 96.8%, about three times that of the second ranked laptops or tablets, which have a usage rate of 31.8%, followed closely by smart TVs (25.7%). In terms of trends, the proportion of smartphones and smart TVs is on the rise, while the usage of desktop computers or tablets has decreased.

（2） The ICT industry is steadily developing, and 5G networks are opening up services

The information and communication technology (ICT) industry can be divided into ICT manufacturing and ICT services. The added value of Mexico's ICT industry is showing a growth trend, with related industries centered on electronic information technology accounting for 4% to 5% of the country's national economy. The output value of Mexico's information industry in 2021 was 3.3305 trillion pesos, a year-on-year increase of 5%, and contributed 4.7% to Mexico's GDP that year. Within the information industry, the service sector is the backbone, contributing up to 70% to the GDP of the ICT industry, while the manufacturing sector contributes approximately 30%. In terms of specific industries, computer and peripheral equipment manufacturing, as well as electronic component manufacturing, are the main sectors of Mexico's ICT manufacturing industry; The telecommunications industry is not only the mainstay of the ICT service industry, but also the pillar of the national information industry, contributing up to 64% to the GDP of the ICT industry (see Table 2). Although the COVID-19 in 2020 will have a major impact on Mexico's overall economy, the country's information related industries show greater resilience, not only lower than the overall economy, but also faster recovery. In 2021, the output value of the information industry has recovered to the pre epidemic level, but the national GDP still shows no signs of full recovery in 2022. According to consulting firm Select, the growth rate of Mexico's ICT industry is expected to slow down in 2022 due to reduced demand, supply chain crises, and rising financing costs for IT companies.

表2 2019～2022年墨西哥ICT产业产值（以2013年为不变价）

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Table 2: Output Value of Mexico's ICT Industry from 2019 to 2022 (at constant prices in 2013)

As the backbone of Mexico's ICT industry, telecommunications services have developed rapidly in Mexico and have reached a high coverage rate. According to the National Bureau of Statistics of Mexico, the number of mobile phone service lines in Mexico is expected to reach 127.5 million by the end of 2022, with a density of 98%; Mobile Internet access will grow by 2.3% year-on-year to 105.6 million, with a coverage rate of 82%; Fixed Internet services will reach 27.4 million access points (up 10.9% year on year), connecting 75% of Mexican households; Fixed telephone lines will reach 25.7 million, covering 70% of households; By the end of the year, there will be 21.5 million pay TV lines, with a coverage rate of 59%. From 2013 to 2021, Mexico had the third highest growth in fixed broadband users within the OECD, with a growth rate of 73%. However, compared to other OECD countries, Mexico still has significant room for improvement in telecommunications coverage and service quality. As of June 2021, the number of fixed broadband users in Mexico ranks second to last in the OECD, with only 18.2 per 100 residents, far below the average of 33.8. In addition, Mexico's fiber optic coverage level is 30.2%, with an average download speed of 44Mbps, ranking 33rd among 35 countries, far below the OECD average speed of 119Mbps.

In terms of mobile networks, Mexico still relies mainly on 3G and 4G networks, and the construction of 5G networks is still in its early stages. According to the 2021 Latin American Digital Economy Report released by GSMA, in 2020, Mexico's communication network was mainly 3G (accounting for 52%), followed by 4G (37%). It is expected that 4G will replace 3G as the main mobile network in the country by 2025, with the proportion rising to 54%, while the proportion of 5G is expected to reach 14%. Under the promotion of major telecommunications giants, Mexico achieved a milestone leap in the development of 5G networks in 2022. In February 2022, operator AT&T launched 5G networks in Mexico City, Guadalajara, and Monterrey, and expects its 5G network infrastructure to cover an additional 25 cities in Mexico by the end of 2022. Meanwhile, Am é rica M ó vil has launched 5G services in 18 major cities in Mexico. Ericsson will also collaborate with Telcel to launch the first commercial 5G network in Mexico, covering 15 cities and comprising 1500 radio base stations. In addition, a 5G spectrum auction for mobile services is also planned to be held in 2022. The launch of 5G will bring huge economic benefits to Mexico, with particularly prominent driving effects on industries such as manufacturing, mining, transportation and logistics, energy, public transportation, health, media and entertainment, financial services, agriculture, and automobiles. It is expected that by 2030, the total valuation of these industries will reach $700 billion. The contribution of 5G to Mexico's GDP is expected to reach as high as 5%. According to IT analysis firm IDC, the first year of 5G deployment will create nearly $4.4 million in value for the service sector in Mexico.

