Business South of the Border

ANPIC 2007 Leon, Guanajuato Mexico

ANPIC 2007. This is the annual international trade fair for leather tanning, leather chemicals, machinery and supplies for the footwear industry held in Mexico since 1980.

The “Fair of the Americas” (Feria de las Americas) is held in Leon, Guanajuato, Mexico from February 17, 2007 through February 20, 2007 at the Poliforum Exhibition Center in Leon.

Leon, Guanajuato is the leather tanning and shoe making capital of Mexico.

Visitors will find 1200 national and international suppliers of:

Shoe machinery and equipment
Tanning machinery and equipment
Chemical products
Hides and skins
Synthetic materials and textiles
Lasts, heels and soles

Related Links

Mexican official and unofficial holidays

ANPIC 2007

ANPIC 2007 calendar of events

ANPIC 2007 Hotel list

ANPIC 2007 contact information

Business South of the Border

Discount and Budget Airlines in Mexico

Low cost and budget airlines are finding their way to Mexico.

These new airlines are offering international flights and national flights between intermediate cities in Mexico previously only accessible through bus lines or at much higher prices via the full service airlines.

The budget minded vacation or business traveller should check out the schedules and prices of these airlines next time you are travelling in and around Mexico.

Aero California

Aladia

Alma de Mexico

America West

ATA

A Volar

Aviacsa

Azteca

Click Mexicana

Frontier

InterJet

Jet Blue

MagniCharters

Mexus Airlines

Spirit

Ted

Viva Aerobus

Volaris

Discount Airlines in Mexico

How to call Mexico from the US

Airport Codes for Mexico

Christmas bonus - the aguinaldo in Mexico

Employers in Mexico are required by law, to give employees a Christmas bonus.

The “aguinaldo” is a mandatory annual payment given in the month of December, prior to the 20th, to each worker in Mexico. This includes all employees in private industry, and all government employees.

The aguinaldo is equivalent to 15 days wages, or more. For employees with less than a years service, a pro-rated payment is provided.

This puts added strain on cash flow and accounts payables for Mexican organizations during the month of December. At the same time it creates a huge burst of economic activity throughout the country.

Indirect messages and business etiquette in Mexico

A comment from .hj highlighted an important issue when doing business in Mexico. He wrote ” (Mexicans) will try to deliver a message using indirect messages and almost never telling things directly for it is consider unpolite”

Etiquette and formal behaviour is expected in Mexican business negotiations, especially with international clients or suppliers. This will become more relaxed and informal over time, as the trust is reinforced and expectations are met on both sides.

It is all about mutual respect.

The formal rules and behaviours (etiquette) that enhance and create an atmosphere of respect have been broken down or eliminated in the USA, but in Mexico they are critical and very much a part of business dealings.

The Mexican business person does not like to create a confrontation or criticize openly, it is considered rude and ill mannered. One should be very perceptive to what is being said by your Mexican partner, what is being avoided and the implications of each behaviour.

One should avoid open criticism of the Mexican partner. They expect the same formality given to you, it is embarrassing and awkward if one begins to point fingers and rant and rave.

Make comments and observations about areas that need attention, strategies and solutions that must be adapted and challenges that must be met instead of criticism of past performance. Discuss what is working and what isn’t working, but don’t personalize it.

You may not hear direct criticism of an idea or proposal, instead there might be suggestions of alternatives.

Your ideas, proposals and solutions may be greeted by nodding heads and smiling faces, but it may only signify that the audience is listening, and not in complete agreement.

Decision-making on sensitive or unpopular issues may be delayed and not openly debated. Give your Mexican partner time to deal with these issues, and don’t force a decision in public.

If able to plan the meetings in advance, propose an agenda, and include the issues you need to discuss, or that require a decision. Give them time to prepare for the meeting and the decision-making required. Don’t demand a decision in an open meeting.

Lunches and informal settings are where the real business discussions and dialogues will take place, and even then, will be presented may be in a vague and non-confrontational manner. Use these moments to explain and explore the ideas, benefits and alternatives. Listen.

Present yourself and treat your business relationships as a well educated respectful gentleman, not like a threatening conquering warrior barbarian. Participate, listen and react to business situations with poise, calm and politeness.

How to speed up doing business in Mexico

Speeches and Protocol in Mexico

Christmas parties and holiday business gifts in Mexico

The month of December is Mexico is filled with Christmas and holiday parties and social events.

The population of Mexico is 95%+ Christian and openly celebrates Christmas in private industry and government displays. Be aware that there are other religious groups in Mexico that do not celebrate Christmas in order to avoid offending suppliers or clients.

These Christmas and holiday reunions are usually mid-day dinners or late suppers. There will be get-togethers for friends, business acquaintances, associations and any committees or other groups that you might belong to.

There is also the company Christmas party.

Failure to attend the holiday events are noticed and considered rude. It’s better to arrive and steal away early than to avoid the reunions all together. Remember Mexico is a very socially oriented culture, failure to attend and participate in the social events will not help you, it might work against you.

Corporate and business gift giving is very important, and in many cases expected at Christmas time. The low end gifts range from the traditional; calendars and pens, agendas, calculators or other promotional type gifts to the higher end: fine liquors (Tequila, Scotch whiskey, Cognac, Red wine), fine food baskets, electronic equipment (Palms, IPods, etc.), gift certificates to restaurants, etc.

Unlike the USA, it is common in Mexico to give holiday gifts to the decision-makers in the purchasing department unless the companies have a policy against it.

Cut flowers or live plants are not considered an appropriate business gift.

Holiday gifts are given to important (and not so important) clients or to key people in the clients organization with whom you have a personal/business relationship (for example the secretary who answers all your calls or the logistics person who solves problems all year long).

Some transnational companies have tried to limit and reduce the amount and quality of business Christmas gifts in the past few years. It is not looked upon kindly by customers who always reflect upon the amount of money they have spent with the supplier, and believe the Christmas gift is a “thank you” and recognition of their support and loyalty throughout the year.

Work begins to slow down in Mexico at the beginning of December, and after December 12 (The Day of Guadalupe) efficiency grinds to a halt. It’s impossible to get major decisions, and many times difficult to locate business owners and managers due to events and social engagements.

Most Mexican businesses (not in tourist areas) are closed during the week between Christmas (Dec. 25) and the New Year (Jan 1). The Mexican government prohibits highway transport of certain goods and tractor trailers during this peak family vacation period.

Related Links

Mexican official and unofficial holidays

Tipping guidelines for Mexico

Doing Business in Mexico - cultural tips

Advice on what to expect when doing business with Mexico

Corruption, bribes, mordidas, tips - doing business in Mexico

Mexican politics - what business people should know

In order to begin to understand Mexican politics (an impossible task), it’s important to learn some fundamentals of the political system in Mexico.

