IT@BAJA

April 2007

IT@BAJA

April 2007

• Closest State of Mexico to Asia

• Neighbor to California the 7th most important Economy in the World

• Part of North America’s High-tech Corridor

• 6 Border Crossings

• Symbiotic Regional Culture

Baja California Location

Baja California Location

• Airports: Tijuana Mexicali Ensenada (Private) San Diego Los Angeles Yuma / Imperial Valley Phoenix

•Sea Ports: Los Angeles, Ca. San Diego,Ca. Ensenada, Mx

•RailroadConnection between Union Pacific and Ferromex

LOGISTICS

• Communications. Telecom, Broad Band Services and other technology communications services (over 600 thousand tel. lines).• Industrial Parks: More than 77 Industrial Parks and Industrial Complexes. Industrial Developers, USA Building Standards, Flexibility and support.•University Research Parks: 4 Parks, focused on Information Technology, Biotechnology & Specialized Electronics Applications (UABC & CETYS).

•Electricity. 4 Main sources available +2 (exports): Rosarito Geothermal Plant 1,168 MW CERRO PRIETO Geothermal plants(2) 720 MW INTERGEN (Private) 1,165 MW

SEMPRA ENERGY(Private) 600 MW Total Production 3,653 MW

• Water. Main source: Colorado River with 1,850 M3 Per Year.

•Non Hazardous Land fill.

• Natural Gas. Available in the majority industrial zones in Baja California.

Baja California Infrastructure

**Proprietary to Technology and Industrial Services de Mexico SA de CV**

Baja California in numbersBaja California in numbers• GDP Participation: 3.42% (Mexico 625 BD-US)

• GDP Growth Rate: 7% (estimated 2005)

• 2005 Total Exports: $10.91 BD Total Imports: $8.67 BD

• 5 municipalities (Mexicali, Tijuana, Tecate, Rosarito, Ensenada)

• 15 High added value Industry Sectors (diversified)

• FDI Investment Ranking: 3rd (2005 bellow Mexico City and Nuevo Leon)

• Total Population: 3.3 million

• Population Growth Rate: 4.15% (higher than the national average)

• 114 Higher Education Institutions & 114 Technical Training Centers & 17 Research & Development Centers

• Over 20 thousand students enrolled in Science, Engineering & technology fields (2005-2006).

• Over 7 thousand graduates in IT related fields (2000-2004)

• One of the top ranking Public University in the Country (UABC)

• Ranked as one of the top 5 most competitive states in Mexico (Baja California, Mexico DF, Nuevo Leon, Aguascalientes, Baja California Sur).

• GDP Participation: 3.42% (Mexico 625 BD-US)

• GDP Growth Rate: 7% (estimated 2005)

• 2005 Total Exports: $10.91 BD Total Imports: $8.67 BD

• 5 municipalities (Mexicali, Tijuana, Tecate, Rosarito, Ensenada)

• 15 High added value Industry Sectors (diversified)

• FDI Investment Ranking: 3rd (2005 bellow Mexico City and Nuevo Leon)

• Total Population: 3.3 million

• Population Growth Rate: 4.15% (higher than the national average)

• 114 Higher Education Institutions & 114 Technical Training Centers & 17 Research & Development Centers

• Over 20 thousand students enrolled in Science, Engineering & technology fields (2005-2006).

• Over 7 thousand graduates in IT related fields (2000-2004)

• One of the top ranking Public University in the Country (UABC)

• Ranked as one of the top 5 most competitive states in Mexico (Baja California, Mexico DF, Nuevo Leon, Aguascalientes, Baja California Sur).

BUSINESS BUSINESS DEVELOPMENTDEVELOPMENT

POLICYPOLICYVOCATIONSVOCATIONS

COMPETITIVNESS & COMPETITIVNESS & BUSINESS BUSINESS

DEVELOPMENT LAWDEVELOPMENT LAW

CLUSTERSCLUSTERS

FINANCINGFINANCING

TARGETED FDI PROMOTIONTARGETED FDI PROMOTION

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TRAININGTRAINING

TECHNOLOGY & TECHNOLOGY & INNOVATIONINNOVATION

STATE ECONOMIC DEVELOPMENT PUBLIC POLICYSTATE ECONOMIC DEVELOPMENT PUBLIC POLICY

BAJA CALIFORNIA’S BAJA CALIFORNIA’S VOCATIONSVOCATIONS

Reasonable•Consumer Electronics•Food Products•Commerce•Tourism

To Promote•Construction•Wood Products Manufacturing•Information Technology•Automotive Industry•Medical Devices