（3） E-commerce continues to improve, with online sales becoming more diversified

E-commerce is a representative industry of Mexico's digital economy. According to data from the Mexican Online Sales Association, the total amount of e-commerce in Mexico reached 4013 billion pesos in 2021, a year-on-year increase of 27%, far exceeding the global average of 16.3%. According to consulting firm eMarketer, Mexico is the ninth fastest growing country in global e-commerce sales in 2022, second only to countries such as Singapore, Indonesia, India, Argentina, and Thailand. Latin America, on the other hand, was the fastest-growing region in global e-commerce in 2021, with a growth rate of 35%. The current global inflation has not had a significant impact on e-commerce in Mexico or even Latin America, and the industry continues to maintain a high-speed development trend.

The contribution of e-commerce to Mexico's GDP is showing an increasing trend, with a specific contribution rate growing from 3.0% in 2013 to 5.8% in 2020. Although the contribution rates of 2020 and 2019 were comparable, the added value generated by e-commerce in 2020 actually decreased by 8.7% compared to the previous year, with a total amount of 1360827 billion pesos (see Figure 1). Among them, 40.4% is from commodity retail trade, 24.9% comes from commodity wholesale trade (higher than 22.1% in 2019), and the remaining 34.7% is contributed by other service industries. In addition, the proportion of retail trade in the added value of e-commerce has significantly increased, from 16.4% in 2013 to 40.4% in 2020, showing great vitality, while the proportion of wholesale trade has remained stable at around 25%. The impact of the epidemic on the consumption structure of e-commerce is that the variety of goods purchased online has increased, but the consumption of online services (accommodation, transportation, leisure, etc.) has decreased.

Figure 1 Value added of e-commerce in Mexico from 2013 to 2020

In terms of the sub sector of e-commerce retail industry, the proportion of e-commerce in Mexico's national retail industry has been continuously increasing, rising from less than 1% in 2015 to 11.3% in 2021, which is comparable to Spain (12.1%), France (11.2%), Germany (10.8%), Brazil (10.7%) and other countries. In addition, Mexico has been ranked among the top five fastest-growing countries in the global e-commerce retail industry for three consecutive years, with growth rates comparable to Brazil, Russia, India, and Argentina. However, there is still significant room for improvement in the proportion of e-commerce in Mexico's total retail sales, which is significantly lower than the levels in the United States (20%), Europe (25%), and the Asia Pacific region (50%).

In terms of e-commerce platform, Mercado Libre is the platform with the largest number of users in Mexico, followed by Amazon, Wal Mart, Liverpool Department Store, Coppel Department Store and AliExpress. In addition to traditional e-commerce giants, e-commerce platforms in Mexico are showing a trend towards specialization and diversification. In 2020 and 2021, Mexicans mostly chose to purchase supermarket products online through super apps, such as Rappi in Colombia, but in 2022, many large commercial chain stores also launched exclusive app software. Shein, a fast fashion e-commerce platform from China, has developed rapidly in Mexico and is one of the most downloaded e-commerce applications in the country. According to data from Brazilian e-commerce service platform VTEX, one-third of Mexico's online sales come from proprietary applications, and 70% come from comprehensive e-commerce platforms. At the same time, live streaming sales as a new online sales model has quietly emerged.

For most businesses in Mexico, e-commerce is not only a huge business opportunity, but also a necessary means of survival to cope with the impact of the pandemic. The latest report from the Mexican Online Sales Association indicates that 60% of small and medium-sized enterprises in the country have conducted online business. In 2021, online sales accounted for 34% of the total, and this number is expected to rise to 50% by 2022. The e-commerce platforms used by enterprises are mainly Mercado Libre and Amazon, and they generally choose a multi-channel parallel sales approach through e-commerce platforms and social networking sites.

（4） Start up companies thrive, with fintech leading the way

There are numerous technology startups in Mexico, ranking second in size in Latin America, only behind Brazil. As of October 2022, there are 681 start-up companies nationwide, with 1709 in Brazil. In terms of industry distribution, according to the "Mexico Startup Ecosystem" report released by PwC, in 2020, Mexican startups were mainly concentrated in three major industries: information technology (26%), financial services (11%), and business services (10%); The number of startups in the three major fields of beauty and health, transportation and transportation, and agriculture has grown the fastest. In 2012, with the rise of fintech, Mexico gradually developed into a major hub in this field in Latin America.