There is no re-election for political officials for the same post in Mexico. Current office holders can sit-out a term and run again for the same office, or they can run for another political post.
The political parties control the selection of party candidates who run for office, at Federal, State and local levels. Political parties, and their leaders are very important.
In order to be remain in politics one must please both the party and the electorate.
The term for the President of Mexico is for 6 years, with no re-election.
The term for State Governor is 6 years, with no re-election.
The term for Senators is 6 years, with no re-election for a consecutive term.
The term for the Camara de Diputados (similar to the House of Representatives in the US) is 3 years, with no re-election for a consecutive term.
The term for local mayor is 3 years with no re-election for a consecutive term.
The term for State representatives and local elected positions is normally 3 years, with no re-election for a consecutive term.
Changes in the Mayor, Governor or President, cause major reshuffling of bureaucrats and administrative officials. This causes a slowdown or “unofficial” shutdown of some government offices between the election date and the date of the new administration start-up.
The lack of re-election encourages and favors the current politicians and parties in power to seek out projects with short term visible benefits. They are pushed to show successes, infrastructure projects or other tangible benefits during their term of office in order to get promoted and elected to future political posts.
In the Mexican states with stable, well defined political party tendencies and majorities, there is more focus on medium and long term projects and planning as the benefits can be attributed to the party.
If selling a long term project to the government, it should include short term benefits, or tangible results, so that the politicians involved can claim credit.
Never try and initiate the sale or negotiation of a major project to the State government during the last 6 months or year of a Governors term. It will be stalled, and you will have to “resell” it to the new administration.
Get to know as many local and State and Federal political officials as possible, in 3 to 6 years they are all sitting in different positions of power and influence in the government.

How to speed up business decisions in Mexico

Patience, chaos and doing business in Mexico

Official websites of the Mexican states

Best States for business in Mexico - World Bank Report 2007

How to tell if your Mexican banknotes are counterfeit

How to tell if your Mexican banknotes are counterfeit.

The handling of foreign currency creates a whole new set of challenges for the business or vacation traveller.

The Bank of Mexico has a webpage dedicated to explaining the security features of the Mexican coins and banknotes so you don’t get bamboozled. Verifying Mexican banknote authenticity

Learn about the security features in Mexican banknotes to eliminate the possibility of receiving “funny money” during your travels.

Security features in manufactured Mexican banknotes - A quick chart to help identify the security features in the current banknotes in circulation in Mexico.

Security features in the 20 Peso polymer banknote

Security features in the 50 Peso paper banknote

Security features in the 100 Peso banknote

Security features in the 200 Peso banknote

Security features in the 500 Peso banknote

Security features in the 1000 Peso banknote

If you believe you have counterfeit Mexican currency, bring it to the attention of a Mexican bank for verification. If the banknote is counterfeit you will not be reimbursed for it’s value, but you might avoid going to jail. Passing counterfeit currency is illegal in Mexico.

The US Department of State Consular information sheet for Mexico states “ A number of Americans have been arrested for passing on counterfeit currency they had earlier received in change. If you receive what you believe to be a counterfeit bank note, bring it to the attention of Mexican law enforcement.”

Banco de Mexico - BANXICO - Bank of Mexico

Top states for business in Mexico - World Bank Report 2007

I highly recommend that you download and read the Doing Business in Mexico 2007 report, released on November 15, 2006.

For anyone currently doing business in Mexico, or thinking about doing business in Mexico, this is a must read.

The World Bank Group has announced that “Doing business became easier in many Mexican states in 2005-2006, according to the new Doing Business in Mexico 2007 report, released today in Mexico City. The report finds that some states compare well with the best of the world, while others need much reform to become globally competitive.” - November 15, 2006

Quick results of the top ten Mexican states based upon the factors of; starting a business, registering property, obtaining credit, and enforcing a contract include:

Aguascalientes, Aguascalientes (Easiest)
Guanajuato, Celaya
Nuevo Leon, Monterrey
Sonora, Hermosillo
Campeche, Campeche
Zacatecas, Zacatecas
Queretaro, Queretaro
Michoacan, Morelia
Sinaloa, Culiacan
Mexico City (Most difficult)

A full listing of all the 31 Mexican states is available in the report.

Excerpt from the report: “If you were to open a new business in Mexico City, the start-up procedures would take 27 days on average, 8 days fewer than in Shanghai. If you decided to open a business in Guanajuato or Aguascalientes, you would have to wait 12 days—only one day longer than your competitor in Amsterdam. But if you needed to take a customer to court for a simple debt default in Guanajuato, resolving the dispute would take 304 days—far longer than the 217 days it takes in Dublin,1 but significantly shorter than in Baja California Sur where it takes 581 days. These examples illustrate two patterns. First, some Mexican states compare well with the best in the world. Second, many states need much reform to become globally competitive.”

Related Links

Press release on Doing Business in Mexico 2007 (PDF, 75KB)

Doing Business in Mexico 2007 (PDF, 1.26MB)

World Bank Report - Doing Business in Mexico 2005

Speeches and protocol in Mexico

Speeches for private industry, trade association and government events are quite common in Mexico.

Every event is started with a speech, or number of speeches from local, state or federal government officials, association presidents or high ranking members or the corresponding private industry equivalents.

Generally when a speech is given in Mexico to a group, formal protocol is followed.

For larger events a professional master of ceremonies will be hired to make the speaker introductions and keep the event moving.

Each speaker thanks and acknowledges by name and title each member sharing the stage or table of honor.

Mention of each member should be given by rank. Highest ranking official or member first, followed by the others in descending order.

Speeches in Mexico tend to be long. Government officials tend to give lots of numbers and statistics. Despite the audience’s desire to hear a short, focused discourse.

It is considered rude to take cell phone calls, carry on conversations with your neighbor, crack jokes or not pay attention during the speeches. If you can’t tolerate it, excuse yourself and leave the room.

Often invited guests and members sharing the podium do not have anything important to say, they are invited as a courtesy or as part of the political/social protocol.

After the initial speeches are over, some government officials may leave for other events.

Use these opportunities to network and exchange business cards. It is often easier to make initial contact with important figures at an event instead of via telephone calls and emails to their office.

Create great international business relationships

Advice on what to expect when doing business with Mexico

Meeting people in Mexico - kiss, shake hands or hug?

Mexican currency, monetary policy and financial systems - BANXICO

Everything you want to know about Mexican monetary policy, Mexican financial and payment systems, Mexican currency, Mexican banknotes and Mexican coins can be found at the Banco de Mexico site: BANXICO English language website.

BANXICO: “Banco de México is the central Bank of Mexico. Under the Constitution, it is autonomous in its operations and management. Its main function is to provide currency to the domestic economy. In discharging this task, the Bank’s priority is to ensure the stability of the currency’s purchasing power. Its other functions are to promote both the sound development of the financial system and the optimal functioning of the payment systems.”

The BANXICO site includes detailed sections on:

Need to know what the currency and coins currently in circulation in Mexico look like? Check out the sections entitled

Currently manufactured banknotes

Currently manufactured coins

Related Links

BANXICO Foreign Exchange Market

BANXICO Securities Market

BANXICO Inflation

Sourcing and supply chain strategy - Mexico

Purchasing from Mexico and Mexican suppliers?

Don Gringo at Catemaco News and Commentary brought these items to our attention.

Sourcing in Mexico gets easier. The article points out that doing business with Mexico is easier than in the past.

The proximity of Mexico to the US markets impacts communication, logistics, costs and time factors.
Mexico has a history of dealing with the US, and are familiar with competitive manufacturing techniques.
Relationships are critical to success.
Beware of stereotypes.
Take the time to find the “right” partner.
Do’s and don’ts for doing business in Mexico

Does your supply chain strategy include Mexico? It should. Al Brown president of SupplyMex writes that Mexico offers:

Logistics infrastructure, highways, rail and port system that has been improved over the past 10 years.
Free trade agreements with 42 countries.
Global production and quality standards.
Stable political and economic environment.
Skilled workforce.

