The effects of the pandemic show the need to choose a more supportive economic system.
Yet another hard blow during the Covid-19 pandemic. The National Institute of Statistics and Geography (INEGI) estimates that, in 2020, out of 4.9 million micro, small, and medium enterprises (MSMEs), 3.9 million (79.19%) survived, and just over one million (20.81%) closed their doors permanently during the lockdown implemented to prevent further contagion.
It’s important to note that 72% of jobs in Mexico are generated precisely by MSMEs, which is why their relevance to the national economy is huge.
Mildred Berrelleza, the Business School’s Regional Development Director at Tecnológico de Monterrey, believes that this situation is going to increase unemployment from its current level of 3.4% to 3.7% in 2021, which is also a consequence of stagnant practices.
“The development model that we’ve been using until now has proven not to be ready for our current conditions, and this forces us to move towards a newer, fairer, and more supportive development model, which places emphasis on local and regional aspects,” she mentions in an interview for Tec Review.
She also says that it’s urgent to redirect the country towards a circular economy paradigm, with human beings at the heart of economic development.
“People’s wellbeing will have to be put above capital for its own sake,” states this entrepreneurial expert.
Even before the health emergency, people were already facing difficulties that have now become even more visible due to the pandemic, according to Berrelleza.
“It wasn’t easy to access credit due to high interest rates, and this had to do with financial institutions in our country that haven’t been able to adapt or understand the financing needs of MSMEs.”
What’s more, many MSMEs were more focused on resolving immediate problems than on starting to implement digital technologies conducive to facing the health contingency more successfully. Foresight was lacking, according to the Tec director.
For Antonio Cervantes, founder of FHiNK, a Mexican financial advisory company, this crisis could have been avoided to some extent, but specific actions from the government and private initiative were lacking. Like Berrelleza, he agrees that narrow-mindedness has been lethal.
“It was a shared responsibility because our culture lacks a medium and long-term vision. Our vision is of a very short-term nature. And on occasion, we’re also very skeptical. This has also been seen with other phenomena, such as earthquakes, hurricanes, and floods, eventualities that we know can happen. However, we don’t take precautions,” he says in an interview for Tec Review.
This specialist points out that it’s essential for the surviving MSMEs not to lose contact with their customers. At the end of the day, it’s them, not technology, which are a business’ raison d’être.
“In Mexico, we’re not always focused on customers’ needs, and keeping them is the most difficult thing for us. We often go overboard with attracting new customers and get distracted from keeping the existing ones.”
Digitalization has allowed many businesses to adapt to changing times, as evidenced by the following data: from March to June alone, more than 8,000 SMEs joined platforms such as Mercado Libre, as reported by the online sales company. However, it’s impossible to eliminate the age-old advice to “always treat customers well” to make a business prosper, according to Cervantes.
“Even though nowadays business is done in a completely different way, consumers –who’re our customers– are still human and like to be spoiled. Often, they’re even willing to pay a little more in order to obtain that special treatment they’re looking for,” he says.
Cervantes says that MSMEs should also focus on reducing costs and on offering lower prices to overcome crises, but insists that, above all, “they mustn’t neglect that part that, in many cases, will yield more: the human part is more important than the material or technological aspect of the business.”