Sino-forming south of the border

Sometime in 2015, I sat in the back of a Mexico City taxi, reading instructions from Waze to the driver. We took detours through small residential streets, zigzagged from one major artery to another, and hung risky U-turns – all of which cut half an hour from our travel time. I had to give the directions because the driver didn’t use Waze, because, like most Mexican taxistas in 2015, he couldn’t afford the mobile broadband, which cost more in Mexico than in any other large country.

That was then. By 2020 about a third of Mexico City drivers were using the navigation app. In 2019 Mexico had 77 mobile broadband accounts per 100 people, vs. only 23 accounts in 2013. And Mexico last year had the world’s highest percentage growth in e-commerce.

This transformation had something to do with my taxi ride of 2015, at least tangentially. I had a cabinet-level meeting at Mexico’s Ministry of Telecommunications, in my then capacity as head of Americas for a Hong Kong investment banking boutique. As I reported in my book You Will Be Assimilated: China’s Plan to Sino-Form the World, I introduced top Huawei executives to senior Mexican officials, then debating an overhaul of the country’s woefully inadequate broadband system.

Nothing happened in 2015; later that year Jack Ma acquired the boutique and within a few months fired the Western bankers. But in 2017 Mexico invited Huawei and Nokia to build a “shared network” (red compartida) for mobile broadband. Banned from the United States, Huawei flourished in Mexico, and its broadband base stations provide service for dozens of Mexican cities, including a few that originally were assigned to Nokia. The cost of broadband service plunged and the number of subscribers more than tripled. Waze, a luxury that only a visiting gringo could afford in 2015, now serves 2 million users per day in Mexico City alone, and Mexico has become the app’s number four market globally. Anyone who has tried to negotiate the Mexican capital’s paralytic traffic knows how much that improves quality of life.

That’s what I meant by “Sino-forming,” namely transplanting China’s infrastructure-led growth model to dozens of other countries. Chinese technology is proliferating at a startling pace through the developing world, creating enormous potential for growth. But technology isn’t enough. Corrupt and incompetent governments can ruin the most promising opportunities. Mexico provides an extreme example of both sides of the story.