Thanks Don.
Related Links

Purchasing.com

Why you should pay attention to free-trade treaties

Maquiladoras in Mexico

Industrial and Business Parks in Mexico

Corruption in Mexico

Quite a bit of interest generated from the piece regarding corruption and bribery in Mexico. Corruption, bribes, mordidas, tips - Doing Business in Mexico

Don Gringo says “Mexico possibly has one of the best governments anyone could buy. And cheap, too.” Catemaco News and Commentary

Bernard Wasow writes in the Globalist “It is no secret that the at law enforcement in Mexico is a “for-profit” business.” Greasing Palms: Corruption in Mexico.

Wide Angle presents a Corruption Chart; How big is Mexico’s problem. Which gives a great state by state overview and comparison of corruption levels in Mexico.

A quote from the page: “According to anti-corruption czar Francisco Barrio, the cost of corruption by government officials and by everyday Mexicans surpassed the amount budgeted for education by more than three percentage points — some 9.5 percent of Mexico’s GDP of $550 billion. Recent studies by the World Economic Forum, an international organization that works to improve worldwide economic conditions, found that the business environment such as rule of law, transparency and corruption were disincentives for foreign investment in Mexico. Corruption, which is often described as a tax, adds to the cost of doing business. The Opacity Index, a study conducted by Pricewaterhouse Coopers, found that Mexico lost $8.5 billion in foreign direct investments in 1999 due to corruption and other suspect legal or economic practices.”

Corruption exists in every country in the world, in politics, in business, in everyday life. In some countries it’s more sophisticated or hidden, in others it’s obvious and required in order to get things done. Mexico is no exception.

People seem to ignore corruption in their own countries, and react with shock and anger to corruption in others.

Depending on where you live in Mexico, what you are trying to do, and who you are dealing with, your experience with corruption and bribery will not echo anyone else.

Evaluation of Mexico, China, Brazil, India or any other country as a potential business location or market should include an analysis of how corruption will threaten and affect your operations, efficiency and bottom line.

Your organization should have a clear understanding of the situation and create a set of rules governing how to deal with the reality and any situations that might arise.

You have to ask and answer the question, “do I want my organization to participate and be involved in corruption and bribery, and at what levels”?

Get advice and information from local businesspeople and consultants on the reality of corruption and bribery. Learn how the culture deals with it, detects it and punishes it before you commit to a strategy, path or action plan.

Tipping guidelines for Mexico

World Corruption Perception Index - 2006

Patience chaos and doing business in Mexico

Questions - Answers, Doing business in Mexico

Have any questions about how to do business in Mexico?

Any specific problems or dilemmas related to doing business in Mexico?

Questions about the business culture in Mexico or Mexican culture in general?

Would you like to know more about a specific theme related to Mexican business?

Need references or information about organizations, people or associations in Mexico?

Send your questions to me at lee.iwan at gmail.com
or post a comment here.

Related Links

Official government websites of the 32 Mexican States

The definitive dialing guide for calling Mexico

Shorten your learning curve about Mexico

Business South of the Border

How to speed up business decisions in Mexico

When doing business in Mexico, one of the fundamental complaints I hear from non-Mexican business people is the speed at which business in transacted.

They say there are 5 speeds to the Mexican economy, I believe they also apply to negotiations in Mexico.

1. Slow.

2. Slower.

3. Stalled.

4. Going in reverse.

5. Dead.

It can be quite frustrating, but it is part of Mexican business culture.

There are several options available that may help speed up the decision-making process in Mexico.

Make certain you are both working for the same goal. Write it down, discuss it, and determine that everyone is seeking the same thing. There should not be any hidden agendas.
Set fixed and specific dates when the data or information must be available or the decision will be made. Get personal commitments from the other participants. Don’t settle for vague answers, get them to agree in public to bring the specific data or make the decision on a specific date. Personal, not institutional responsibility.
Does everyone have all the information required to make the decision? Write down what is missing and assign responsible parties and dates for completion.
Follow-up with phone calls and written communication and verify that everything is running on schedule. You will have to dedicate more time to “motivating” or “prodding” than you are used to in your own country.
Don’t get angry. If there is no decision it is because of a reason you don’t understand or hasn’t been verbalized. Anger is seen as threatening, and not part of a good relationship, it will hurt you more than help you.
Be patient. It always takes longer than you think it will.
Keep up the communications, in fact increase them. Contact all the team members involved, try and discuss the project or decision informally (outside of the office or work environment).
It might be the money. When everything looks perfect, and still no decision, it might be due to money (or lack of it). Try and discuss this privately with the head decision-maker.
It might be the risk or control involved. Bring the subject out in the open and discuss the risks and control issues involved for both sides. This is best done informally with the team members, one on one.
It might be NO. Mexicans do not like to say no or give bad news in certain situations. They believe it is impolite, and many times will not respond or will allow the situation to continue until it fades away without a “yes or no” decision being made.

Doing business in Mexico - cultural tips

How to do business in Mexico

What does Gringo mean

The term “Gringo” is used in Mexico to refer to Americans. Depending upon it’s use (and user) it may or may not be an insult.

My experience with the term in Mexico is that it is a convenient way to refer to Americans, much shorter that “Americano” or “Norte Americano”. Most of the time it’s use is not offensive or meant as a derogatory or demeaning remark.

Many Mexicans will not use the term around Americans thinking that it might offend. Even after establishing friendships when the term “Gringo” is used, often someone will apologize.

Where did the term originate? There are several stories, urban myths and rumours:

From Wikipedia: “A recurring false etymology for the derivation of gringo states that it originated during the Mexican-American War of 1846-48. It has been claimed that Gringo comes from “green coat” and was used in reference to the American soldiers and the green color of their uniforms. Yet another story, from Mexico, holds that Mexicans with knowledge of the English language used to write “greens go home” on street walls referring to the color of the uniforms of the invading army; subsequently, it became a common habitual action for the rest of the population to yell “green go” whenever U.S. soldiers passed by. This is an example of an invented explanation, because gringo was used in Spanish long before the war and during the Mexican-American War. Additionally, the U.S. Army did not use green uniforms at the time, but blue ones.

Another legend maintains that one of two songs – either “Green Grow the Lilacs” or “Green Grow the Rushes, O” – was popular at the time and that Mexicans heard the invading U.S. troops singing “Green grow…” and contracted this into gringo.

From the Snopes Urban Legends Reference Pages: “Although the first recorded use of “gringo” in English dates from 1849 (when John Woodhouse Audubon, the son of the famous nature artist, wrote that “We were hooted and shouted at as we passed through, and called ‘Gringoes’”), the word was known in Spanish well before the Mexican-American War. According to Rawson, the Diccionario Castellano of 1787 noted that in Malaga “foreigners who have a certain type of accent which keeps them from speaking Spanish easily and naturally” were referred to as gringos, and the same term was used in Madrid, particularly for the Irish.

The true origin of gringo is most likely that it came from griego, the Spanish word for “Greek.” In Spanish, as in English, something difficult or impossible to understand is referred to as being Greek: We say “It’s Greek to me,” just as in Spanish an incomprehensible person is said to hablar en griego (i.e., “speak in Greek”).”

