Creative Industries: The Mexico Advantage. Mexico in the World Mexico: A Strategic Partner for NAFTA s Creative Industries

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1 Mexico in the World Mexico: A Strategic Partner for NAFTA s Creative Industries The Lifestyle Feature Nature s Gifts to Mexico: 10 Natural Wonders Not to Be Missed Negocios para exportadores VIII Creative Industries: The Mexico Advantage

2 The government of Mexico has set out to transform our country based on five major national goals: to have a peaceful, inclusive, well-educated, prosperous and globally-responsible Mexico. In order to build the prosperous Mexico we long for, we must generate sustained high economic growth that results in more and better jobs that will improve the quality of life of our population. Mexico has a solid foundation on which to attain these goals: healthy public finances; a manageable debt level; a budget with no fiscal deficit; a responsible and autonomous monetary policy, as well as adequate international reserves. Our macroeconomic stability and institutional strength are enriched by a wide sociopolitical consensus that favors important transformations required to boost the development of our country. Through the Pact for Mexico, two constitutional reforms have been approved: one in education that will enhance the quality of teaching, and another in telecommunications, radio broadcasting and economic competition that will open up the sector and ensure competition throughout our economy. Furthermore, the Congress is analyzing a financial overhaul to increase the level of credit and make it more affordable. Mexico offers certainty and confidence to investments, a business climate favoring productivity and competitiveness, and an ambitious plan to further develop infrastructure. Moreover, the country s strategic geographic location and optimal legal framework for international trade, through a network of trade agreements with 44 countries, give us access to a potential market of over one billion people. Mexico s exceptional economic and geographic conditions, as well as the talent and quality of its human capital, make it the ideal destination for new productive capital to flourish. This is the time to invest in Mexico. Investors will find the government of Mexico and ProMéxico to be allies committed to the success of projects that create quality jobs and prosperity for the country. Enrique Peña Nieto President of Mexico

3 Table of Contents Mexico in the World Mexico: A Strategic Partner for NAFTA s Creative Industries Guest Opinion Film in Mexico: An Industry with a Golden Future Negocios Report The National Strategy for the Film and Audiovisual Industry: A Road Map to the Future 26 Guest Opinion Creative Intelligence: Design as an Agent for Change in Mexico The Lifestyle The Complete Guide to the Mexican Way of Life COVER FEATURE Creative Industries: The Mexico Advantage 50 The Lifestyle Briefs Special Feature Turkey and Mexico as Priority Partners: Trade Diversification and Emerging Markets in Asia 6 5 From ProMéxico Briefs Business Tips The Relevance of the Creative Industries in Mexico figures Special Report 10 Entia 12 Biaani Mexico s Partner 28 UDCI 30 Boxel 32 Astrolol 34 Gran Tiki Games 36 Motion Control 38 Don Porfirio 40 Machete Producciones 42 Baja Studios 44 Redrum photo courtesy of estebán hernández photos archive 54 When I dance, I am reliving my whole life Interview with Esteban Hernández The Strains of Mexico the Whole World is Singing photo eugenio cau 57 Mexico, a Home Away from Home 66 Nelson Vargas, Poseidon of Mexico s Swimming Pools 60 Nature s Gifts to Mexico: 10 Natural Wonders Not to Be Missed

4 Para exportadores ProMéxico Francisco N. González Díaz CEO Karla Mawcinitt Bueno Image and Communications General Coordinator Sebastián Escalante Director of Publications and Content Advertising Natalia Herrero Copy Editing From proméxico. fotos archivo foto archivo 78 Desde ProMéxico Una bebida de México para el mundo. ProMéxico y las empresas exportadoras de tequila La franquicia como modelo de crecimiento: lecciones de México 71 La Alianza del Pacífico a ojos de México breves Download the PDF version and read the interactive edition of Negocios ProMéxico at: negocios.promexico.gob.mx This publication is not for sale. Its sale and commercial distribution are forbidden. Negocios ProMéxico es una publicación mensual editada en inglés por Pro- México, Camino a Santa Teresa número 1679, colonia Jardines del Pedregal, Delegación Álvaro Obregón, C.P , México, D.F. Teléfono: (52) Página Web: Correo electrónico: negocios@promexico.gob.mx Editor responsable: Gabriel Sebastián Escalante Bañuelos. Reserva de derechos al uso exclusivo No Licitud de título: Licitud de contenido: 12032, ambos otorgados por la Comisión Calificadora de Publicaciones y Revistas Ilustradas de la Secretaría de Gobernación. ISSN: Negocios ProMéxico año 6, número VIII, agosto 2013, se terminó de imprimir el 9 de agosto de 2013, con un tiraje de 13,000 ejemplares. Impresa por Cía. Impresora El Universal, S.A. de C.V. Las opiniones expresadas por los autores no reflejan necesariamente la postura del editor de la publicación. Queda estrictamente prohibida la reproducción total o parcial de los contenidos e imágenes de la publicación, sin previa autorización de ProMéxico. Publicación Gratuita. Está prohibida su venta y distribución comercial. ProMéxico is not responsible for inaccurate information or omissions that might exist in the information provided by the participant companies nor of their economic solvency. The institution might or might not agree with an author s statements; therefore the responsibility of each text falls on the writers, not on the institution, except when it states otherwise. Although this magazine verifies all the information printed on its pages, it will not accept responsibility derived from any omissions, inaccuracies or mistakes.. Creativity has always been a key component of the Mexican culture. Thus, our human capital is enriched with two extremely powerful features: talent and innovation. These features have been responsible for boosting the growth of Mexico s creative industries including video game development, digital animation, and film and television production, amongst others, making them absolute box-office hits on a global scale. We have great news to share with you on this field. First of all, since the IT sector is a cornerstone for the creative industries, we are glad to announce that we will be the next venue of the World Congress on Information Technology in This congress is the world s greatest international IT event and hopefully will open new opportunities for Mexico s global alliances in the creative industries. We are also working hard to create a Digital Creative City in Guadalajara, with the aim of boosting the creative industries in Mexico. This project will be the first of its kind in Latin America and could be described as a global hub for digital media development, within a world-class technology environment. In terms of digital content development, the country ranks as one of the most competitive places in the globe. It stands out as the sixth largest exporter of new media. Furthermore, Mexico is the most competitive destination in the Americas for software design, video games and digital entertainment. Regarding the film industry, Mexico is home to one of the biggest markets worldwide. Both local and foreign film productions have prospered in Mexico thanks to the country s highly-recognized talent, competitive costs, scenic variety, proximity to international key markets, as well as the public policies and incentives that the Mexican government has granted to the creative industries. Mexican film entertainment products are exported to over 100 countries. More specifically, Mexico is poised to become a global leader in the production of material for the Spanish-speaking market, given the increasing need for specialized content that better supplies this fast-growing segment. Today, Mexican human capital with its talent and innovation capabilities is available for anyone seeking to succeed in the ever more profitable creative industries, as a platform which grants the necessary tools to develop highly-innovative global projects which are based on creativity. Welcome to Negocios! Francisco N. González Díaz CEO ProMéxico

5 BRIEFS BRIEFS LOGISTICS Vanguard logistic services MANUFACTURING BUILDING GROWTH BRICK BY BRICK Multinational port operating giant Hutchison Port Holdings (HPH) will invest 1.5 million usd to improve logistical capabilities at the port of Ensenada on Mexico s northwestern coast. Upgrades include the installation of a new container crane that boosts capacity while reducing carbon emissions. Danish toymaker Lego will invest 125 million usd to expand production capacity at its manufacturing plant in the northern state of Nuevo León. Lego has experienced double-digit sales growth in Mexico in recent years. CONSUMER GOODS MANUFACTURING IN THE BORDER British consumer goods manufacturer Reckitt Benckiser will invest 10 million usd to open a new production facility in the northern border city of Tijuana, Baja California. The company currently has operations in Monterrey, Guadalajara, Tijuana, Mérida and Mexico City. photo courtesy of lego IT EXPANDED NETWORK Mexican IT services provider RedIT will invest 12 million usd to extend its fiber optic network in key growth areas such as the cities of Guadalajara, Monterrey, Querétaro, Tijuana and Toluca. RedIT offers services such as data centers, fiber optic networks and IT infrastructure management. CHEMICAL DUPONT EXPANDS ITS titanium dioxide PLANT US chemicals giant DuPont will invest 500 million usd to increase operating capacity at its production plant in the northeastern state of Tamaulipas. The major expansion is aimed at making the site the world s second largest producer of titanium dioxide. photo courtesy of 3m MANUFACTURING 3M: A SOLID LONG-TERM BET US-based diversified manufacturing multinational 3M will invest 400 million usd in its Mexico operations over the next five years. Projects include expanded output of products for the health, automotive and telecommunications industries at the company s plant in the northeastern state of San Luis Potosí. METALLURGICAL AHMSA S NEW FACILITY Mexican steel maker Altos Hornos de México (AHMSA) inaugurated a major new production plant in the northern state of Coahuila. The massive 2.3 billion usd facility will produce specialized steel plate for the automotive, railroad and energy industries, among others. photo pedro pérez garcía