Mexico's unicorn companies (startups valued at over $10 trillion) started relatively late, but have been rapidly rising since 2021. Since the birth of the first unicorn Kavka in October 2020, as of October 2022, Mexico has had 10 unicorns, with fintech dominating the majority (see Table 3).

表3 墨西哥独角兽企业名单

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Table 3 List of Mexican Unicorn Companies

Mexico's tech startups exhibit a high degree of concentration in terms of industry and region: fintech companies dominate the mainstream, and the capital city of Mexico City is the largest innovation center in the country, and even the most important tech incubation, technology innovation, and venture capital center in Latin America. In addition to the capital, Guadalajara and Monterrey are also important entrepreneurial centers in Mexico. The outstanding fintech companies in Mexico are shown in Table 4.

表4 墨西哥代表性金融科技企业

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Table 4 Representative Fintech Companies in Mexico

According to Finnovista's FinTech Radar report, there were a total of 512 active fintech companies in the country in 2021, an increase of 16% compared to 441 in 2020. The digital banking and lending sectors had the highest growth, with loans accounting for 21%, surpassing payments and remittances (14%) as the sector with the highest number of startups. In terms of annual revenue, 65% of fintech companies had revenue below $500000 in 2020, which is better than 80% in 2019.

The main development advantages of fintech in Mexico are as follows: firstly, there is a large gap in banking services. The coverage of banking services in Mexico is low, with about 60% of adults not having a bank account, and cash remains the most mainstream payment method. Secondly, the population is large and the structure is young. 45.35% of Mexico's 130 million population is economically active, with an average age of 29, and approximately 43.8% of the population is under 25 years old. Thirdly, the advantage of nearshore services. The US Mexico Canada Trade Agreement (USMCA), which came into effect on July 1, 2020, has brought the economies of Mexico, the United States, and Canada closer together, providing Mexico with the opportunity to seamlessly cooperate with these two markets. The high competitiveness of Silicon Valley has also prompted many entrepreneurs to come to Mexico in search of business opportunities. Fourth, the penetration rate of smart phones and mobile Internet is high. In 2021, 79 million people in China will use smart phones, and the utilization rate of mobile Internet will be 57%. Fifth, advanced regulatory mechanisms. In March 2018, Mexico passed the Financial Technology Institutions Regulatory Law, establishing a regulatory framework for financial technology institutions, providing institutional guarantees for improving the competitive environment of the financial system, regulating the development of financial technology enterprises, and enhancing the level of inclusive finance. It became the first country in Latin America to regulate the financial technology industry.

Mexico's unique conditions have not only incubated numerous domestic startups, but also attracted a large number of domestic and foreign venture capitalists and foreign companies to enter the market. In terms of venture capital, according to the Transactional Track Record platform, Mexican startups received a total investment of over $4.7 billion from local and foreign investment funds in 2021, an increase of 294% compared to 2020 and over 2000% compared to 2016. The number of transactions also increased by 60% year-on-year (see Figure 2). The main investment funds include Kaszek Ventures from Argentina, Angel Ventures Mexico AVPAFII from Mexico, FJ Labs from the United States, ALLVP from Mexico, 500 Startups from the United States, and SoftBank from Japan. Fintech has been ranked as the hottest investment industry for three consecutive years.

Figure 2: Venture Capital Amount and Transaction Quantity in Mexico from 2016 to 2021

Foreign companies entering the Mexican market mainly come from the United States and neighboring Latin American countries, but there are also other countries. In recent years, Chinese companies have also actively explored the Latin American market and have achieved fruitful results. Didi launched two major services in Mexico, DiDi and DiDi Food, in 2018 and 2019 respectively. In just four years, Didi's business in Mexico has covered 70 cities across the country. Among them, Didi Chuxing is on par with Uber in the ride hailing industry and has become the most widely used and downloaded travel app in Mexico with high cost-effectiveness and safety. The active users in the country are as high as 10 million. In addition, TikTok, Kwai and other short video social platforms, as well as some game companies, have also chosen to enter the Latin American market, taking Mexico as a test field, while Huawei, Xiaomi, Lenovo, Tencent and other old technology companies have already been deployed in Mexico. Under the background of the tide of China's Internet going to sea, more and more Chinese enterprises will enter the Mexican market in the future.