According to the Real Academia Española (the ultimate reference for the Spanish language): 1. Adjective: Foreigner, especially one who speaks English, in general one who speaks a language other than Spanish. 2. Foreigner 3. In Mexico, Cuba, El Salvador, Honduras, and Nicaragua an American 4. In Bolivia, Honduras, Nicaragua and Peru a blond fair skinned person 5. Unintelligible language
Related Links

Doing Business in Mexico, parts 1 - 28

Corruption, bribes, mordidas, tips - Doing business in Mexico

There are perceptions and realities associated with bribery and corruption when doing business in Mexico.

Corruption, bribery, “mordidas” (translated as “bites”, but are actually bribes) and tips are part of Mexico and the foreigner’s perception of Mexico.

It’s a difficult subject to address because it involves ethical and moral decisions for the foreign visitor or business person. What is culturally OK in Mexico, may be seen as immoral and corrupt by an individual from another country.

Historically, corruption in Mexico is blamed upon the Spanish conquistadors. While corruption no doubt existed prior to the Spanish conquest, they certainly did institutionalize it in government and throughout the Mexican (and Latin American) culture.

Today corruption, bribery and tipping occur at all levels of Mexican society and at many different degrees. For one reason or another it has become part of daily life. Most of it involves small sums of money, and is thought of as tipping and not as a bribe.

In fact, to eliminate corruption in Mexico overnight is unrealistic and would probably result in chaos. As some Mexican observers have noted, “La mordida” is the grease that makes the system work.

All of the following might occur in Mexico. Which of the following are acts of corruption or bribery? Which are totally unethical, somewhat unethical, and no big deal? Which of these events occurs in your country ?

The garbage collectors come by every 2 weeks, rings the doorbell and ask for money for a soft drink, US $1 or $2.
While waiting in a long line, someone comes up to you and asks if you would like to avoid the line and be attended right away. It will cost US $ 5 to US $ 10, and save you 2 hours.
Your application for a permit/license has been in the government office for several weeks, and no one seems to be able to tell you what is wrong. The secretary asks if you would like to buy a raffle ticket for some organization. After buying the ticket the application suddenly appears.
You visit a local political leader and take him to dinner and a theater event to discuss your project.
At holiday time, you send gifts to politicians, suppliers and business associates.
Your daughter copies exam answers from another student at school.
The police stop you for a traffic violation (which may or may not have occurred). They suggest that for US $ 20 or $ 50 you can make it disappear, and you’ll be on your way in 5 minutes.
You need government agency approvals for your business project. In order to make sure everything is done correctly, you hire an official in the department as a consultant.
You require a zoning change on a piece of land, you invite a government official to participate as an investor in the project, or perhaps give him some shares.
Your son or daughter wants to get into a nightclub, the doorman says no. They give him US $ 5 and walk right in.
A city inspector finds code violations in your restaurant. A call to a family member, who knows someone, who knows someone, results in the violations being revoked.
A drug enforcement agent receives a phone call that tells him to choose between accepting USD $ 20,000 payment this year to let a drug shipment go by unharmed or to have his children shot.
Your immigration papers are not quite right. There is a document missing. You are able to convince the official (though words and tears) to “overlook” the situation, no money is exchanged.

Can you live and work in Mexico and not pay bribes? Yes. (I’m lived and worked in Mexico over the past 14 years and have never paid a “mordida” in my private or business life.)

Are bribes necessary for doing business in Mexico? I think it depends on the circumstances. Most business can be done without them. It depends on you, and your evaluation of the situation. There must be certain areas where influence peddling, and “mordidas” are an integral part of the business, and other areas where it’s not required in the least. This is not unique to Mexico.

All Mexican local, state and federal governments and government agencies are not corrupt. In fact, in the past 10 years there have been great advances in transparency in government, including guarantees for the time involved in processing applications and permissions.

Mexican federal public policy and local and state governments have been actively reducing and eliminating institutionalized corruption and penalizing government workers involved in illegal acts. There is still a long way to go before it’s completely eliminated, but there has been a noticeable change in many areas.

Mexico’s poverty, unequal distribution of wealth, history and culture make it difficult to eradicate corruption overnight. Mexico is a country with many laws, but they are not well enforced. It’s similar to the temptation one might feel on the lonely country road at 3:00 AM and confronting a red light…..do you stop…or run through it?

You should develop and hold firm to your own ethical and moral principals in order to live and do business in Mexico. If you don’t do it at home, why would you do it in Mexico?

Your company should have a clear policy about corruption and bribery, and hold to it when doing business in Mexico, or internationally.

If you have any personal experiences or observations about corruption, bribery, mordidas and doing business in Mexico, please write me or comment here.
Related Links

How to do business in Mexico, Parts 1 - 28

Tipping guidelines for Mexico

World Corruption Perception Index - 2006

Patience chaos and doing business in Mexico

World Corruption Perception Index 2006 - Transparency International

Interesting look at perceived corruption worldwide.

Transparency International has released their 2006 index of corruption perception on November 6, 2006.

Mexico lands at number 70 on the list, which puts it close to the middle of the pack out of a total of 163 countries.

” Since 1995, Transparency International has published an annual Index of perception of corruption ordering the countries of the world according to “the degree to which corruption is perceived to exist among public officials and politicians“. The organization defines corruption as “the abuse of public office for private gain. ” - excerpt from Wikipedia Corruption Perception Index.

“As this index is based on polls, the results are subjective and are less reliable for countries with fewer sources. Also, what is legally defined, or perceived, to be corruption differs between jurisdictions: a political donation legal in some jurisdiction may be illegal in another; a matter viewed as acceptable tipping in one country may be viewed as bribery in another. Thus the poll results must be understood quite specifically as measuring public perception rather than being an objective measure of corruption.

Statistics like this are necessarily imprecise; statistics from different years are not necessarily comparable.” - Wikipedia Corruption Perception Index.

Related Links

Internet Center for Corruption Research

Corruption Perception Index - 2006 (EXCEL)

Transparency International

Wikipedia

Foreign direct investment in Guanajuato, Mexico

The State of Guanajuato, Mexico has over 572 companies with foreign capital registered and located in the state.

The following information has been translated from an article dated November 6, 2006, published in the newspaper Correo, by Vicente Ruiz, Link.

49% of these foreign companies in Guanajuato are involved in manufacturing, and 29% are commercial operations which together represent an investment greater than 1,000,000,000 (one billion US dollars).

Due to changes in laws regarding foreign investment in Mexico (in 1993, 1995, 2001), 90% of all economic activities in Mexico are completely open to foreign participation and investment.

Mexico’s growing national economy, free trade agreements with 32 countries and geographic location provide great economic and logistics advantages to companies opening operations in Mexico.

In Guanajuato, 50% of all the foreign companies are located in the city of Leon (281), followed by Irapuato (71) Celaya (52), San Miguel Allende (31), Silao (26), San Francisco del Rincon (25), Guanajuato (19) and the rest (67) throughout the state.

Guanajuato occupies the first position for foreign investment of the all the Mexican states in the North-Central region.