6 BRIEFS BRIEFS AUTOMOTIVE MAGNA, ADDING MANUFACTURING CAPACITY Canadian auto parts manufacturer Magna International will invest 100 million usd to build three production facilities in the northern state of Coahuila. The added capacity is slated to produce auto seats for export and suspensions for domestic OEMs. ELECTRONIC sumitomo makes itself at home in mexico Japanese electronics manufacturer Sumitomo Electric Wiring Systems will invest approximately 19 million usd to build a new distribution center in the northern state of Coahuila. The site will be used to concentrate and distribute imported inputs for the company s two electrical components plants in the region. AUTOMOTIVE PHARMACEUTICAL GRUPO SOMAR, LEADER IN LATIN AMERICA photo courtesy of embraco higuchi s new manufacturing plant Japanese automotive parts manufacturer Higuchi Manufacturing will build a new production plant in the northern state of Coahuila. The 3.5 million usd facility is planned to produce components for safety belts and air bags. MANUFACTURING COOLING INVESTMENT Brazilian industrial manufacturer Embraco will invest up to 60 million usd to expand production capacity at its Mexico plant in the northeastern state of Nuevo León. Resources are targeted to boost output of refrigeration compressors and initiate production of next-generation compressor technology. Mexican pharmaceutical manufacturer Somar will invest approximately 50 million usd to install a plant with plasma fractionation capabilities outside Mexico City. According to the company, the new facility will be the largest of its type in Latin America. AUTOMOTIVE a Business as SMOOTH AS LEATHER US-based automotive leather producer Eagle Ottawa initiated operations at a new 40 million usd production plant in the central state of Guanajuato Mexico s leather working heartland. photo courtesy of somar

7 Negocios ProMéxico Special Report Special Report Negocios ProMéxico process, which was too long as it involved speaking to every stakeholder in the project to create an offer suitable for everyone. We decided to turn the process around: instead of visiting the customer for eight months to speak to all the stakeholders in a software development project, we could bring them all to the office and in five or six hours when they could freely contradict each other, reach an agreement to everyone s liking he reveals. The challenge was to present it so that it appealed to all the project s players within a corporation, take them out of their everyday context and get them planning. That was how they came up with playful techniques to complete a process they call collaborative design. That new method increased the chances of closing a sale significantly but there came a time when this collaborative design in itself became a service appealing enough to leave software development behind. We saw clearly how people got excited about presenting their ideas and discussing their software project and we realized that the service itself of getting them together to think was very valuable, affirms González. Using several methodologies and dynamics Lego, team building, nominal groups and other dynamics the group designed a strategy that was no longer called Innocamp, since it was no longer a oneday camp but had become an approach that required from three to six weeks. That was how Entia came to life in January 2013, a company whose only product is Active Action, a strategic design process for high-value software projects. The method has seven stages, from meeting the project stakeholders, to contacting potential developers, suppliers and investors, including follow-up, at the client s request. We became talent integrators. That is what we do to generate high-value projects, boasts González. Close to 70% of the projects designed with that approach have been successful, says González. And while close to 30% of them have been cancelled during the process, it is not seen as a failure since, when a customer realizes that creating new software is not a viable option, it just means that Entia s methodology has been effective. It is a success to us. If the project is declared unfeasible, we have saved the business a lot of money, says González. Entia no longer employs developers or marketers. However, they create value in follow-up and in hiring the person who will lead the project. We decided to stay away from specific solutions and act as neutral technology consultants, explains González. Often, at the end of the process, the recommendation is not to develop new technology but to use existing resources such as cloud hosting services. We have been looking at many types of technology for so long that we discovered that if a percentage of the solution is already there, we don t have to develop it that would be like reinventing the wheel. Instead, we guide and, at most, integrate the existing services. That automatically reduces project costs dramatically, says González. Entia s work is novel in one segment. While large consulting firms do similar work with industry giants, Entia has been able to reach small and medium-sized businesses (SMBs) that had no access to strategic design services. The company is currently headquartered in Guadalajara but by the close of 2013 will reach Monterrey and Mexico City two of the country s largest cities and plans to open an office in Central America within three years. N The Adventure of Software Design Entia has devised a new method called Active Action that enables companies to design the software project that best fits their needs. by karla garduño If software were a building, Entia would be the team of architects that listens to and guides users to define the best project for their needs. But that is not all: Entia would also find the best builders, carpenters, forgers, painters and plumbers to build it as efficiently as possible. Depending on the build of a house, the modernity, we bring in experts from multiple disciplines to make the most cost-effective project, says Juan Carlos González, CEO of the company created in early Entia was born from Innox, a small software development firm that was founded by four partners in 2003 in an office that did not look like an office and a house that did not look like a house, recalls González. We started growing and by 2008 we were 70 developers, he adds. With the arrival of new competitors from countries such as India, the international software development market began to lower its prices, so Entia s partners decided to change the focus of their business. We created a service called Innocamp, which basically meant bringing customers in with their entire work team to design their software project, he explains. Innocamp emerged as part of the company s sales ACTIVE ACTION, The Method 1. Pre-Day. The program for the day is to find out the customer s goals and plans to achieve them. 2. Intensive Day. For 12 hours, the client s team is taken out of its regular routine by the experts to discover, identify and design the technology project that will enable them to reach their vision using diverse techniques. 3. Post-Day. The information generated in the Intensive Day is analyzed to design and document the set of solutions that will enable the company to reach its goals. 4. Action Day. Alternative solutions are presented that align with expectations so that the client can make the decision to launch his/her project. 5. Meeting Day. Once the project is designed, a work day is organized for the client to meet the work teams proposed by Entia. 6. Team-up Day. The project leader is recruited and prepared. 7. Follow-up Day. Periodical meetings are held to follow-up on the project and ensure its success

8 Negocios ProMéxico Special Report photos courtesy of biaani Special Report Negocios ProMéxico Biaani: Technology Applied to Business and Health Four years after its foundation, this Mexican company offers both technology solutions to small and mediumsized businesses (SMBs) and mobile device applications that measure a user s health status. by antonio vázquez In Zapoteca language, biaani means light, clarity and wisdom. These three concepts were the inspiration for the Mexican entrepreneurs that created Biaani, a company devoted to the development of technology solutions, which has been recognized with national and international accolades. In 2009, Biaani appeared as a business that offered mobile technology development to its customers. The firm s applications gave customers access to their information from anywhere in the world, without the need for a server. We saw that developing web applications for corporations was our biggest strength. We approached several institutions such as the Mexico-US Science Foundation (FUMEC) and we decided to not only perfect these applications but also to get involved in creating others for the health sector, says Enrique López Muñoz, CEO of Biaani. Since completing its first products, Biaani has created Walk-Biz, an application for SMB owners, and Zabani, a mobile device application (Apple ios and Android) to monitor a user s quality of sleep. Enrique López Muñoz explains that Walk-Biz is software for handling a company s institutional information, its services and products and any type of data. Users can manage their own accounts from a web page and update their information whenever they want. According to information by Biaani, 38% of Internet searches made through a smartphone are related to products and services, while 66% of cell phone users in Mexico have downloaded some mobile application in Since completing its first products, Biaani has created Walk- Biz, an application for SMB owners, and Zabani, a mobile device application (Apple ios and Android) to monitor a user s quality of sleep. the last two years. Furthermore, 26% of smartphone owners have made purchases from their devices and 33% have said they will do so in the future. Based on that information, it is estimated that in the medium term, five out of every 10 smartphone owners will make transactions, purchases and product and service searches from their devices. We have always worked with solutions aimed at SMBs, to enable them to have their own applications. This is a big sector where online sales are increasing through mobile devices and tablets, which today are sold far more than desktops, states López Muñoz. Biaani s application for SMBs is easy, integrative, quick and affordable. Walk- Biz buyers do not require any knowledge of programming or design to create their own application using the platform. Owners who get an application using Walk-Biz will have the advantage of offering other cybernauts information about their business, as well as their products and services, which can be downloaded from any cell phone or tablet. As for Zabani, López Muñoz claims that it is Biaani s venture into the health sector. We decided to propose something in health and we used Zabani to participate in Vancouver, Canada, through a program by FUMEC called Technologies Business Accelerator (TechBA). The application monitors and analyzes users sleep patterns and, based on that information, determines if the individual is at risk of suffering some sleep-related disease, says López Muñoz. Zabani was introduced in Canada in It won an award to creativity as part of TechBA and with it, Biaani received the feedback it needed to position its application internationally. Zabani will be available for the most popular platforms Apple, Android and for the Nokia S40 family of phones, of which close to 1 million units are sold daily around the world. The application captures sounds through the device s microphone during the night and subsequently analyzes the sleep patterns and makes a diagnosis that can be sent to a doctor to determine if the patient suffers from a disease. According to some companies, by 2017 the mobile healthcare market will be worth 23 billion usd. Such an application offers savings in distances, time and cost, since a doctor can check up on a patient even if he or she is hundreds of miles away, clarifies López Muñoz, pointing out that one of Biaani s advantages over its competitors is Mexico s geographic location, closeness to the US, national technology talent and low production costs. Biaani s CEO adds that in the future, the firm plans to improve and consolidate its applications for SMB customers. Without a doubt, product development for these business owners will be the company s strongest area. We want to mature in that aspect and continue growing with Walk-Biz and Zabani, he concludes. N

