Introduction
TikTok, the popular short-video platform, has calculated its economic contribution in Mexico to be 45,240 million pesos for the year 2024. This assessment is part of a report commissioned by TikTok and prepared by The CIU, marking the first such study for the Latin American region.
Breakdown of Economic Impact
The report divides TikTok’s economic contribution into three categories: direct economic impact, indirect economic impact, and induced effects on consumption.
Direct Economic Impact
TikTok’s direct economic impact in Mexico, which includes the company’s revenue, salary payments, investments, taxes, and purchases from third-party vendors, amounts to 6,347 million pesos or 14% of the total impact.
Indirect Economic Impact
The indirect economic impact, encompassing sales of goods and services by micro, small, and medium-sized enterprises (MSEs) that use TikTok, totals 30,825 million pesos or 68% of the total impact. This is the largest portion of TikTok’s influence on Mexico’s economy.
Induced Effects on Consumption
The induced effects on consumption, representing the spending by TikTok employees and MSEs using the platform, amount to 8,068 million pesos or 18% of the total impact.
Employment Impact
TikTok’s operations are estimated to create 58,614 jobs in Mexico by 2024. Of these, 41,323 are direct and indirect jobs in companies, suppliers, and units that have expanded their activities. The remaining 17,291 jobs are considered induced by salary expenditure generated.
Most Affected Sectors
Professional services, such as those offered by specialists in specific fields like lawyers, doctors, engineers, or accountants, are most affected by TikTok’s operations in Mexico, with an economic impact of 7,274 million pesos.
- Food and beverages: 3,546 million pesos
- Health and beauty: 3,230 million pesos
- Tourism and transportation: 2,881 million pesos
- Handicrafts and handmade products: 2,867 million pesos
The majority of the economic impact comes from MSEs that rely on TikTok to reach new customers.
Influence on Consumer Behavior
The impact extends beyond sales and employment figures. The study’s survey reveals how TikTok influences users’ purchasing decisions. Fifty-eight percent of respondents reported visiting an establishment after seeing recommendations on the platform, and 56% found in-app advertising helpful in deciding what to buy.
Moreover, 63% of users surveyed stated they acquired new skills or knowledge through videos on the app, reflecting an additional benefit in terms of human capital.
TikTok in Mexico vs. the United States
This announcement comes amid discussions about TikTok’s regulation, privacy concerns, and its influence on public life. The U.S. government is in talks with the Chinese government to ensure TikTok’s operations in North America are managed by U.S.-based investors.
However, TikTok’s narrative in Mexico emphasizes its economic and social value.
“The Mexican market is crucial for corporate reasons, as many regional decisions are made from our Mexico City office, along with the market’s size and community trust,” said Édgar Rodríguez, TikTok’s Public Policy Director for Latin America.
Key Questions and Answers
- What is the total estimated economic impact of TikTok in Mexico by 2024? The estimated economic impact is 45,240 million pesos.
- How does TikTok contribute to Mexico’s economy? TikTok contributes through direct and indirect economic impact, as well as induced effects on consumption.
- Which sectors are most affected by TikTok’s operations in Mexico? Professional services, food and beverages, health and beauty, tourism and transportation, and handicrafts and handmade products are the most affected sectors.
- How does TikTok influence consumer behavior in Mexico? TikTok influences consumers by driving them to visit establishments and making in-app advertising helpful in purchasing decisions.
- What is TikTok’s significance in the Mexican market? The Mexican market is crucial for TikTok due to its size, community trust, and the central role of the Mexico City office in regional decision-making.