Principal industries in Guanajuato that received direct foreign investment include:

The automotive industry received US $ 874.2 million
Processed food industry (concentrates, preserved products) received US $ 99.1 million
Manufacture of paper, cellulose and derivatives received US $ 18.9 million
Commerce of non-agricultural items received US $ 17.3 million
Chemical manufacturing received US $ 15.9 million
Clothing manufacturing received US $ 7.5 million
Textile manufacturing received US $ 5.2 million
Plastics manufacturing received US $ 5.4 million
Food products received US $ 4.8 million

Who has invested in the State of Guanajuato, Mexico:

Country…. Investment (Millions of US dollars)…… %

United States of America……..1’ 009, 214.00………..92.7

Holland………………23, 277.90………….2.1

Spain………………….18, 234.00………….1.7

Germany……………14, 267.30………….1.3

Denmark……………..4, 913.90………….0.5

Taiwan…………………4, 426.00………….0.4

Others………………..14, 549.60………….1.3

Total: USD $ 1’ 088, 882.70 (Millions)

Secretaria del Economia de Mexico (English)

State of Guanajuato webpage (English-Spanish)

Correo (Spanish)

IMF predicts strong economic growth for Mexico

Good news for Mexico and Mexican business.

The IMF (International Monetary Fund) released their Regional Economic Outlook: Western Hemisphere on November 2, 2006.

They are predicting a 4.4% growth rate for this year and strong indicators for medium term growth due to a strong financial sector in the country.

Get the entire report here: IMF - Regional Economic Outlook: Western Hemisphere (pdf file)

IMF - Regional Economic Outlook: Western Hemisphere

IMF - Regional Economic Outlook: Western Hemisphere (pdf file)

BBC News: IMF praises Latin American growth

Bloomberg: Mexico’s growth to beat earlier forecast, IMF says

The definitive guide on how to dial to Mexico

Starting today, November 4, 2006 there are changes on how to dial to cellular phones in Mexico.

The program called “El que llama paga”, which means “whoever calls, pays for the call”, allows you to call any cellular phone in Mexico and the recipient of the call does not have to pay. Previously the cost of the call was shared between both parties.

If calling Mexico from out of the country (International long distance):

To a fixed landline phone: the exit code of the country (in the USA - “011″) + 52 + area code + telephone number

To a Mexican cellular phone: the exit code of the country (in the USA - “011″) + 52 + 1 + area code + telephone number

If in Mexico, calling from a fixed landline phone to a Mexican cellular phone

To a cellular phone in the same city: 044 + area code + telephone number

To a cellular phone in another city: 045 + area code + telephone number

To a Nextel of the same city: telephone number

To a Nextel of another city: 01 + area code + telephone number

From a fixed landline that is NOT Telmex to a cellular phone of another city: 01 + area code + telephone number

If in Mexico, dialing from a cellular phone

To a fixed landline in the same city: telephone number

To a fixed landline in another city: 01 + area code + telephone number

To a cellular telephone in the same city: area code + telephone number

To a cellular telephone in another city: 045 + area code + telephone number

To a NEXTEL: telephone number

To a NEXTEL in another city: 01 + area code + telephone number

Related Links

Changes for dialing long distance to cellular phones in Mexico

Use of business titles in Mexico - Doing Business in Mexico

The use of business titles in Mexican business life is important.

Most people with professional degrees are addressed using their professional title. This is especially true in written communication. Failure to do so can be seen as lack of education and offensive.

Until you get to know a person, always use the professional title or full name, never address them by their first name until it is clear that they are comfortable with this.

You can ask how they wish to be addressed if unsure. It’s better to make a mistake on the side of formality.

Some titles are general, and when in doubt regarding the professional title, you should use these:

Joven - refers to any young man from birth to adolescent.

Señor (Sr.) - refers to any male older than an adolescent.

Don - a term of great respect used to recognize older males.

Señorita (Srta.) - refers to any unmarried female. Once a woman is above a certain age, she is referred to as Señora, even if unmarried.

Señora (Sra.) - refers to any married or widowed woman.

Doña - a term of great respect used to recognize older females.

Professional titles

Doctor (Dr.) masculine, or Doctora (Dra.) feminine - Refers to anyone with a PhD. or Medical Doctors degree.

Licenciado (Lic.) masculine, or Licenciada (Lic.) feminine - refers to anyone with a law degree (most common usage) or Bachelor’s Degree.

Contador Publico (C.P.) - refers to anyone with a public accounting degree.

Ingeniero (Ing.) - refers to someone with an engineering degree.

Arquitecto (Arq.) - Refers to anyone with an arquitectural degree.

Diputado (Dip.) masculine, or Diputada (Dip.) feminine - refers to a publicly elected official equivalent to Federal, State or Local representative in the USA.

Patience, Chaos and Doing Business in Mexico

Criticism - how to do business in Mexico

Meeting people in Mexico

Doing Business in Mexico - cultural tips

When doing business in Mexico you are very likely to see some, or all, of the following during a business trip. It’s part of the Mexican business and social culture.

Late arrival for meetings by participants. This might be up to 30 to 45 minutes late.

Cancellations at the last minute.

Changes in agreed upon plans and agendas.

Long lunches or dinners, where business talk is not the major theme.

Meetings that seem to go on for a long time before coming to the business issue.

People will gesture and use their hands a great deal while speaking.

There will be a degree of emotion in business discussions and presentations.

People will be very formal and polite.

People will sit very close to you when speaking, and often touch your arm or shoulder while talking.

Your Mexican partners will not be forth coming and explicit regarding bad news.

You will not hear the word NO a lot.

Deadlines may not be met for reasons that you don’t understand or don’t believe.

Until you establish a social relationship with your Mexican business partners, your business discussions will seem very vague, cold and unsatisfying.

Decision-making may be extremely swift or excruciatingly slow. You never will know why.

Dinners, parties, weddings and social gatherings last for hours. There is no such thing as a 2 hour cocktail party.

You will be encouraged to eat everything, drink plenty and enjoy yourself while in Mexico. Failure to do this is seen as a refusal of hospitality or a sign that you are not comfortable in Mexico or with your hosts.

In a social gathering the men will tend to congregate in one part of the room or table and the women in the other.

Criticism - how to do business in Mexico

Meeting people in Mexico

Great International Business Trip Results

16 Essential questions - the international business traveller’s quiz

International Business - cultural mistakes

Good advice for international travellers, on how to avoid being seen as the “ugly American”. Are you the ugly American by Erin Richards, Budget Travel.

Remember that every action, comment, reaction, criticism and gesture is being watched and evaluated by your hosts, counterparts and clients when you are in their country.

Look for and work to find the similarities in your cultures and interests.

Humility and and stopping to think before acting will go a long way toward improving your relationships and international cultural and social skills.

International Business Tips

Great International Business Trip Results

16 Essential questions - the international business traveller’s quiz

Lessons in international business

Stereotypes and global business

Are you the ugly American

Patience, chaos and doing business in Mexico

To successfully work with Mexico one must understand some fundamental truths inherent in the country and culture.

Patience and Chaos are important factors in understanding the people, culture and history.

Patience.

Mexicans are patient people. The have great tolerance for human error. They run on a schedule that is influenced by work concerns, family concerns, their own mental health, and takes into consideration outside factors and influences that might interfere with their plans.

This is not to say that Mexicans are never in a hurry, or are willing to accept poor quality, or like to move slowly.

What it means is that they are not overly disturbed and motivated to emotional outbursts and threats if something gets in their way, or does not go as planned. They patiently seek a solution, and if no solution is present, they accept the reality of the situation.

Chaos

Chaos is part of Mexican culture and society. Lack of long term planning is quite common (at government, business, personal levels), and everything gets done at the last minute. The curious part is that everything DOES get done.