9 Negocios ProMéxico Cover Feature A Creative Opportunity Latin America is one of the world s fastest growing media markets and Mexico is a leading force in the digital audiovisual production renaissance in the region. The country s creative industries are transforming their business and production models and evolving with the advent of new technologies and consumer trends, which range from cinema and TV production all the way to digital animation, special effects (VFX), video game and multimedia development. As a result, the national media landscape has registered rapid growth in recent years, placing Mexico at the forefront of the digital, cultural and entertainment revolution of the Spanish language and establishing it as the Matrix of the Spanish Digital Wave. The need for specialized content that better caters the Spanish language market, along with the search of strategic partners for global media companies based primarily in North America and Europe, has prompted increasing interest in the region. Given Mexico s highly recognized talent, as well as its extremely competitive costs, international quality standard infrastructure, natural wonders, world renowned hospitality, great local market, proximity to key international markets and generous incentives, the country has become, now more than ever, the most attractive production destination on the globe, with unmatched financial, logistic, human capital and geographic advantages. Mexico s audiovisual and interactive industry is committed to the development of intellectual property for the digital screen in any platform. Strategically located, neighborillustrations oldemar Cover Feature Negocios ProMéxico Creative Industries: The Mexico Advantage Mexico is poised to become a global leader in the production of content for the Spanish speaking market. With an unprecedented convergence of perfectly aligned conditions and a clear industry strategy oriented to that end, the country is taking firm steps in the pursuance of its destiny of leadership. by mariana larragoiti kolkmeyer* ing the most important market in the world the US and gateway to Latin America and the Pacific Rim regions, business culture affinity, an integral government support platform, quality of life, industry-tailored incentives and highly competitive costs are some of the elements that factor into the Mexico advantage. The Mexican Audiovisual Industry and the Age of Spanish Content Mexico is one of the most important consumer markets and the gateway to the highest growing markets in the globe: The creative industries in Mexico contribute up to 7% of the Gross Domestic Product (GDP) of the national economy. According to figures taken from the Creative Economy Report 2010 of the United Nations Conference on Trade and Development (UNCTAD), Mexico exported 5,167 million usd of creative goods and services and it is the largest exporter of Latin America, followed by Brazil, which exported 1,222 million usd. In fact, Mexico exports more than Latin America and the Caribbean combined. Mexican audiovisual content is currently being watched by over 1 billion people around the globe in more than 10 languages. Latin America is one of the fastest growing consumer regions and Mexico is one of the most important markets in the world. In 2012, the media sector in Mexico recorded over 15,500 million usd in sales. The sector includes advertising, broadcast television, cable television, and film marketing. Mexico is ranked among the 15 main video game markets worldwide and it is the first in Latin America with almost 50% of the sales of the region, equivalent to 893 million usd during According to information from Mexico s Ministry of Public Education (SEP), over 110,000 engineering and technology-related students graduate in the country each year. Mexico is the ninth global hub of information technology (IT) resources and America s most important technology talent pool. The country s audiovisual production and development costs are very competitive. According to KPMG, Mexico is 37.7% and 38.9% more cost competitive than the US in terms of software development and digital entertainment, respectively. The Spanish speaking population is one of the fastest growing segments in the world, especially in the US. Mexico is not only a prime 14 15

10 Negocios ProMéxico Cover Feature Cover Feature Negocios ProMéxico According to figures taken from the Creative Economy Report 2010 of the United Nations Conference on Trade and Development (UNCTAD), Mexico exported 5,167 million usd of creative goods and services and it is the largest exporter of Latin America, followed by Brazil, which exported 1,222 million usd. In fact, Mexico exports more than Latin America and the Caribbean combined. market for entertainment products but also an ideal platform to create Spanish language content, since the country can be both a test market and a development center for products that target the increasingly important and influential Spanish speaking market. Said market constitutes a huge community that shares products, services and culture, a situation that offers businesses and institutions a truly unique growth opportunity. Here are some important facts regarding the Spanish language: Spanish, the official language in 21 countries, is the third most widely spoken language in the world, after English and Mandarin. More than 400 million people speak Spanish worldwide. Experts predict that by 2050 there will be 530 million Spanish speakers, of which 100 million will be living in the US. The demand for quality Spanish content nationwide has been fueled, in part, by the Hispanic media market explosion led by TV advertising at a national and network level, which has seen growth of nearly 74% in recent years. For the aforementioned reasons, as well as Mexico s potential to become the global production leader of these industries, the Mexican government is working on the implementation of an integral strategy for its development and improvement, where the attraction, generation and retention of talent play an essential role. Program for High-impact Audiovisual Production Having identified the creative industries as a priority sector for the Mexican economy, the government embarked upon a strategy designed to enhance the country s cost effective competitiveness to boost the audiovisual production platform and to promote export services and investment in the industry by strengthening Mexico s position as a preferred production destination. As part of its strategy for the sector, in March 2010, the Mexican government launched the Support Program for High-impact Audiovisual Production (ProAV), which comprises a dedicated government service platform for audiovisual production and includes an industry incentive. ProAV grants foreign and local audiovisual productions with an incentive of up to 7.5% on the whole of eligible expenses incurred and invoiced in Mexico, whose minimum total is equal or larger than 40 million pesos (approximately million usd) of expenses in production or 10 million pesos (approximately 780,865 usd) in post-production costs (VFX), animation and video games or digital interactive. Mexico is not only a prime market for entertainment products but also an ideal platform to create Spanish language content, since the country can be both a test market and a development center for products that target the increasingly important and influential Spanish speaking market. The policies of ProAV are very flexible in terms of eligible costs; the only requirement is to back the expenses with authorized fiscal invoices. Practically any expense incurred in Mexico related to the production and post-production of an audiovisual production is contemplated. As an additional advantage, producers can now have access to the ProAV Program benefit through a bundle mode, which allows a single production company to apply for the incentive with a production portfolio of projects for set/ location shoot or digital post-production. Digital Creative City Digital Creative City (DCC) is an exciting new project that will create a hub for the digital media industry within Mexico from TV, cinema and advertising to video games, digital animation, interactive multimedia and e- learning. DCC will be located in Guadalajara, the country s second largest city and home to Mexico s Silicon Valley. DCC aims to attract Mexican and international creative minds to develop new digital media content. The project will advance Mexico s natural position as a global creative leader while pushing the boundaries of sustainable urban development. In short, DCC will stand out as a new model to be replicated across the country and Latin America. In November 2012, the Mexican Ministry of Economy (SE) formally presented the DCC Master Plan developed by a team of world renowned urban development specialists, such as the Massachusetts Institute of Technology (MIT), Sensible City Lab (MIT) Carlo Ratti Associati, Metropolis Foundation, Accenture Mobility in Chain and ARUP. The Plan has been launched and has already begun work in the first urban interventions. In addition, before the end of 2013, DCC will formally announce the investment committed by its first anchor international digital media company. With the launch of DCC, Mexico will reap the following benefits: A planned contribution to the national GDP of 3.5 trillion usd by Increased Foreign Direct Investment (FDI) estimated at between 1.8 and 4.9 billion usd over 10 years. Creation of 31,000 jobs (19,000 direct, 8,000 indirect and 3,500 induced). Creativity Focuses on Mexico In recent years, Hollywood and many powerful audiovisual production giants have tried to play the game with China but abrupt changes in their market s rules of engagement and deep business culture differences have made producers fix their vision in the rapidly growing and increasingly influential Spanish language market. Mexico appears as the natural gateway to that profitable segment, not only in Spanish speaking countries but also, most importantly, in the US. Today, creativity has set its sights on Mexico, an interest that, given the growth potential of the creative industries in the country, will surely pay off in the years to come. N *Director of Innovation, Business Intelligence Unit (UIN), ProMéxico