To Incubate•Retirement AttentionServices•Custom / Luxury Automobile Manufacturing

TIJUANATIJUANA MEXICALIMEXICALIReasonable

•Consumer Electronics•Metal Mechanics•Restaurant Industry•Automotive Industry•Plastics•Commerce

To Promote•Tourism(San Felipe)•Medical Devices•Agricultural•Aerospace•Information Technology

To Incubate•Specialized Electronics•Semiconductor Microelectronics•Energy & Alternative Sources

Reasonable•Tourism Industry•Restaurant Industry

To Promote•Aquaculture•Fishery•Information Technology

To Incubate•Logistics•Wine Industry•Biotechnology•AgroIndustry•Mining•Construction / Naval Repair Industry

Reasonable•Tourism Industry•Restaurant Industry•Manufacturing & Commerce of rustic & hand crafted furniture

To Promote•World Class Tourism Destination•Select Manufacturing•Resort Hotels

To Incubate•Sport Fishing•Film Industry•Theme Park & Family Destination

ENSENADAENSENADA ROSARITOROSARITO

TECATETECATEReasonable

•Food & Beverage•Manufacturing•Electronics•Plastics

To Promote•Hand Crafts•Clay Products•Wine Industry

To Incubate•Eco Tourism•Resort Hotels•Automotive•Retirement Homes•Health & Rehabilitation Centers

Technology Based Clustersin Baja California

Technology Based Clustersin Baja California

Medical Devices

Display devices (electronics)

Automotive

Aerospace

Life Sciences

Microelectronics / Semiconductors

Information Technology

IT Sector in Baja California

IT Sector in Baja California

After 4 years of combined efforts:

• Over 112 IT business organizations in Baja California (companies, freelance, integrators, etc.),

• IT@baja Cluster integrates 43 IT companies,• 42 SME +1 Anchor Companies generated 28 mdd in Software

related Revenue in 2005,• Cluster SME’s represent 95% of software companies,• More than 4000 high-tech & high added value jobs, (SME’s & 4

Anchor Companies + Government & Foreign Companies Software Development Centers)

• 4 integrator companies (2 Soft. Dev, multimedia, Medical, Web) • 5 Anchor companies collaborating with the cluster• Full integration with business organizations, government &

academic sectors.

After 4 years of combined efforts:

• Over 112 IT business organizations in Baja California (companies, freelance, integrators, etc.),

• IT@baja Cluster integrates 43 IT companies,• 42 SME +1 Anchor Companies generated 28 mdd in Software

related Revenue in 2005,• Cluster SME’s represent 95% of software companies,• More than 4000 high-tech & high added value jobs, (SME’s & 4

Anchor Companies + Government & Foreign Companies Software Development Centers)

• 4 integrator companies (2 Soft. Dev, multimedia, Medical, Web) • 5 Anchor companies collaborating with the cluster• Full integration with business organizations, government &

academic sectors.

IT business processes in Baja CaliforniaIT business processes in Baja California

• Government Services & Applications• Telecommunications• Web Based SME’s Packaged Applications• Accounting, Tax, Human Resources Software• Foreign Trade Applications• Gaming Software• Embedded Systems • E-learning• Biometrics• Call Center & BPO Services• R&D Services• CRM & ERP Solutions• Process Modeling• Software Development Outsourcing

• Government Services & Applications• Telecommunications• Web Based SME’s Packaged Applications• Accounting, Tax, Human Resources Software• Foreign Trade Applications• Gaming Software• Embedded Systems • E-learning• Biometrics• Call Center & BPO Services• R&D Services• CRM & ERP Solutions• Process Modeling• Software Development Outsourcing

Baja California’s IT Participation at the National Context

Baja California’s IT Participation at the National Context

• One of the 5 most competitive States to invest in IT business (Baja California, Nuevo Leon, Mexico City, Jalisco, Aguascalientes)

• Pro IT business environment and support infrastructure.• Government aligned IT Industry support program.• Leading IT Cluster Organization IT@baja (Business, Academia,