International competitiveness of the digital economy

The scale of Mexico's digital economy is considerable, not only ranking among the top in Latin America, but also occupying a place among major countries in the world. However, it is relatively backward in some sub sectors of the digital economy. This section will combine overall and local perspectives to sort out Mexico's global and regional rankings in terms of digital economy volume, digital competitiveness, network connectivity, e-commerce maturity, technology and finance, comprehensively and objectively showcasing the country's position in the global digital economy.

According to the "Global Digital Economy White Paper" released by the China Academy of Information and Communications Technology, the scale of Mexico's digital economy reached 352.2 billion US dollars in 2020, ranking 11th among the 47 countries measured and 3rd among developing countries. Its scale is second only to China (5356.5 billion US dollars) and India (541.9 billion US dollars), ranking first in Latin America and leading second place Brazil by about 40 billion US dollars.

According to the 2022 World Digital Competitiveness Ranking released by the Lausanne Institute for International Management and Development in Switzerland, Mexico's digital competitiveness in 2022 ranks 55th among all 63 countries evaluated, one ahead of the previous year, and is lagging behind in the overall international ranking, the level of which is comparable to that of Jordan, Türkiye and the Philippines; Ranked third within Latin American countries, it lacks competitiveness compared to Chile (41st) and Brazil (52nd), but leads Peru, Argentina, Colombia, and Venezuela. The sub items of the ranking show that Mexico has significant room for improvement in areas such as technological development, banking and financial services, and cybersecurity.

The Network Readiness Index (NRI) is an authoritative ranking that evaluates the level of information technology development and the impact of information and communication technology on economic competitiveness in major economies worldwide. According to the 2021 Network Readiness Index released by the Portulans Institute, Mexico scored 52.57 points, ranking 59th out of 130 countries surveyed, slightly higher than the average levels of middle - and high-income countries (49.71 points) and the Americas region (50.62 points). In the Americas region, Mexico ranks 6th, behind Chile (44th), Uruguay (49th), Brazil (52nd), Costa Rica (56th), and Argentina (58th). In terms of sub items, Mexico ranks first in the world in e-commerce legislation, with outstanding performance in active mobile broadband users and high-tech exports (both ranked 8th). However, it lags behind significantly in rural digital payment usage and ICT service exports (ranked 114th and 129th respectively).

As the leader of Mexico's digital economy, e-commerce has developed rapidly, but according to the global B2C e-commerce index released by the United Nations Conference on Trade and Development (UNCTAD) to assess e-commerce maturity, Mexico ranked 93rd among 152 countries (China ranked 55th) in 2020, lagging behind Chile (59th), Brazil (62nd), Colombia (68th) and other Latin American countries, as well as Saudi Arabia (49th), Türkiye (57th), Indonesia (83rd) and other developing countries with similar GDP.

In terms of technology finance, Mexico ranks 32nd in Findexact's 2021 Global Technology Finance Ranking Report, but third in Latin America, behind Brazil (14th) and Uruguay (17th). The capital city of Mexico City ranks 49th in the global city rankings and 3rd within Latin America, lower than S ã o Paulo in Brazil (3rd) and Montevideo in Uruguay (44th).

Shortcomings and Prospects of the Three Digital Economies

At present, Mexico's digital economy is developing rapidly, with various industries thriving. However, there are also some issues that urgently need to be addressed, such as a large digital divide, lagging digitalization of small and medium-sized enterprises, difficulties in industrial digital transformation, and a shortage of high-quality talents. In addition, the current government's role in guiding and promoting the development of the digital economy is limited. The Mexican government only proposed a national digital development plan, the "2021-2024 National Digital Strategy," in September 2021, and the number of specific action plans is small, with insufficient financial support. Therefore, the Mexican government and business community need to work together to remove all obstacles as soon as possible, ensure the long-term healthy development of the digital economy, and make it an important growth pole for high-quality development of the national economy.