11 Negocios ProMéxico Business Tips Business Tips Negocios ProMéxico The Relevance of the Creative Industries in Mexico The creative economy has become a source of development and growth. Mexico is the top creative economy in Latin America, sixth among developing countries and 18th worldwide. The country is fertile ground for new business opportunities in this field. by maría cristina rosas* The United Nations Educational, Scientific and Cultural Organization (UNES- CO) states that creative industries are an increasingly relevant component of knowledge-based, post-industrial economies. These industries contribute to economic growth and job creation and are vehicles for the transfer of cultural identity. The growing interest in the industry has implied the proliferation of analyses, statistics, mappings and studies on the relationship between the creative industries and economic development, providing legislator bodies in several countries the necessary data and information to create public policies. The concept of creative economy was introduced in 2001 by John Howkins a journalist and consultant for over 30 countries around the world including Australia, Canada, China, France, Greece, India, Italy, Japan, Poland, Singapore, United Kingdom and the US. During an interview with the World Intellectual Property Organization (WIPO), Howkins explained that a creative economy is an economy where the major inputs and outputs are ideas [ ] where most people spend a significant amount of their time in having ideas. It s an economy or society where people are concerned with their capacity to think and have an idea [ ] It s where people, at any stage talking to their friends, having a glass of wine, waking up at 4 o clock in the morning think they can come up with an idea that actually works, not just an idea with some sort of esoteric pleasure but the driver of their career and their thoughts of status and their thoughts of identity. [Therefore] the creative economy consists of the transactions in (the resulting) creative products. Each transaction may have two complementary values: the value of the intangible, intellectual property and the value of the physical carrier or platform (if any). In some industries, such as digital software, the intellectual property value is higher. In others, such as art, the unit cost of the physical object is higher. Howkins refers to a creativity-based production model, however redundant it may seem, with proposals that go beyond established patterns. The creative economy operates differently than the traditional industrial economy which shows a rigid and hierarchical behavior that is clearly divided into the stages of origination, production, distribution and consumption. In contrast, there is more flexibility in a creative economy, particularly in the phases of origination, distribution and consumption. Howkins considers 15 industries in the concept of creative economy, ranging from arts to the wide fields of science and technology. These industries, technologies and/or sciences include art (painting, for example); crafts; design; fashion; film; music; performing arts (theater, opera, dance and ballet); editing and publishing (books and magazines); research and development; computer programs; toys and games, excluding video games; television and radio; video games; architecture and advertising. The common denominator between all these industries is creativity, which is both their raw material and their most valuable economic product. In other words, for a product or service to be considered a byproduct of the creative economy, it has to be the result of creativity as well as have economic value. However, Howkins acknowledges the difficulties of quantifying the economic value of creativity, which is why there are only a few estimates. Thus, according to the United Nations Conference on Trade and Development (UNCTAD), that has published a report on creative economies since 2008, global exports of creative goods and services doubled between 2002 and 2008, reaching 592 billion usd in 2008 with an annual growth rate of approximately 14%. Creative economy is positive for developing countries which always struggle to access international markets in the traditional branches of economy. For instance, in 2008, developing countries exported goods and services for around 176 billion usd, 43% of total trade in the world s creative industries that year. That contrasts against the severe contraction of global trade in the same year, which was 12%. The creative economy can be an option for growth, even a means to reduce poverty in developing countries amid the prevailing international economic crisis. There are many companies in Mexico that offer cultural, audiovisual and entertainment services. For instance, in 2006, the television content distribution market earned approximately 167 billion usd and is expected to reach 251 billion in Mexico and the Creative Industries Mexico is the top creative economy in Latin America, sixth among developing countries and 18th worldwide. According to Pro- México, Mexico s trade agency, creative industries rank fifth among the country s strategic sectors, behind only the aerospace, agricultural, food and automotive sectors. There are many companies in Mexico that offer cultural, audiovisual and entertainment services. For instance, in 2006, the television content distribution market earned approximately 167 billion usd and is expected to reach 251 billion in The advertising market is significant as well, especially considering that it was valued at 479 billion in 2008, with television recording the largest share. Of Mexico s creative industries, design is the most important component, accounting for 73%, followed by publishing (9.8%), music (5.8%), arts and crafts (5.2%), visual arts (4.6%), new media (1.5%) and audiovisual products (0.3%). Other sectors are very promising in terms of development, such as jewelry the country is the leading silver producer in the world fashion, leather and shoes, decoration and furniture. One sector experiencing a sweet spot, thanks to tax incentives provided by the Mexican government, is film close to 70 films have been produced. Furthermore, due to the recent boom in the industry, some 30,000 jobs that are directly linked to film production have been created. According to the 2012 Statistical Yearbook for Mexican Cinema, 67 Mexican films premiered in national theaters and a total of 112 films were produced, of which 63% received government support. It is important to note that in 2012, 36 Mexican films produced with government support received a total of 66 awards in international film events. With regard to digital industries, the use of information technology is ever expanding and will have an effect on creativity and the competitiveness of the Mexican economy, particularly in trade, cultural and social activities. Also of special interest is that Mexican laws are being adapted to recognize and stimulate projects pertaining to the creative industries, opening a window of opportunity for investors. N *Professor and researcher in the Political and Social Sciences Faculty, National Autonomous University of Mexico (UNAM)

12 Negocios ProMéxico Mexico in the World Mexico in the World Negocios ProMéxico Mexico: A Strategic Partner for NAFTA s Creative Industries Thanks to its infrastructure, state of the art technology, scenic variety, experience, highly skilled human capital and internationally recognized talent, Mexico is an ideal location for the creative industries in North America. by josé antonio peral* The creative industries can be defined as those that are based on individual creativity, skills and talent that combined create value through the generation and exploitation of intellectual property. They are composed of the film, television, video game, animation and multimedia sectors. According to the study Global Entertainment and Media Outlook , carried out by consulting firm PricewaterhouseCoopers (PwC), the global entertainment and media market was worth over 1.35 trillion usd in 2008 and it is forecast to rise to approximately 1.6 trillion usd by As the knowledge versus industrial economy continues to grow, creative industries become more essential, since they increase the knowledge-based job creation engine, preparing workers for a digital future that relies on creativity rather than physical work. Creative industries also represent a significant part of many countries Gross Domestic Product (GDP), as nations around the globe recognize the importance of the sector to their future economic growth. For countries such as the US and Canada, innovation is the key to continue growing in different industries, including the creative ones. In the US, the creative industries have two major influences: one cultural for example Hollywood, sports championships and world recognized toys the other technological innovation carried out by companies like Google, Microsoft and Facebook, among others. In short, the creative industries have become one of the largest, most dynamic and profitable sectors in the US. For Canada, creative industries are the backbone of the country s innovation and faster economic growth. According to a report by the Ontario Entertainment and Creative Cluster, only the province of Ontario is among North America s top entertainment and media economies, ranking third in employment just behind California and New York. It is among the world s highest revenue generating creative clusters and has the potential to surpass its current status and place at the top of the second tier of media economies. However, that growth and specialization requires the combination of different skills, talent and experience. Ontario s six cultural industries need global partners to reach the potential growth that is compulsory for the sector. The province s six cultural industries are: video production (film, TV, mobile and online), music recording and publishing, commercial theater, interactive digital media (including mobile content), magazine publishing and book publishing. In the case of Mexico, the country is an ideal location for the creative industries thanks to its infrastructure, state of the art technology, scenic variety, experience, highly skilled human capital and internationally recognized talent. In that sense, Mexico represents the perfect ally for Canada to create a synergy as well as develop a strategic partnership to reach its true potential and competitive level for projects in the North American Free Trade Agreement (NAFTA) region and other countries. Over the past 20 years, Mexico has experienced a steady and stable growth in its economy due to its openness to international business, which, in turn, has led it to be ranked as one of the top three emerging markets. With an estimated population of 116 million people, a large and growing middle class, and an average of 100,000 engineering and technology students graduating every year, Mexico is a significant potential consumer market and, more importantly, a potential business partner for any company within the creative industries sector. Mexico has succeeded in the creative industries by implementing a partner business mentality as opposed to a competitor business mentality, with the objective of complementing existing firms to better consolidate the North American market and to make it more competitive regarding global standards. According to KPMG s Guide to International Business Location Costs 2012, in terms of costs Mexico is 37.7% more competitive in the area of software design and 38.9% in digital entertainment compared to the US. What the country offers through renowned companies like Baja Film Studios (world s largest sets and aquatic stage) and Estudios Churubusco, among others, are potential partnerships to enhance the creative industries productions while offering competitive costs, in order to strengthen the sector in the continent. To date, both the Canadian and the US film industries have chosen Mexico as their partner for their cinematographic projects, in comparison to the other sectors that make up the creative industries. Both nations film industries have produced several award-winning films which were filmed in Mexico. That serves as an excellent example as to how the cooperation between the NAFTA countries can lead to even greater success when Canadian and American knowhow are combined with Mexican talent. Synergies such as that have boosted the development of Mexico s creative industries exponentially and resulted in the creation of highly innovative projects i.e. the planning and current building of the Digital Creative City in Guadalajara, Jalisco. That city is destined to house several creative industry global giants and to become a hub in which animation, software, technological clusters, film and video game companies can develop projects not only for Latin America but also for the global market. In the meantime, however, the remaining sectors in both the US and Canadian creative industries should not lose the opportunity to expand into the Mexican market via the tropicalization of their products. After all, since Mexico offers highly skilled talent in these kinds of processes, all three countries would be creating an initial win-win partnership that will grow into something greater and will provide the necessary tools to pursue highly ambitious projects in the long run. What is more, all of the above comes to show that a strategic partnership between NAFTA companies will create greater competitiveness against non- NAFTA countries for projects within the region, which is the best alternative NAFTA has to contend with other foreign companies. N *Trade Commissioner of the ProMéxico office in Chicago, United States of America. Mexico has succeeded in the creative industries by implementing a partner business mentality as opposed to a competitor business mentality, with the objective of complementing existing firms to better consolidate the North American market and to make it more competitive regarding global standards