This chaos and disorganization draws strong criticism from individuals used to order, control, planning and expected outcomes in their own countries. Remember that it is a characteristic of Mexico, not good, not bad, just different.

Living in a chaotic environment allows the Mexicans to rapidly adapt to any situation, take advantages of opportunities quickly, and survive quite well in a every changing world.

There is spontaneity in Mexico. Social engagements are arranged at a moments notice, or simply just happen, unplanned and casually. Things just happen. Expect last minute changes in plans, events, and agendas. “Expect the unexpected” is great advice.

Not surprisingly, Mexico is a country where social relationships and social networks are extremely important. These personal bonds and relationships, which are reinforced constantly, help to creat order and get things done.

As is the case of all stereotypes, these observations are broad based and may, or may not, have any validity.

Criticism - how to do business in Mexico

Meeting people in Mexico

Mexico manufacturing, US inventories and safety stock

Manufacturers are returning to Mexico after “experimenting” in the Asia Pacific region. Some of the big reasons for this return are ; to reduce time to market, eliminate the financial costs of inventories in transit, lower the logistics costs, and to strengthen the supply chain by moving closer to just-in-time deliveries.

But moving to Mexico isn’t going to solve all the problems.

A September 2006 article in CFO magazine points out how US businesses are increasing safety stocks “just in case”. Delayed in the USA The article points out how supply chain disruptions are being provoked by an increasingly saturated US highway system and bottlenecks in deepwater ports and railyards.

The good news is that Mexico is close to the USA, a truckload of goods can leave any point in Mexico and arrive at the US destination in as little as 4-5 days. The railyards and new multimodal Interior Port in Guanajuato, Mexico allow manufacturers to establish production facilities in the interior of the country. Exporters can now clear customs and load the sealed container onto the rail-car at the new (2006) high capacity Customs port located in the geographic center of Mexico.

The bad news is that unless the US begins to upgrade their highway, port and rail facilities, supply chain managers in the US will be buying and storing higher levels of inventory to assure continuity of operations, “just in case”.

Related Links

Delayed in the USA - Supply Chain

Industrial and Business Parks in Mexico

AMPIP Mexican Association of Industrial and Business Parks

Illegal immigration - USA and Mexico

Immigration control is a global challenge, and yet not one developed country has developed a good workable and acceptable legal immigration plan that eliminates illegal immigration.

There are political solutions, and then there are real solutions.

Immigration between nations occurs when there are marked differences in economic wealth or living conditions between two regions. In order to eliminate massive immigration, wealth (and it’s distribution) of the economically disadvantaged country must improve or the wealthier country must lose it’s wealth.

The long-term solution to immigration will be found in changing economic conditions, policies and the creation of opportunities in the disadvantaged country.

A short-term solution will be found by building walls and increasing border enforcement (This is effective where the border areas are limited and can be totally controlled).

The current immigration situation between Mexico and the US has become a political football, and it appears political solutions are all that matter.

It’s time for both countries to work and invest in real, long-term economic solutions to solve fundamental problems in order to help and protect both countries. The US is facing a problem, and Mexico should assist their neighbor in finding solutions.

The Mexican perspective:

There are many opportunities and jobs available that pay much better than in Mexico.
There are no jobs available in Mexico for the majority of immigrants.
Going to the US is a “rite of passage” for many Mexicans in certain areas. Most return to Mexico after 3 - 5 years.
Many cross the border illegally to meet family members already in the US, and have jobs waiting for them once they arrive. Most immigrants have jobs in the US.
Most of the immigrants come from rural areas in Mexico, with low levels of education.
Mexican immigrants in the US send enormous sums of money to support family members in Mexico. Petroleum sales bring Mexico the most foreign currency income, followed by money sent by Mexicans in the USA (not all illegal immigrants) to family in Mexico.
For many Mexican state governments, this injection of foreign capital is very important for maintaining local economies.
Crossing the border illegally is dangerous and life threatening, and in many cases expensive.
US employers are open and supportive to employing illegal immigrants, and in many cases provide false identification and protection to the workers.
The majority of the millions of illegal immigrants currently in the US are working, and spending money in the local US economies.
The legal immigration mechanisms available (visas) reject those who are economically disadvantaged (the ones with the highest need to immigrate).
Mexicans believe that the US has the sovereign right to restrict and control immigration.
They would like to see a realistic legal migration program created.
The immigrants in the US pay sales taxes, and they consume goods and services in the US.

The US perspective

Illegal immigration takes jobs away from US citizens.
Illegal immigrants use social, health and welfare services paid for by US taxpayers.
Illegal immigrants bring crime, drugs and violence to communities.
Illegal immigrants don’t speak English and don’t learn English, and are forcing communities to spend money on bilingual teachers and government programs.
Illegal immigration can be stopped by building a wall or by enforcing the border.
Illegal immigrants don’t pay taxes.
US agricultural businesses cannot survive with competitive prices if illegal workers are eliminated. Legal immigration will increase labor costs.
Elimination of illegal immigrants will cause substantial increases in the costs of food, restaurants, hotels, construction and certain consumer and industrial goods and services. Immigrant labor is needed to maintain the US economy.
The US Border Control has stated many times that the solution is in enforcing and penalizing US employers that hire illegal workers, not by penalizing and deporting the illegal immigrant.
The US government and state governments understand the economic situation and provide political solutions for voters, but understand that the total elimination of immigration would severely hurt the US economy. A legal immigration solution must be implemented.
There is a fundamental dilema. America is the land made of immigrants, and yet now must begin to control this immigration. Huge uncontrolled borders, wealth and opportunity, and willingness of employers to hire undocumented workers combine to make the US an attractive immigration destination.

Opportunities and possible solutions

If we agree that the illegal immigration problem is a consequence of economic situations and differences in the distribution of wealth, then the following ideas are possible solutions. None of them are easy, all of them have costs, but they are the only real long-term solutions to the immigration situation.

US government and businesses coordinate with the Mexican government and business sector to invest in economic development projects in the areas in Mexico with the highest degree of poverty and immigration.
The Mexican government must aggressively work and invest in order to improve opportunities and wealth in their country, especially for the economically disadvantaged.
US businesses push for immigration reform that allows for temporary workers and legal immigration. The program would increase costs to the US employers, and the workers would be paying taxes.
US government makes laws and enforces them against US employers that hire illegal immigrants.
US government finds a method to legalize current immigrants that have been and are working in the US.

Official government websites of the Mexican States

The definitive dialing guide for calling Mexico

Top States in Mexico for for doing business - World Bank Report 2007

Lessons in international business - negotiations

Observations on how to create trust, effective meetings and excellent negotiations with overseas customers, suppliers and partners.

Whenever you are involved in international negotiations or global meetings keep in mind that you might be working with the same person for the next 10 - 20 years.

Negotiations should be open and straightforward. Hidden agendas will eventually be discovered and make the next meeting very difficult.

Negotiations should involve creating value for both parties.

Meetings are important moments where trust is being built and confirmed. Be honest and clear about your desires.

Never agree to something you cannot deliver or perform.

Listen, understand and evaluate what your partner is requesting. What are they saying, and what does it mean.

Be certain of what you are negotiating and agreeing to. If not 100% sure, stop and request clarification.

Prepare for the meeting several weeks before it happens. Refresh and add information weekly. When you reach the meeting, you will be in control of the information and feel comfortable during the talks.