Government)• 36 Funded IT Related projects with a combined (public/private),

investment of $159.5 million pesos in 3 years.• 15 Universities with related IT Programs.• Over 5,000 students enrolled in IT Related Programs.• Ideal partner for Nearshore outsourcing…

Keep it simple…keep it in Baja

• One of the 5 most competitive States to invest in IT business (Baja California, Nuevo Leon, Mexico City, Jalisco, Aguascalientes)

• Pro IT business environment and support infrastructure.• Government aligned IT Industry support program.• Leading IT Cluster Organization IT@baja (Business, Academia,

Government)• 36 Funded IT Related projects with a combined (public/private),

investment of $159.5 million pesos in 3 years.• 15 Universities with related IT Programs.• Over 5,000 students enrolled in IT Related Programs.• Ideal partner for Nearshore outsourcing…

Keep it simple…keep it in Baja

Were do opportunities exist in Baja CaliforniaWere do opportunities exist in Baja California

• Diversified Industry Experience: Electronics, Medical, Aerospace, Automotive + Information Technology.

• Growing pool of Human Capital (40% growth 2005-2006)• Local Business Organization Support through IT@baja.• New Business Development Law (fiscal & None Fiscal

Incentives).• University Research Park space available (Ensenada,

Mexicali, Tijuana).• California/Baja California Symbiotic Regional Business

Culture.• Easy access to Baja California from the US, Mexico and Asia.• Government (Federal & State) support through the

PROSOFT Program.

• Diversified Industry Experience: Electronics, Medical, Aerospace, Automotive + Information Technology.

• Growing pool of Human Capital (40% growth 2005-2006)• Local Business Organization Support through IT@baja.• New Business Development Law (fiscal & None Fiscal

Incentives).• University Research Park space available (Ensenada,

Mexicali, Tijuana).• California/Baja California Symbiotic Regional Business

Culture.• Easy access to Baja California from the US, Mexico and Asia.• Government (Federal & State) support through the

PROSOFT Program.

STATE’S PUBLIC POLICY GUIDLINE STATE’S PUBLIC POLICY GUIDLINE ON PROMOTING VALUE GENERATIONON PROMOTING VALUE GENERATION

RETAIN & EXPANDRETAIN & EXPAND

ATTRACT STRATEGIC FDI ATTRACT STRATEGIC FDI

PROMOTE EXPORTSPROMOTE EXPORTS

PROMOTE TECHNOLOGY PROMOTE TECHNOLOGY & INNOVATION& INNOVATION

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DISTRIBUTION OF THE BUSINESS VALUE CHAIN

L1 L5L5

2016 2016 GoalGoal

Technology & Innovation

Strategy

Control of the introduction of new products

Brand and mark-up (overpricing)

20062006

20012001

The function of innovation in the productive & economic escalation strategy

World classWorld classmanufacturingmanufacturing

EVOLUTION OF THE LOCAL ECONOMIC DEVELOPMENT STRATEGIES EVOLUTION OF THE LOCAL ECONOMIC DEVELOPMENT STRATEGIES

Productive Re-conversionOld national & regional

industriesHeightening of worldwide competition

Worldwide Economic RecessionWorldwide Economic Recession

Increasing loss of Increasing loss of regional & national regional & national

competitivenesscompetitiveness

Productive Chains Productive Chains & Clusters & Clusters

of high added value of high added value and technologyand technology

PROINNOVAPROINNOVAPlanPlan

FDI FDI

DrivenDriven

PoliciesPolicies

Local NodesLocal NodesOf InnovationOf Innovation

Coming of the new economyComing of the new economy

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++ AddedValue

++Technological Complexity

Business Clustering Strategy.Value chain rapid scaling due to key and high added value projects.high added value and high-tech manufacturing business opportunities.

Creation of capacities for the innovation & development of technologies with MKT Sense.Capital & Technology Intensive Investments.HC in research, development & design.

Support to previously established industriesAttraction of OEM, EMS, Manufacturing Capabilities

System of Local Innovation Organizations: System of Local Innovation Organizations:

Clusters that don’t necessarily share the same industry sector but they do integrate around the same innovation & technology businesses.