13 Negocios ProMéxico Guest Opinion Guest Opinion Negocios ProMéxico Film in Mexico: An Industry with a Golden Future Mexico s geographical diversity and natural, architectural and cultural wealth, the abundance of quality infrastructure and technical equipment, along with the country s creative and artistic talent, have made it a natural set for the film industry. by giselle otero osornio and luis esteban muñiz* The golden age of cinema in Mexico was of huge importance for the country s film industry. It was a period of great social, political and cultural unrest not only in Mexico but also around the world. The Second World War was ravaging Europe and Asia. The US was dedicating most of its resources to the arms trade. In that context, the Mexican film industry encountered an opportunity to offer the world something other than the products of war. Between 1936 and 1945 there appeared films such as Allá en el Rancho Grande by Fernando Fuentes, Ahí está el detalle by Juan Bustillo Oro and Salón México by Emilio Fernández, which are now classics of Mexican and world cinema. Major Hollywood studios have shot films in Mexico that have been box office hits not only in the US but across the globe, thanks to the geographical, artistic and economic benefits the country offers. For example, the film Titanic by James Cameron was produced by Twentieth Century Fox s recently built Baja Film Studios (1996) (located in Rosarito, Baja California). The complex is home to the largest aquatic studio in the world and has been the set for shooting other films such as 007: Tomorrow Never Dies by John Richardson and Metro-Goldwyn-Mayer (MGM) and Deep Blue Sea by Renny Harlin and Warner Brothers (WB). Foreign directors have discovered that Mexico is a paradise for filmmaking with attractive locations and incomparable talent. Furthermore, in recent years agreements and incentives have been established to support the growth of the film industry in Mexico, leading to the development of new opportunities to facilitate the production of films in the country. The number and variety of incentives offered in Mexico has evolved to the extent ema are the number, quality and variety of its locations, together with the existing facilities for obtaining a range of discounts in goods and services from state and municipal governments. Support is also offered in obtaining filming permits and the transport and set-up of operations, to name but a few. International film productions have seized the countless opportunities offered by that range of advantages. Neil Blomkamp s Elysium received support from the ProAV fund, as did the film Colombiana by Olivier Megaton. Turning to Mexican cinema, key films include Amores Perros by Alejandro González Iñarritú and Y tu máma también by Alfonso Cuarón, while a number of film- that, together with financial and tax benefits, comparative advantages are also available relating to locations. The geographical diversity and natural, architectural and cultural wealth of Mexico, together with the abundance of quality film support infrastructure and technical equipment, and the country s creative and artistic talent, ensure the conditions are present for numerous film success stories. In that context, the financial and tax incentives to consider include the Fund for Film Production Quality (FOPROCINE), a trust that aims to support quality cinema with venture capital, loans, guarantees, promotion and recognition of efficiency. The Fund for Film Investment and Promotion (FIDECINE) is another trust that supports production, post-production, distribution and screenings with venture capital and loans. Also available is the Fiscal Stimulus for National Film Production Investment Projects (EDICINE 226), an incentive package that grants a tax credit equivalent to the amount invested, to be discounted against the income tax levied during the tax year in which the loan is agreed. All these incentives are available through Mexican producers. In 2010 a new incentive called Support for High Impact Film and Audiovisual Production or Fondo ProAV was created. Pro- México, the international economic promotion agency of the Mexican government, established the program to promote the internationalization of the country s film industry. Fondo ProAV is designed to receive investment in audiovisual projects (film, series, animations, video games, apps and e-learning programs), through financial reimbursement of up to 6.5% of eligible expenditures made and invoiced in Mexico. However, what sets Mexico apart and makes it truly unique in the history of cinmakers continue to demonstrate their artistic qualities: Luis Estrada s El infierno; Carlos Carrera s The Crime of Father Amaro; Luis Mandoki s Innocent Voices and Carlos Reygadas s Silent Light. The internationally recognized work of Amat Escalante who was awarded as Best Director at the most recent Cannes Film Festival for his film Heli and received the Best International Film award at the Munich Film Festival is also worth mentioning. All of the above shows that Mexican cinema is achieving a great sense of drive and importance on an international level. Bringing together all of these elements means business opportunities will continue to consolidate further, perhaps to achieve a new golden age of Mexican cinema that leads to the flourishing of an internationally renowned, quality film industry. Mexico is evolving and it has everything it needs to boost the creation and development of the national film industry. What is more, Mexico not only offers an innovative environment that helps create an art of ever increasing value and profit (film) but also achieves greater universal successes. N *Giselle Otero Osornio is an Independent film director and Luis Esteban Muñiz an independent film producer. Both are graduates of Centro: Diseño, Cine y Televisión. What sets Mexico apart and makes it truly unique in the history of cinema are the number, quality and variety of its locations, together with the existing facilities for obtaining a range of discounts in goods and services from state and municipal governments

14 Negocios ProMéxico Negocios Report Negocios Report Negocios ProMéxico The National Strategy for the Film and Audiovisual Industry: A Road Map to the Future ProMéxico and representatives from Mexico s film and audiovisual industry have worked on the National Strategy for Film and Audiovisual Industry, which will be presented to Mexico s filmmaking community in the fall of by luis archundia* In the wake of the growing demand for Spanish language entertainment and cultural products with a Latin touch in the United States and around the world, Mexico is currently in a unique position in the globalization of audiovisual production. The development of new digital technologies has exponentially increased the country s chances to sophisticate and deepen its participation and influence in the industry s global value chain. Known for its long filmmaking tradition, Mexico is a powerhouse of talent and the country has the potential to establish itself as the world s largest producer of filmed entertainment and cultural content in the Spanish language across the audiovisual spectrum: locations, geostrategic position, experience, as well as award-winning and cult-following cinematic storytellers. While encouraging the outlook for the country, Mexico faces a paradox: enormous challenges in the digital age demand that the sector gradually leaves behind its heavy dependence on state subsidies and develops a strong business model that ensures constant growth and diversification of the moving image industry (film, television, animation, video games, new media or visual effects), in order to formulate a new scheme with the support and guidance of the federal government. For that reason, in 2010, ProMéxico s Business Intelligence Unit (UIN) and representatives from the creative community, who participated in the development of a Road Map for the Creative Industries, identified the need to establish an ongoing dialogue with the film and audiovisual industry. They began collecting diverse views from a Trust Group representing the entire value chain, to perform together a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of the sector and make proposals and public policy recommendations to give a definite boost to the industry, in front of the challenges posed by the digital age. The result of that input and a three-year long Mexican and international industry analysis is reflected in the National Strategy for Film and Audiovisual Industry, which will be presented to Mexico s filmmaking community in the fall of The document to be published in both digital and printed format will show the current state of the industry. It will include a diagnosis and concrete proposals for an action plan to transform the current production and business model into a virtuous circle of growth and profitability through a better industrial integration to take advantage of the opportunities brought by digital technology convergence. This National Strategy is also a reference for the best practices of leading film industries in the world, country cases and sources of documentation of global leaders in multi-disciplinary analyses of the sector. Research on international experiences was an essential component of the document, given that the film industry is truly global, especially in the digital age. The vision is much broader that in the analogical times: It is not about local theatrical performance anymore; it is a multicultural, international, simultaneous and multiplatform industry In that regard, the National Strategy for the Film and Audiovisual Industry is a road map to a forward-thinking industry which demands its players to migrate from an analogical mind frame to a digital one; to learn and master new and fast-changing production and business models; to know and embrace the opportunities of the digital production and distribution environments and to join multidisciplinary forces to make a global export-driven difference in mass or niche markets. In short, the document is designed to tackle domestic and international challenges and build upon its strengths, a new pathway to a future of consolidated leadership. N *Sector Advisor, Business Intelligence Unit (UIN), ProMéxico