At the end of the meeting, write down the most important points or agreements, with names and dates, and have it signed by those present. This little tip will save lots of time and trouble for everyone involved.

Any agreement must have 100% follow-through. If for any reason problems arise in the follow-through, immediately contact and communicate the situation to your partner.

Great international business trip results

Great International Business Trip Results

In any international relationship communication and understanding are critical for success.

Problems created by; language, stereotypes, misinformation, lack of information, and cultural misunderstandings combine with normal business problems to create a complicated scenario for anyone involved in international relationships and global business.

Prepare your international meetings and business presentations using the following questions as a guide to organize your ideas and focus on actions that will produce positive results for everyone involved.

6 Questions - Create Great International Business Trip Results

What does this organization know about me, my company and my country?
What do they think they know about me?
What can I tell them that they do not know?
What do I know about my international partner, culture and country?
What do I think I know about this business, culture and country?
What can they tell me that I do not know?

1. What does this organization know about me and my company. When you walk in the room an opinion has already been formed about you, your organization, and your ability to perform in the future. These ideas are based upon facts, information and past experience.

What has been the history of our relationship in their country?
Who has been involved in our mutual business, and why?
What promises have been made and kept by both?
What promises have been made and not delivered upon?
What have the major problems and success been in the past?
Press and media, our organizations promotional material.

2. What do they think they know about me. Clarifying the unknowns or presumed realities in a relationship is crucial to success. These ideas may be very damaging and limit your ability to trust one another. What stereotypical behaviour can you avoid or prevent? What can you clarify or refute through information or actions?

Behaviour and reacts based upon past experience with your organization.
Rumour and innuendo, press and media reports.
Negotiation styles.
Business objectives.
Behaviour, goals and methods of doing business based upon country and cultural stereotypes.

3. What can I tell them that they do not know. Today’s business world requires trust, information and solutions. Reinforcing your need to work with your international partner, providing important information or solutions, and clarifying misunderstandings can only help the relationship.

Clarify or destroy cultural stereotypes.
Clarify business objectives and why they are important in order to reach these objectives.
Provide solutions and alternatives to existing situations and challenges.
Provide information of value for their business and strategy.
Clearly identify current or potential business problems.
Predict and have answers ready for their questions.

4. What do I know about my International partner, culture and country? What do I know is true and not innuendo or interpretation? The numbers, facts, information, agreements and past performance history of the business. Information about the country and the business culture.

5. What do I think I know about this business, culture and country? What preconceived ideas and stereotypes are you working with? What are you assuming and what has been proven?

6. What can they tell me that I do not know? What questions do you need to ask in order to verify information or create plans. What pieces of your information puzzle are missing? This is the time to get your questions answered, what are they?

Stereotypes and global business

Create great international business relationships

16 Essential questions - the international business traveller’s quiz

Lessons in international business

Changes - dialing long distance to a cellular phone in Mexico

New changes take effect for some cellular phone companies in Mexico on November 4, 2006.

The program is called “El Que Llama Paga Nacional”, which loosely translated means “Whoever Calls, Pays for the Call In Mexico”. Previously a long distance call to a cellular phone was shared between the caller and the receiver of the call.

New long distance dialing codes (after November 4, 2006) from “regular” landline phone to a cellular phone:

If calling from Mexico, long distance to a Mexican cell phone:
045-Area Code - Telephone number (the old code was 01-Area Code-Telephone number)

If calling from other countries to a Mexican cell phone: 52-1-Area Code- Telephone number (old code was 52-Area Code- Telephone number)

This 045 prefix applies to calls to cellular phones using Telmex, Telefonos del Noroeste, Telcel, Iusacell, Iusatel, Telefonica, Baja Celular, Telefonia Celular del Norte, Portatel del Sureste, Telecomunicaciones del Golfo and Unefon service. This represents 90% of the cellular phone users in Mexico.

The person on the cellular phone receiving the call will not be charged, however the person making the call from the landline phone will be charged approximately $ 3.00 Mexican pesos per minute (an increase of 300% from the current rate). The rates are still being negotiated between the companies and final results should be available from Cofetel in the next week.

The following companies have not signed the agreement: Axtel, Avantel, Alestra and Maxcom. Dialing to cellular phones using these suppliers will remain the same (01-Area Code- Telephone number) and the costs are shared between the person dialing and the person receiving the call.

Related Links

Cofetel

El Que Llama Paga Nacional (pdf)

Institute for Strategy and Competitiveness

Global competitiveness 2006 - Mexico and China

The Global Competitiveness Report 2006 - 2007 (Link), released by the World Economic Forum on September 26, 2006 has some statistics and rankings of interest if your organization is expanding into new international markets.

Based upon a mix of economic factors, information and the opinions of international business leaders, the report lists how competitive nations are in relation to one another, and compares this to last years ranking.

Mexico has clicked up a notch from 59 in 2005 to 58 in 2006.

“Mexico’s ranking has remained broadly stable, moving up one place to 58. The country’s somewhat uneven performance over the various pillars of the GCI is shown by relatively high scores for health and primary education, goods’ market efficiency and selected components of technological readiness, e.g., FDI and technology transfer, no doubt reflecting the close links of the Mexican market to the US in the context of NAFTA. However, this is offset by the same institutional weaknesses as are prevalent in the rest of Latin America.”

China is the big surprise, dropping 6 points this year (48 in 2005, 54 in 2006).

“On the positive side, China’s buoyant growth rates coupled with low inflation, one of the highest savings rates in the world and manageable levels of public debt have boosted China’s ranking on the macroeconomy pillar of the GCI to 6th place – an excellent result. However, a number of structural weaknesses need to be addressed, including in the largely state-controlled banking sector. Levels of financial intermediation are low and the state has had to intervene from time to time to mitigate the adverse effects of a large, non-performing loan portfolio. China has low penetration rates for the latest technologies (mobile telephones, Internet, personal computers), and secondary and tertiary school enrollment rates are still low by international standards. By far the most worrisome development is a marked drop in the quality of the institutional environment, as witnessed by the steep fall in rankings from 60 to 80 in 2006, with poor results across all 15 institutional indicators, and spanning both public and private institutions.”

Related Links

World Economic Forum

U.S. tops world competitiveness index 2006

Lessons in international business

The most difficult part of doing business overseas will occur when you have to explain your country’s politics and culture, and provide answers on why you do things the way you do.

Stereotypes and global business

International business traveller, ambassador, explorer, map-maker

Sunday, March 25, 2007

20 ideas - how to avoid major problems with your export business

Exporting is an extremely difficult process as compared to selling in the local or national market.

Exporting is not easy, and it’s not inexpensive. It takes planning and requires people that are open, flexible, problem-solvers, and quick at adapting to new situations.

A smart organization that desires to export their products will invest time and money building the proper administrative and sales structure before they begin operations.

20 ideas - how to avoid major problems with your export business

1. Say no to customers. When you can’t do it, say no upfront, before you make an agreement.

2. Create an export strategy before you begin to export. Don’t get sucked into exporting by “accident”.

3. Samples should be equal in quality to the actual production that will be shipped.

4. Make everything perfectly clear with customers. Don’t assume anything, don’t work with suppositions.

5. Learn and understand the business culture of your export market and customers before you begin.

6. Provide detailed price lists and price quotations to the customer. Understand your Incoterms (if you don’t know what these are, stop know and click here)

7. Contemplate what problems might possibly arise (internal and external) that could affect shipment or delivery. Prepare alternatives or take preventive action.