（1） The digital divide still needs to be bridged, and digital infrastructure is gradually improving

Although Mexico has a high level of internet penetration and rapid development in recent years, there is still a significant imbalance in development, with a large digital divide, urban-rural gap, interstate gap, and gap between different income groups. In 2021, the proportion of mobile phone usage among the population in Mexican cities was 82.8%, while in rural areas it was only 64.2%; The Internet population in urban areas accounted for 81.6%, 25.1 percentage points higher than that in rural areas. In terms of regional gap, the Internet penetration rate in the north is higher than that in the south as a whole. The average proportion of Internet users in all states nationwide is 75.6%. The proportion of Internet users in Mexico City, the capital, is as high as 88.3%, ranking first in the country, followed by Baja California (86.8%), which is far higher than Chiapas (46.1%), the last state. The difference between Sonora State (86.2%), which ranked first in the national household Internet penetration rate, and Chiapas State (30.8%), which ranked last, was 55.4 percentage points. In addition, only 13.5% of low-income people in Mexico use computers, far below the 71.2% penetration rate among high-income groups. The mobile phone usage rate of low-income groups (60.1%) is about 30 percentage points lower than that of high-income groups (90%).

It can be seen that the government still has much room for improvement in Internet connectivity, especially to narrow the urban-rural gap and regional gap. In recent years, the Mexican government has launched plans aimed at expanding the country's digital infrastructure beyond urban areas and underdeveloped states. According to Mexico's National Development Plan for 2019~2024 issued by the Lopez government, one of the pillars of the country's digital economy is to vigorously promote the construction of information infrastructure. It is planned to install wireless Internet nationwide, improve the Internet connectivity of roads, squares, hospitals, schools, communities and other public places, so as to promote the economic development of poor areas and improve social marginalization. In 2020, the Mexican Ministry of Communications and Transport released the "2020-2024 Communication and Transport Sector Plan", which clearly stated its goal in the field of communication is to expand the coverage and accessibility of postal, telecommunications, broadcasting and other services, focus on assisting the poor and vulnerable groups, improve people's digital skills, formulate reasonable public policies to promote the country's digital integration and technological development. According to the National Digital Strategy for 2021-2024, the government will take a series of actions to promote social digitization, including increasing the coverage of fiber optic networks and improving the quality of social services through technological means. At the practical level, the government has launched some specific plans, such as the Public Place Connection Plan for 2020~2021, which aims to provide 20642 key places across the country with access to the Internet. The State Power Commission has also launched the "All China Telecom and Internet" program to ensure people's right to access information and communication technology.

The development of 5G networks in Mexico is mainly due to fierce competition among telecommunications giants. From 2021 to 2022, telecom giants such as Telcel, AT&T, and Am é rica M ó vil have successively launched 5G networks in Mexico and continuously expanded their coverage, striving to establish advantages in the early stages of 5G deployment. Among them, Am é rica M ó vil has the fastest development speed. Since its official launch of 5G services in 18 cities in February 2022, it has expanded to 40 cities by June and plans to reach 120 cities by the end of the year. In addition to telecom operators, some mobile virtual operators such as Weex, FreedomPop, and Vasanta have also entered the market through third-party networks. In the future, the full development of the country's 5G network needs to overcome problems such as a small number of internet devices, high pricing of 5G spectrum, high communication tariffs, and a lack of comprehensive connectivity policies. According to Ericsson's prediction, by the end of 2022, there will be about 132 million mobile phones and Internet access in China, while 5G only accounts for 12.2% of the total active lines. In terms of spectrum pricing, the total value of the country's spectrum exceeds 213 billion pesos, while the rest of the world is only 116 billion pesos, which is unfavorable for the government, users, and operators. In response, domestic and foreign telecommunications operators will continue to increase investment in Mexico's 5G technology and fixed network infrastructure. The government is also vigorously developing the ICT industry. In the 2021-2024 National Digital Strategy, the Mexican government has identified information and communication technology as one of the core drivers of the country's digital transformation. With the collaboration of the public and private sectors, Mexico's digital infrastructure is bound to become increasingly sophisticated.

（2） The digital transformation of small and medium-sized enterprises needs to be accelerated

More than 99% of businesses in Mexico are small and medium-sized enterprises, contributing 42% of the country's GDP and 78% of employment, but with an average lifespan of no more than 8 years. The COVID-19 has brought devastating blows to numerous enterprises. Under the impact of the epidemic, more than one million small and medium-sized enterprises in Mexico have closed down. According to a survey by the National Bureau of Statistics, from May 2019 to July 2021, Mexico added 1.2 million new small and medium-sized enterprises, while 1.6 million went bankrupt. By year, there were 4.857 million small and medium-sized enterprises in China in 2019, creating 27 million jobs. In 2020 and 2021, the number of enterprises decreased by 8.1% and 8.2% respectively, and by 2021, the number had dropped to 4.46 million.