15 Negocios ProMéxico Guest Opinion photo courtesy of quórum Guest Opinion Negocios ProMéxico Creative Intelligence: Design as an Agent for Change in Mexico Design is booming. Driven by a group of leading designers, the government, the private sector and academia, the perception of the discipline is shifting, from the added value delivered at a product or business level, to improvements on quality of life, education and the environment to society as a whole. by luis herrera rojas* The history of design in Mexico was ignited by the 1968 Olympics that took place in the country. That was followed in the 1980s by a wave of professionalization headed by organizations such as Quórum and the School of Industrial and Graphic Designers of Mexico (CODIGRAM), while the third wave of the Mexican design boom started about four or five years ago with a number of strategic-based projects focused on design policies, educational models and sustainable trends, led by a number of designers across the country. For some disciplines of design, this journey has seen an evolution to new levels of sophistication, having the project Destination: Mexico as a case in point. A joint initiative between the Museum of Modern Art (MoMA) in New York, the Ministry of Economy (SE), ProMéxico and the Centro design school, it involved placing a selection of Mexican-designed products in the museum s shops for over a month to promote the country s perspective on design. The project s success was reflected by the shift in perception of Mexican design and culture as expressed by hundreds of visitors and even through the online store, which sold out within a few days of the project opening. Towards a Design Culture Claiming that design is everywhere is not the same as having a strong design culture. For that to exist, government, private sector and academic professionals need to prove the value of design and its benefits to people s quality of life. That may be achieved through large-scale projects that offer high functional and aesthetic value at low cost, such as the one developed by Swedish-Dutch company IKEA, or through strategic design projects involving a real democratization of design, that go beyond lifestyle to provide tangible benefits in everyday life to a wider population, such as the government-led program Ver Bien para Aprender Mejor (See Better to Learn Better). To that end, Quórum, Mexico s Design Council has outlined a design ecosystem consisting of six habitats: government, academia, the private sector, society, the professional design community and the media. Their actions must be synchronized in order to create the conditions, attitudes, programs and results that will help to provide tangible benefits to the economy, the environment and society at large. To achieve that, Quórum is urging the design community and other productive sectors to see and use design not only as a set of skills but as a mindset focused on new ways to solve old problems. Examples of government involvement in design include early developments on funding programs, design policies and Integrated and Sustainable Urban Developments (DUIS) such as the showcasing of Puebla as a design capital, Guadalajara as a multimedia regional hub or Querétaro as a city focused on the promotion of creative industries. Strategic-designed initiatives impacting on people s welfare include projects such as Ciudad Mural by Colectivo Tomate, which focuses on the renewal of the social fabric in certain neighborhoods. The strategy is complex; however, the tactics are fairly simple as they involve only a dozen paint cans and the will of hybrid teams formed out of locals and artists to transform these so called red zones into places for young people and families to meet and relax. For these types of projects, design is used as part of the business model to change behaviors, attitudes and even industries, fostering growth and generating employment for partners, allies and suppliers alike. Design Opportunities Mexico offers a wide range of opportunities for foreign companies looking to venture into the national market or boost their growth by hiring talented design artists or consultants who can provide guidance and consulting in areas such as innovation and strategic design, offering world class experience with a regional perspective at a local price. In terms of business, Mexican designers have helped a number of foreign companies to successfully expand into niche markets ranging from premium brands, such as frozen yogurt or urban fashion clothing to mass market products. That means that those whose business models are based on margin or volume can benefit from the experience of local consultants to design, build and try out prototypes or pilot businesses tapping into local talent and experts. Other opportunities can also be found in Mexico for companies interested in developing Shared Value Creation business models, which are aimed at impacting positively on the welfare of the local community while generating economic value for the corporation. Such is the case of projects like Sala Uno, which is determined to eradicate eye cataracts for disadvantaged people with excellent results in terms of quality of life improvement and business growth. The Future Mexico s future will become more promising when the six habitats of Quórum s design ecosystem align in terms of objectives and resource allocation. That will allow the country to use design as creative intelligence to build smarter cities, lifestyle solutions, educational systems and products that could solve everyday problems. On the other hand, the democratization of design should also become an integral part of the national agenda to promote its use at a policy level so that it is accessible to everyone. Putting these ideas into practice is an ambitious challenge that will require boundary-breaking partnerships, determination and a focus on clear priorities. To that end, several design schools such as Centro, Anáhuac Norte and Centro de Estudios Superiores de Diseño de Monterrey (CEDIM) are embracing that vision through programs aimed at giving students a broader perspective based on business, innovation and sustainability skills. The challenge for design educators is to generate professionals trained simultaneously in problem solving and creativity. If that is pushed forward, design will precipitate a positive change in public perception and encourage the private sector to invest in original projects that will raise the quality of people s lives, leading towards a new sense of social responsibility. The future of design in Mexico is bright, due to the trust that many companies, schools and institutions have put on the use of design as a strategic bridge between the productive sectors of the country: a strategic vehicle to tell the story of a new Mexico to the world and a strategic tool to solve the key challenges of the nation. When that reality becomes operational, the country will be recognized in the eyes of the world as a forward-thinking culture that is ready to be an agent for change in as many industries as possible. N *President of Quórum, the Mexican Design Council and partner at MBLM, an international brand consultancy agency

16 Negocios ProMéxico Mexico s Partner photos courtesy of universidad de las californias internacional Mexico s Partner Negocios ProMéxico A University Out of a Movie Having a good curriculum has never been enough for the managers of a film school in Tijuana. For them, being on the set of major productions is nothing short of fundamental. While the program gives significant weight to theoretical training with a focus on screenplay, production and business, Castillo and his academic partners believe that it is crucial, even natural, that students who have already completed their fifth term get hands-on practice, especially in a region where documentaries and commercial and film productions with significant budgets are being made throughout the year. by omar magaña Almost any university student knows the importance of participating in real production processes before graduating, especially if the experience involves heavy responsibilities coordinated by the best in the field. For five years, one of the basic goals of the film studies program at the Universidad de las Californias Internacional (UDCI), operating in Tijuana for the last 20 years, has been to have students participate in medium and big budget film productions made along the border. Generally, they are Hollywood productions that are filmed close to Tijuana to make use of natural sea and land settings, the purpose built studios and the specialized human capital that has been formed in the city over the last decade. The same filmmakers that brought the academic plan into the University s menu of programs in 2008, have launched a solid and assertive program of agreements with governments, producers, film studios, film equipment rental companies and universities, to give students the necessary tools to train in a profession that requires both enormous creativity and knowledge of technical, legal and financial guidelines. We offer the best connections. If you are accepted into the school, you will be involved in a real production, says René Castillo, who coordinates the UDCI s film program. The eight first-generation graduates of the program and current students have participated in feature length films and television series, such as Little Boy, by Alejandro Monteverde; Americano, by Mathieu Demy; Benjamin Troubles, by Kai Ephron; The Bridge, by Elwood Reid and Meredith Stiehm; Knight of Cups, by Terrence Malick; Foreverland, by Max McGuire; Workers, by Pepe Valle; Ghosts of the Pacific, by Brian Falk; Ahí va el diablo, by Adrián García Bogliano; Miele, by Valeria Golino; Volando bajo, by Beto Gómez and Chronicles of Narnia: Voyage of the Dawn Treader, by Michael Apted. That is possible and Castillo emphasizes this as one of the school s main advantages over other film faculties in Mexico thanks to our border location, where students can travel freely between Tijuana and Los Angeles, where they can get, for example, equipment from Hollywood Rentals, one of the largest suppliers in the US, at no cost thanks to an agreement with UDCI. Another pact with Baja Studios the set for James Cameron s Titanic in the late 1990s ensures that their doors will always be open to students working on practical assignments during the program. Several other good links between the UDCI s film school and universities such as Jinan in Guangzhou (Guangdong, China), Oviedo (Spain), Cienfuegos (Cuba), Católica de Honduras, Francisco de Paula Santander Ocaña (Colombia) and the Escuela Internacional de Cine y Televisión de San Antonio de los Baños (Cuba) are opening up new opportunities for academic exchange for students. The UDCI is about to consolidate a plan with Jinan University for 10 film students to travel to China and 10 Chinese students to visit Tijuana to develop a film project in which each culture will portray the other. While the program gives significant weight to theoretical training with a focus on screenplay, production and business the basis of the 63 courses that students must complete during nine four-month terms (three years) Castillo and his academic partners believe that it is crucial, even natural, that students who have already completed their fifth term get hands-on practice, especially in a region where documentaries and commercial and film productions with significant budgets are being made throughout the year. Continuous Practice The school can guarantee that new students will have the same, if not more, opportunities than earlier generations. The UDCI is building its own film set in its Santa Fe campus, close to the beaches of Tijuana and a post production room in another facility. Furthermore, students and faculty will be involved in the production of a feature film in the Guadalupe Valley, based on the screenplay of one of their students, and another couple of projects from the US and Argentina. In addition, they are to coordinate the Corto Creativo festival that the UDCI has been holding for 10 years, and which marked the beginning of the program, and prepare their participation in the Tijuana Innovadora 2014 exhibition, where they will be in charge of the film section, as they were in A Boost to the Industry from Academia Several initiatives by the UDCI s film school, state and local governments as well as the private sector are seeking to recover the momentum of investments in film productions experienced along the Mexico-US border after Titanic and the establishment of Baja Studios. When large production companies decide to come to Tijuana, Rosarito or Mexicali, explains Castillo, the image of the region improves around the world and that translates into economic benefits for people in the area and professional opportunities for new film graduates. The UDCI s film school was very active in the consultation and analysis process of the Law for the Promotion, Support and Development of the Film and Audiovisual Industry of the State of Baja California, which was published in the Official Gazette of the Baja California State Government on September 20, Furthermore, professors of the program are on the Film Consultation Board of Baja California and are conducting an investigation requested by the State Film Commission, which is part of the state Ministry of Tourism (SECTUR), aimed at showing whether the economic impact of the film industry in the region is equal to or higher than in other areas, such as medical tourism. The University was also involved in an investigation on the effects of the Free Trade Agreement on the Mexican film industry, led by a team of researchers from Penn State s Center for Global Studies, coordinated by Dr. Sophia A. McClennen. The collaboration paid off, to the point where UDCI professors have presented their experiences and findings in Pennsylvania on the fervor for film that has erupted along the Mexico-US border in the last decade. Meanwhile, Penn State professors could join the list of guest lecturers who visit the University from other institutions in Los Angeles, San Francisco and Mexico City. According to Castillo, Tijuana has everything it takes to build a Vancouverstyle film complex a city that became a prime destination for productions and formed, from that, the human capital required to advance projects with a local seal. N

