Workshop: The impact of digital transformation on MSMEs in Mexico and Germany

Mexico

On 28 February 2024, representatives from the German Association for Small and Medium-sized Businesses (BVMW), the Mexico Competitiveness Center (CCMX) and micro, small and medium-sized enterprises (MSMEs) from Mexico and Germany gathered for a virtual workshop. They shared experiences on how digital transformation impacts MSMEs in both countries.

MSMEs and business associations from Mexico and Germany exchanged on the impact of digitalisation. © Digital Dialogues-GIZ

MSMEs are important for the development of local and national economies as well as the global economy. Mexico and Germany currently have approximately 4.7 million and 3.5 million MSMEs respectively. They represent by far the largest share of economic units in both countries. The digital transformation has had a major impact on the economy. During the Covid-19 pandemic in particular, many MSMEs adapted their business and, for example, integrated into digital commerce.

As part of the Mexican-German Digital Dialogue, the workshop facilitated an open exchange between different sectors of MSMEs and business associations in Mexico and Germany. Together, they aimed to identify challenges and needs faced by MSMEs, as well as initiatives and recommendations for greater competitiveness through the integration of digital solutions.

Integration into the digital ecosystem: opportunities and challenges

Andreas Jahn (BVMW) and Juan Carlos Ostolaza (CCMX) highlighted that it is important to strengthen the resilience of MSMEs. Some of the strategies of MSMEs during the pandemic were remote working, digitalisation of operational processes, adoption of enterprise resource planning (ERP) methods and the integration into e-commerce.

Those measures however led to new internal challenges. The rapid transition to digital platforms entailed cybersecurity risks, for example. Fulfilling customer expectations and complying with regulations also became a challenge. External factors added to this - such as disruptions in local and global supply chains and new digital marketing trends. The participants also identified complex administrative and bureaucratic processes as a challenge for MSMEs. Both in Germany and in Mexico, public services are not yet digitalised in a way that would facilitate processes. Another challenge is the lack of digital infrastructure, both within MSMEs as well as public digital infrastructure. It hinders rapid scaling and makes it difficult to guarantee secure online transactions.

This shows how digitalisation impacts MSMEs in a complex way, and how it not only brings solutions, but also challenges. In today’s business environment, it is important for MSMEs to increase their adaptability, cybersecurity and digital skills.

The future of MSMEs in the digital transformation

While analysing the potential future of MSMEs, the participants believe that emerging technologies such as artificial intelligence (AI) play a crucial role for the competitiveness of business models. Adopting emerging technologies might become necessary to face competitors, to fulfil customer needs and to reach more markets.

The Mexican-German Digital Dialogue will continue to provide a platform for exchange on the challenges and opportunities of MSMEs in the digital transformation, and to foster collaboration between both countries.

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