Fast and affordable access to one of the top markets for medical equipment and devices is what for years has been bringing international groups to set up assembly and manufacturing solutions near the border region, get a glimpse of the industry and it’s regional activity.
In a very similar fashion to the regional dynamic shared between Hong Kong and Shenzhen, an important element when living and working in this part of the globe is also the reality of a dynamic border shared with one of the largest economies in the world. Just on the northern side of that border shared between Tijuana City and San Diego, the state of California in the United States represents (if taken as a country) the world’s 7th largest economy, this American state also happens to be one of the largest receptors of retired baby boomers in North America; baby boomers are a segment of the population that where born after second world war and that grew up at the same time that the American economy was flourishing, this situation profiled this segment as an educated and mostly wealthy sector of the population which only recently started to retire.
With nearly 6 million residents over the age of 65 years old living in California, and most of them requiring medical attention equipped with insurance, the baby boomer consumption market has become a most valued and targeted segment for medical treatment, health related services, pharmaceutical and special care resources, this regional dynamic factors in the use of medical equipment and particularly employs the use of a large array of medical devices. On the south side of the border, even before the baby boomer market started to retire and partly migrate to places like California and Florida, Tijuana already had a history in relation to assembling and manufacturing medical related products and has since continued to adapt and grow together with the industry and neighboring market.
As an important economic motor, the medical device industry is considered to be a traditional sector in Baja California State (Mexico) representing one of the largest clusters within this industry in the country, and within it, the largest number of companies have chosen to establish their facilities in Tijuana City. The medical device industry is also the fastest growing industrial sector in the northwest part of Mexico, accounting over 30 years of history and experience which has consolidated into a professionalized cluster offering solid ground for foreign companies to initiate operations, equipped with a highly qualified labor force specifically profiled by the academic sector in collaboration with government and private sectors.
According to the Mexican Ministry of Education, over 14,000 students in Tijuana City are enrolled in engineering careers or technical programs and only considering the city’s territory over 42,000 graduates are currently employed by the sector. The city has universities and high schools with programs tailored to the industry, which are related to engineering, technology, manufacturing as well as research and development, delivering a sophisticated world class talent pool, because of it the atmosphere created ensures is high productivity and low turnover for international groups establishing manufacturing operations in Tijuana.
Coupled with an ideal location just minutes from the market and preferential logistic and a duty free import regime, makes Tijuana a "no-brainer" this is why over 75 international groups have presence in Baja California and over 65 percent of those are stationed in Tijuana City, together employing nearly 70,000 workers within the State, these numbers represent at least 50% of the National Industry in Mexico making up the largest concentration of international firms for any state in Latin America, well known international brands such as Medtronic, Smiths Medical, Welch Allyn, Gambro, Medplast and Sunrise Medical just to name a few, have been running successful manufacturing operations in this region for years, and the sector keeps growing regionally at an annual rate of at least 9 percent. It is estimated that between 2018 and first half of 2019 at least USD 1 billion dollars of FDI (Foreign Direct Investment) where received within the entity where 85 percent came from the USA and the remaining came in from New Zealand, Switzerland, Italy and Island.
From Surgical equipment, catheters, pacemaker's parts, orthopedic devices, defibrillators and a large array of items designed for the global health markets are manufactured, assembled and many times even designed here. Something more to consider when establishing operations in Tijuana is that the regional medical industry has developed in a way that it now offers a mature market on both sides of the border, bare in mind that as part of the economy the heath sector represents by far California's largest Industry, employing over 1.5 million people, and capturing an overwhelming 15 percent of the state's 2.5 trillion economy. California's residents are spending directly or indirectly a sum of nearly $368 billion on health related products and services, this represents one of the most highly compact and dense medical industry consumer markets in the world and it is growing rapidly. Because of this most of Tijuana's manufacturing plants are highly integrated into the consumer market because of a well developed supply chain ensuring productivity and a constant demand from hospitals and health care institutions.
So when the question comes to mind, specifically how could a Chinese company benefit from having assembly, manufacturing or even R&D operations in Tijuana city? There are a few answers, a clear one is direct and preferential access to one of the largest markets in the world, another is logistics cost reduction, a third is same time (regional) operation which eliminates costly time and cultural differences, a forth is integrating into a highly developed ecosystem that supports functioning and growth, however there is a fifth key element to consider and this is easy access to government approval, health safety inspection and certification programs to be able to sell products in a sensitive sector such as medical devices to the USA, including FDA, NSF and others, since several of these kinds of associations are just across the border and cluster focused organizations, non profit groups and government may provide assistance in linking to government approval and certifying agencies.