17 Negocios ProMéxico Mexico s Partner photos courtesy of boxel Mexico s Partner Negocios ProMéxico Boxel: Exporting Quality Creativity This Tijuana-based company has a perfect understanding of what is needed to be successful in an increasingly global market in which Mexico has huge opportunities: creativity. by omar magaña The visual content firm Boxel has set itself a goal that is an example to every new creative endeavor in Mexico: to comply with international quality standards in terms of processes, product delivery and products themselves. Because for ideas, concepts and anything else resulting from creative work to set in motion the virtuous cycle that creates industry, moves capital and generates jobs, quality is of the essence. Andrés Reyes, founder and CEO of Boxel, believes that idea has been the key to making his company one of the main suppliers to the US entertainment industry from Tijuana, Baja California. Boxel has its own competitive advantages over other firms in Mexico that produce latest-generation visual content cartoons, feature films or 3D images for video games like its closeness to the world s largest supply and demand center, the bilingualism of its human capital and the deep cultural exchange that takes place along the border. But at the end of the day, the company s success has been possible thanks to the eagerness of Reyes and his partners who embarked on this adventure in 1998 to match their way of doing things with the leading economies of this sector. The difference between the US and Mexico does not lie in the ability to do things but in the ability to guarantee quality, believes Reyes. Having solved this, Boxel has been able to position itself as a reliable and profitable option for US corporations that sign agreements with studios located on the other side of the world in an effort to lower production costs. That is how Boxel has written its own outstanding history of organic growth and consecutive successes. Reyes started out as a freelancer, taking jobs that required knowledge on interactive presentation and web page development. His work earned him an excellent reputation in the region; so much so that, in time, he had to partner up with his brother, a programmer and a designer to bear the work load. In 2006 there were eight people working in the company. At some point, the partners understood that they could export their products, while firms on the other side of the border saw an excellent ally in this group of entrepreneurs. Someone in San Diego realized that people in Tijuana were doing things with the same quality as in the US but at lower costs, explains Reyes. Boxel is currently a studio with its own facilities, infrastructure and a workforce of 27 people. The Advantage of Talent Training Boxel s brand comprises two large areas: a studio that offers visual solutions for export and a training and specialization center for young talent with basic preparation in design, communications, marketing, architecture, plastic arts and film, among other disciplines. The areas are mutually supportive. Boxel Workshops, the company s training center, uses the studios technology to find, first-hand, people with creativity and training in the processes they need to ensure a privileged spot in the industry. Between 2006 and 2013, 400 young people have come through Boxel s doors. Some of them become part of the firm s team after graduating, either temporarily or permanently, while others establish their own companies elsewhere in the country or join large projects abroad. Human resources are extremely important in this industry. You have to really know who you will be working with because you often get involved in long projects, says Reyes. Thus, Boxel Workshops achieves two goals simultaneously: improving the academic training of future creative professionals and increasing the chances to renew its workforce or grow as new orders come in. I am positive that this will be the industry that will fight unemployment in Mexico and strengthen the country s social relations with the world. It is a key sector for the global economy, affirms Reyes. The Challenges India, the Philippines, Romania, China and Korea are competing to get the largest slice of a market pie valued at 170 million usd, according to Reyes estimates. Large studios in the US have found opportunities in these countries to lower production costs, by developing their infrastructure and human capital for specific projects. According to Reyes, some studios have opted to send specialized staff to these nations to train and oversee the work instead of financing large workforces in their own studios. He adds that many of them have discovered that is not always a viable option because the physical distance from the parent firm complicates reviewing and correcting processes, therefore extending the delivery times of the projects. This is exactly where Boxel comes in: as the best solution for US production companies. With us, projects are authorized at the second review. And if there is a problem, we can be with our clients and solve it personally. We are two hours away from Los Angeles, he boasts. He adds that the cost of living in Mexico is lower than in the US, reducing payroll numbers while guaranteeing respectable salaries for Mexican creative professionals. Our work might not be 80% cheaper than India s but it can still be 40% lower [than in the US] and my colleagues make a good living, says Reyes. He concludes by saying that the country has everything to become the strategic collaborator to the US and Canada in this sector. He believes governments are analyzing and understanding the importance of the industry and are beginning to understand that investments must be allocated to training and certifying talent to make Mexico the leading player, the one that produces better work, in less time and at more competitive costs. N

18 Negocios ProMéxico Mexico s Partner Mexico s Partner Negocios ProMéxico Astrolol Conquers Space in itunes In less than two weeks, Skyport, a video game created by the Mexican firm Astrolol, became a favorite among Apple itunes users, with over 25,000 downloads. by antonio vázquez In early July 2013, Astrolol, a Mexican mobile device entertainment company, launched its video game Skyport on itunes, which in less than three weeks has been valued at 364,230 usd, more than double the initial investment, by SensorTower. That is a goal that no other Mexican IP has achieved in the Apple itunes AppStore. The game has been given a four star average on the five star rating that itunes customers can award an application. Astrolol is a Mexican business created in While still very young, the company is supported by the experience of its CEO, Francisco Casanova Parra, who for four years led Digital Chocolate Mexico, an international mobile device game firm founded in 2003, with offices in the US, Spain, Finland and India. Digital Chocolate began a process of optimizing resources and shut its branch in Mexico. Before it closed, I began working on a new project, like Astrolol, and that is how Skyport was conceived, recalls Casanova. Skyport is a Farmvilletype game that became famous on Facebook in which players collect airplanes, send them around the world, invest money and purchase new planes until completing a fleet with different aircraft. The game focuses on a micro transaction model; players earn Aircoins they can invest to expand their airport and collect more aircraft. It is very simple but for us, Skyport has achieved one of its main goals, since it got us our first investor says Casanova. The company maintained itself with its own limited resources during Astrolol s first takeoff in Two graphic artists, one designer and Casanova were all that was needed for Skyport to be launched into the Appstore in Our investor is from Monterrey but instead of diving into Skyport we went on to create a new project relevant to what players want right now adds Casanova. Having worked at Digital Chocolate Trip Hawkins business, who built Electronic Arts, 3DO, worked on the famous franchise Madden and designed games such as Rollercoaster Rush 3D, Beach Mini Golf or Kings & Warlords gave this young entrepreneur the right set of tools to launch Astrolol. Having studied in the Universidad Iberoamericana (UIA) and the Tecnológico de Monterrey (ITESM) two of the leading private education institutions in Mexico Francisco Casanova founded Digital Chocolate in Mexico in Since then and until 2012, he led several game projects for itunes and other platforms such as Android, Facebook, Google Games, Spill and so on. The difference between Astrolol and other companies is the knowledge behind it, claims Casanova. Being part of Digital Chocolate opened new doors for us internationally. But the work system we are implementing is different from other places. We offer our collaborators the chance to earn more money within the company. We want a deep commitment from every person and in our six months as a new business, we offer consulting in addition to game projects, helping the firm and its employees to grow, he asserts. Casanova explains that Astrolol s confidence in its video game apps for itunes lies in the innovation in gameplay and relevant business models that are of interest to Apple users. Every company does it; we look for our own market niche, especially to create empathy with large brands. It s part of our growth strategy, says Casanova. After Skyport, the firm will launch Monster Pop Diary, which will closely resemble Candy Crush a famous mobile social game. In the future, Astrolol plans to create more projects that attract investors and continue, via outsourcing, to offer consulting services to companies that design apps for Apple, with strong brands that people love and can have fun with. N