Under the impact of the epidemic, digital transformation has become the only way for small and medium-sized enterprises to overcome the crisis. The expansion of technology application scope and the promotion of digitalization process are the key to breaking through the current economic development dilemma. Digital tools can bring many benefits to small and medium-sized enterprises, such as improving communication efficiency and reducing transaction costs; Further integrate into the global market and reduce the cost of cross-border trade; Assist in obtaining financial resources and services, promote innovation in business models, etc. However, despite the increased acceptance of digital tools by businesses due to the pandemic, their popularity remains relatively low. In 2020, only 10% of small and medium-sized enterprises conducted online business. The survey data in 2019 shows that only 23.3% of Mexico's economic units were equipped with computers, 20.7% had Internet connections, and only 4.3% had online transactions. Although the Mexican government has implemented some measures to help SMEs access information technology and improve their digital level, and the private sector, including Rappi, Google, Microsoft, Meta, and BBVA, has also provided digital transformation services, there are still too many porridge to benefit all SMEs with transformation needs. In addition, due to differences in industries, resources, and employee education levels, the pandemic has widened the gap between different small and medium-sized enterprises. Enterprises that seize opportunities to achieve digital transformation are revitalized, while those lacking the drive for transformation are increasingly lagging behind.

In order to promote the use of digital tools, the government and enterprises have not only actively promoted the popularization of financial technology, but also implemented many plans to enhance the digital skills of the workforce, improve network connectivity, and formulate cybersecurity regulations. In addition, the USMCA has played a positive role in bridging the digital divide in Mexico. This agreement provides special support for the digital economy, small and medium-sized enterprises, and exports, creating development opportunities for small and medium-sized enterprises, improving the legal framework to ensure the safe operation of e-commerce, and creating an environment conducive to high-quality digital content, product, and service innovation. The continuously improving internal and external policy environment is expected to alleviate the economic burden on enterprises and accelerate their digital transformation process.

（3） The digital transformation of industry is a long and arduous task

As an important industrial country, although Mexico is the pioneer of industrial digital transformation in Latin America, it is still in a relatively backward position globally. The main obstacles it faces include lack of unified planning, shortage of professional talents, low Internet connectivity, and insufficient resources for SMEs.

Taking the automotive manufacturing industry as an example, it is one of the representative industries in Mexico's transition to Industry 4.0, but still lacks specialized talent to implement and develop cutting-edge technologies. Faced with lower labor costs, high transformation costs have weakened the digital transformation drive of many manufacturing enterprises, but the trend of transformation has strengthened since the outbreak of the pandemic. In 2022, the Lopez government finally released a policy document to promote the digital transformation process of the national industry.

Mexico has significant advantages in terms of geographical location, trade agreements, infrastructure, natural resources, and demographic dividends for industrial digital transformation. At present, industries undergoing rapid transformation include automotive and aerospace, pharmaceuticals, food and beverage, metallurgy, fast-moving consumer goods, chemical and electronic processing. The application of new technologies is beneficial for enterprises to reduce costs, improve efficiency and output, achieve mass customization, and develop new profit and business models.

With the gradual promotion of 5G networks, the competitiveness of Mexican industry will greatly improve, and key industries are expected to achieve exponential growth, bringing new business models to entrepreneurs, small and medium-sized enterprises, and startups. The transition to Industry 4.0 will also increase the productivity of Mexico's small and medium-sized enterprises by 30%. Currently, Mexico's automotive and aerospace industries are undergoing the fastest transformation. According to the Confederation of Mexican Chambers of Commerce (Concamin), 60% of the country's manufacturing factories can be digitized.

In September 2022, the Mexican Ministry of Economy proposed the "Towards Industrial Policy" strategy, aimed at achieving inclusive economic growth through technological upgrading, improving domestic scientific and technological levels, and strengthening human capital training. The four major axes of this strategy include innovation and technological trends, cultivating talents for the future, promoting regional connections between small and medium-sized enterprises, sustainable industry, and electrical and electronic, electric vehicles, which are listed as the five major strategic sectors. This strategy not only provides a clear action path for Mexico's industrial innovation and promotion of Industry 4.0, helping Mexico integrate into the global industrial development trend, but also injects new vitality into the country's digital economy development.