They are networks of businessmen, corporations, investors, scientists and technologists, bankers, universities, strategic support agencies, business

organizations, all focused on reaching a successful development and sustainability of high-tech business.

DRIVING ORGANIZATIONSBCInnovaCCCBCPRODUCENCENTRIS

•PROMOTING ORANIZATIONS•Local Innovation Councils•CDT, CDIM, COPREEN, etc.•CANIETI, CANACINTRA, etc.•City Governments.

•SUPPORTING ORGANIZATIONS•SEDECO/SEE•Ministry of Economy•CONACYT•NAFIN

Local Capacity for Technological Innovation

(High Value FDI, High-tech Jobs,

High-tech business)

•GENERATING ORGANIZATIONS•CENI2T, Design Centers•UABC, CICESE, IPN, UNAM, etc.•H.R. Development Centers•SEE/Science Centers, Museums

Systems of local Strategic Organizations for Innovation

Mexicali, Tijuana-Tecate-Rosarito, y Ensenada

Systems of local Strategic Organizations for Innovation

Mexicali, Tijuana-Tecate-Rosarito, y Ensenada

Business in:Business in:ResearchResearch

+Development +Development +Design+Design

IT Initiative IT Initiative (Embedded Systems,

Gaming &Firmware)

BiotechnologyBiotechnologyInitiativeInitiative

(Biomedical, Biometrics, Aquaculture.)

NanotechNanotechInitiativeInitiative

((Nanomaterials, Nanodevices)

Specialized ElectronicsSpecialized ElectronicsInitiativeInitiative

(Display Tech)

Six great technology & innovation initiatives of BCSix great technology & innovation initiatives of BC

Mechanical Design+Mechanical Design+R&D+TestR&D+TestInitiativeInitiative

(Aerospace & Automotive)

MicroelectronicsMicroelectronicsInitiativeInitiative

(MEMS, ICs, Semiconductors)

1. Science & Technology Parks (Silicon Border + others)1. Science & Technology Parks (Silicon Border + others)2. High-tech Clusters (Software, Biotech, etc.)2. High-tech Clusters (Software, Biotech, etc.)

3. Innova Grant Fund3. Innova Grant Fund4. CENI2T Innovation Centers Program4. CENI2T Innovation Centers Program

5. State Fiscal Incentives5. State Fiscal Incentives++

Federal Government SupportFederal Government Support

AlternativeAlternativeEnergiesEnergies

((Solar, Fuel Cells Etc.)

Government Support Structure

•Business Development Law (Fiscal

Incentives)

•Infrastructure & Public Infra. Support

•High tech & University Research Parks

•Automotive, Aerospace, Biotech, IT

Incubators

•Innovation & Technology Development

Grants

•Private sector Professional services and

support

•Federal support and incentives negotiations

support

Accumulated Investment in Technology Sectors2004-2006 (Millions of Pesos)*

Accumulated Investment in Technology Sectors2004-2006 (Millions of Pesos)*

Program 2004 2005 2006 Total

Federal 25.84 42.26 72.55* 140.65*

PROSOFT 18.84 9.47 39.85 68.16

TECNOLOGY SME’S 4 17.79 28 49.79

CONACYT 3 15 4.70 22.70

State 18.29 35.33 82.90* 136.52*

SEDECO/Prosoft 11.29 7.83 15.7 34.82

SEDECO/Pymetec 4 6 4.5 14.50

SEDECO/F.Innova --- 5.5 57 62.50

FONDO MIXTO/SEE 3 16 5.70 24.70

Total F+S Resources 44.13 77.59 155.45* 277.17*

Private Funds 20.35 97.35 499.85* 617.55*

TOTAL 64.48 174.94 655.30* 894.72*

**Approximate investments according to 2006 investment commitmentsApproximate investments according to 2006 investment commitmentsSource:Source: 2004-2006 committed investments: PYME, PROSOFT, 2004-2006 committed investments: PYME, PROSOFT, BC-Conacyt Mixed Funds. SEDECO, SEBSBC-Conacyt Mixed Funds. SEDECO, SEBS

Become part of our Baja

family of companies

Become part of our Baja

family of companies

“Reflect on the past, act on the present, plan for

the future”

Baja California:Baja California:Technology & Knowledge FrontierTechnology & Knowledge Frontier