19 Negocios ProMéxico Mexico s Partner Mexico s Partner Negocios ProMéxico Gran Tiki Games: for the Best Agreements The conquest of interactive televisions through video games is brewing in western Mexico. Gran Tiki Games is part of the new digital entertainment trend and it is surging forward. by omar magaña Gran Tiki Games is a Mexican startup with five years of experience. During that time, it has focused on exporting its video games using the platforms of the largest video game distributors in the world. This company with global aspirations is located in Guadalajara, Jalisco, where there has been an important boom in information technology and entertainment in recent years. Fifteen employees work in its head office but a large part of its production is done through networking, the in-vogue collaboration system that enables it to integrate the creativity and know-how of some 10 experts that join the company s video game creation process from the US, Canada and Spain. The firm, headed by Iván Díaz de León, began developing video games with a project on Mexican golfer Lorena Ochoa for the Nintendo Wii, which involved some fifty Mexican and Dutch developers. Today, Gran Tiki Games products have found an outlet that the industry would not have contemplated five years ago: smart televisions. The company has a contract with Samsung to create over 40 video games in Spanish, English and Portuguese. In these five years, the studio has had the chance to learn about several niches and business opportunities. It is important to follow, understand and develop the trends, says Díaz de León. He explains that when the business began, gaming companies believed that consoles would reign but now we know that video games have huge chances of reaching the markets through mobile phones, tablets and digital entertainment televisions. Gran Tiki Games has followed closely the path of global trends and has positioned its products on Facebook, Apple and Androidbased devices, PlayStation Vita and now Samsung s smart televisions. According to the firm s CEO, its strategy was to review and learn how business opportunities were created in international markets, especially through the examples of countries such as Canada, Germany, the US, Sweden, the Netherlands and Spain, where some companies have more than 20 years of experience. The next steps in this sector-recognition dynamic were training, certification, networking, securing their first important project Nintendo in this case to catapult them and, more recently, exhibiting in international shows to introduce themselves to potential customers. We ventured into Nintendo s ecosystem and onto platforms that did not exist in Mexico. They saw the country as a consumer zone instead of a development zone. We were a milestone, boasts Díaz de León. International Showcase Iván Díaz de León, who is also head of the Mexican Federation for the Development of the Video Game Industry (mexicodevgames.org), believes that the international shows that his business has attended with ProMéxico s support are the ideal venue for meeting customers that will take their products to new markets. He explains that Gran Tiki Games wants to venture into the US, Brazil and German markets and to do so it intends to make contact at every show with the largest content distributors such as Electronic Arts and Apple, medium-sized companies that establish work agreements via outsourcing and companies committed to team work, mainly from Spain, Holland and Germany that have investments for this type of project. For a Mexican firm to be hired by a foreign one, there must be certain levels of quality, commitment, responsibility and professionalism, states Díaz de León. Shared Achievements Díaz de León s position in the Mexican Federation for the Development of the Video Game Industry makes him an agreement manager for the sector. I see opportunities in the industry for Mexican companies to benefit and further their business, he says. According to his numbers, there are currently more than 80 video game developers in Mexico, although there are some other groups of creative developers that are not constituted as companies (Sociedad Anónima or S.A.). Together, and with the support of several universities, these businesses are creating the human capital required to grow the sector in Mexico. Our added value [as a Mexican industry compared to other countries] is the existing creativity and talent. The third point we need is marketing and distribution. It is one of the niches we need to work on, he explains. In addition, Mexico has federal and state funds to launch this type of firm, although companies like Gran Gran Tiki Games has followed closely the path of global trends and has positioned its products on Facebook, Apple and Android-based devices, PlayStation Vita and now Samsung s smart televisions. Tiki Games strive to maintain their operations through third party sales and attracting private investors capital. Some people see the potential of the video game industry. The world s market is worth 67 billion usd, he reveals. Gran Tiki Games which has created games such as Candy Crew, an adventure with extraterrestrials and candies; Ninja Kisu, a reaction game; ED Zombie, a tower defense game; Tiki Idol, a development for Facebook in which a toy company from North Carolina participated, and other games with various themes has seen itself as a sustainable firm since day one. Every company needs to work hard. Corporations that have been immensely successful have done so in 10 years or more. In any case, I believe it is important to keep one s feet on the ground and be professional in any enterprise, concludes Díaz de León. N

20 Negocios ProMéxico Mexico s Partner photos courtesy of motion control Mexico s Partner Negocios ProMéxico Motion Control: a Transmedia Company For over two decades, Motion Control has evolved harmoniously alongside technological change. The Mexican firm offers products and services for the film world to video games for mobile devices. by antonio vázquez plications, commercials, films and interactive facilities for museums, he explains. Twenty years after the firm was created, Rochin has achieved every one of his goals. Twenty five years ago, before he opened his business, Rochin submerged himself in the historical and anthropological research of the ball game played by Meso- American cultures in what is now Mexico. A quarter of a century later, Motion Control has brought to Apple touch-screen mobiles the Pok ta pok app ( which recreates the ball game played by civilizations such as the Mayas, Aztecs and Olmecs thousands of years ago. Our company is deeply rooted in Mexican culture and its sights are set on new technology innovations. Our creations like Pok ta pok, which is available for ios and in the process of migrating to a mobile multi-platform, in addition to a version of Kinect and a multiplayer PC, is the only game that recreates the original Mexican ball game Roberto Rochin, CEO of Motion Control, defines the company as a transmedia business able to contribute technological products and services for film, television, mobile devices and culture. We are a transmedia company: we create and develop products with multiple technologies, such as games and multi-platform apfrom over 3,000 years ago, he clarifies. With colorful and finely detailed graphs, Pok ta pok is the clear technological image of the ancient Pre-Hispanic game. Its 11 characters have names like Cuauhtémoc, Xóchitl and Tláloc, which allude to personas and gods of the ancient Meso-American cultures. Pok ta pok jump, leap, jump in Mayan is Roberto Rochin s life s work. Twenty five years ago he made a film of the ball game, whose impact has lasted until now. I made that movie 25 years ago, and I always dreamed of adapting it to an interactive game. Many have tried to create an app or a video game of the ancient ball game but couldn t get them published, he boasts. Rochin also claims that he led all the research on the ball game, until I made it into a fun and attractive video game that maintains the cultural essence of Mexico. The challenge was to make Pok ta pok a modern and fun game that also represented Mexico: a ball game as universal as tennis itself. Rochin points out that Pok ta pok was created and developed by Mexican engineers and artists at Locomocion3d, Motion Control s video game division. The only foreign contribution was from a group of advisors that helped perfect the game play which is what makes a game technologically fun to play and easy to grasp. For the businessman, Mexico s geographic location is an advantage for companies that create technological products for the film and video game industry. The monitoring and contact we have with foreign companies that hire our services is fluent and agile. We have always been convinced of the talent and resources in Mexico. Our business has the infrastructure required by any modern studio, to attract producers from the US and the rest of the continent, he states. In the film world, Motion Control has an outstanding reputation. Motion control services computer-controlled camera movements offered by the company have been hired for films such as Frida, with Mexican actress Salma Hayek, Apocalypto, directed by Mel Gibson, and The Arrival, with actor Charlie Sheen. With an academic background in film schools in Los Angeles, Roberto Rochin has achieved what few people in the industry have: to expand the horizons of a corporation that today offers film, commercial production, spots and music videos, video game development and museum infrastructure services. We are working to concentrate everything in a virtual set that serves to make visual effects and images with motion control, with new robots and, in that way, combine all the technology we have, says Rochin, who believes that most of Motion Control s success stems from its roots in Mexican culture and close relationships with other companies in the US, France and Argentina. With colorful and finely detailed graphs, Pok ta pok is the clear technological image of the ancient Pre-Hispanic game. Its 11 characters have names like Cuauhtémoc, Xóchitl and Tláloc, which allude to personas and gods of the ancient Meso- American cultures. The perspective for the sector in Mexico is extremely good. Technology is part of the life of any consumer seeking entertainment and utility tools and Mexico is prepared to offer just that, concludes Rochin. N