8. Understand that there is a learning curve that affects the organizations ability and performance when exporting to new markets. Calculate the time this will require, and it’s cost.

9. Write down and sign all agreements with the customer (dates, specifications, changes, time, everything). Verify everything with an email or fax if unable to physically sign the agreements and changes.

10. Use caution about exclusivity agreements. Everyone wants exclusivity, will that exclusivity support your entire export production? Will it limit your ability to grow?

11. Develop a quality control system throughout the company.

12. Never send poor quality products, especially in order to meet a shipping deadline.

13. Research the transportation, temperature and climatic conditions that the product will be subject to prior to arrival at the export destination.

14. Create an export price strategy. Know where you are going, and how you want to get there, your costs and required profit margins before you begin to quote prices.

15. Clearly define the costs of production and separate them from the costs of the sales required for exports. Give the sales department a base price to build upon, and make sure they clearly identify the costs related to sales and promotion in the export markets.

16. Always have at least 2 customers in the export market. This will provide protection and stability for your production and for the customers in the export market.

17. Customers who provide the research, development and design for the product may bring samples to you. Assist in the development and manufacture of the samples. Your production know-how (turning ideas into product) is fundamental and important for all involved.

18. Research and investigate fashion, trends and tendencies. In order to survive, you have to create, not pirate and copy.

19. Quality complaints and suggestions must be addressed and implemented immediately. This has to be part of the understanding of every worker, from production to sales to executive suite.

20. Discipline, planning and order. Production planning, raw material purchasing decisions, financing, infrastructure investment, human resources, sales and marketing all must be planned and coordinated, at all times.

Added Oct. 1, 2006 - Bonus legal reminder: Know the law of the country to which you are exporting concerning: retention of documents for litigation, product quality and manufacturing and product safety before you begin sales and shipping. Understand your responsibility and liability for recalls, retrofitting, refunds or destruction of the product. Learn about your legal responsibility and relationship with brokers, agents and distributors and your products.

Maquila and Maquiladoras in Mexico

Why you should pay attention to free trade treaties

Mexico and international free trade treaties

Maquiladoras in Mexico

An Internet search for the definition of the terms maquila and maquiladora will turn up quite a variety of ideas and interpretations.

The maquiladoras have created quite an emotional and political reaction on both sides of the US and Mexico border. They have been accused of stealing jobs from the US, promoting sub-standard working conditions, lowering wages, exploiting workers, and not contributing to the Mexican economy.

Despite the controversy, the maquiladoras are growing and thriving in Mexico. They offer attractive benefits to organizations that are seeking competitive production and assembly costs, skilled labor and Mexico’s proximity to the US market. Recently many transnational organizations that moved manufacturing operations to China in the 1990’s have moved back to Mexico due to cost and logistic advantages.

Maquila and Maquiladoras - definitions and activities

The term maquila comes from the Spanish term that refers to the portion paid (in grain, flour or oil) to a miller for milling a farmer’s grain.

Maquiladoras are legal entities under Mexican law, with special tax privileges, they provide service, assembly or manufacturing operations.

Maquiladoras are able to import raw materials or semi-processed materials from foreign countries, in order to service, process or assemble them in Mexico, and then export the finished product back to that country. These activities take place without the collection or payment of import, export or V.A.T. (value added tax) taxes.

The maquiladora program was created by Mexico in order for foreign organizations to take advantage of low labor costs in Mexico (primarily the USA), and to provide employment to Mexican workers in Mexico. Initially the maquila operations were located close to the US border. Currently maquila operations can be found throughout Mexico.

Maquiladoras can be 100% foreign owned, 100% Mexican owned, or a joint venture between Mexican nationals and foreign investors.

Maquiladoras are also known as twin plants, in-bond industries, export assembly plants and offshoring.

The maquiladoras in Mexico suffered from a crisis of plant closings in the 1990’s and early 2000’s as many companies moved operations to China. Since 2004, Mexico has seen a resurgence of the maquiladoras.

Check with your attorneys and accountants in Mexico about the specific benefits of the maquila program. As of September 2006, there were important legal changes (simplification and consolidation of government compliance and monitoring programs) that will affect current and future maquiladoras.

Maquila and Maquiladoras in Mexico

Travel information - Guanajuato, Mexico

Life is not all about work. When on business trips to Mexico, do some research about your destination and nearby cities. Ask your hosts to assist with transportation or a guide, and visit the area. It will help you understand the country, and greatly increase your enthusiasm for doing business in Mexico.

If you are in Leon or Irapuato for business, make sure you get out to see Guanajuato City.

The New York Times has a piece on the city of Guanajuato in the state of Guanajuato, Mexico in their T-Style Magazine: Travel Section. The City that Silver Built

Quite a different experience from the border towns and beach resorts that Mexico is famous for. Guanajuato city is located in the geographical center of Mexico, 30 minutes away from Leon, the largest city in the state of Guanajuato.

The city of Guanajuato (located in the state of Guanajuato) is home to the International Cervantino Arts Festival (Festival Internacional Cervantino, FIC). This year the dates of the Festival are October 4 - October 22, 2006.

Guanajuato Capital

Travel by Mexico: Guanajuato

Festival Internacional Cervantino 2006

Why you should pay attention to free trade treaties

Globalization, transnational companies, global sourcing and outsourcing, free trade, do any of these terms sound familiar?

Obtaining products and raw materials for the lowest price possible is a fundamental concept in business. Today organizations are looking for manufacturers and locations worldwide where they can find lower costs of production in order to remain competitive.

Combine the factors of: quality control, low cost production, logistics costs, and the time involved to get the product to market from the factory, and you understand the challenge of doing business and sourcing products in today’s global economy.

To truly determine the final cost of the product, all these factors must be calculated. This will determine which country offers the best competitive advantage. Make sure you are analyzing any existing free trade agreements when you are seeking suppliers globally.

Free trade treaties between countries have a significant impact upon the final cost of goods. These free trade agreements eliminate the tariffs and taxes on imported and exported goods between the countries involved, depending upon their concentration or percentage of “local” or national raw materials (including labor), as specified in the free trade agreement.

Free trade agreements between countries are of great importance and value only if are exclusive and not accepted by all trading countries. The more free trade is embraced by the international community (through treaties or elimination of import and export tariffs) the less impact the current free trade agreements have in determining competitive advantages for a single country.

Here is a simple example of how the NAFTA (North American Free Trade Agreement) free trade treaty between Mexico and the USA, would favor the US supplier over a Chinese supplier.

Example of free trade agreeement competitive advantage:

US supplier to Mexico. If I want to purchase paint made by a US paint manufacturer and have it shipped to my warehouse in Mexico, my total cost to bring the goods to my warehouse in Mexico would be the cost of the paint, plus freight and customs clearing costs. There is no import tariff on this product due to the NAFTA free trade treaty. It would take 4 - 6 days to arrive in my warehouse in Mexico once the product has been shipped from the USA.

US paint $ 20.00 + Freight $ 4.00 + Customs $ 1.00 = $ 25.00 total cost of the US product in my warehouse in Mexico

Chinese supplier to Mexico. If I purchase the same product, from the same transnational company, but it is manufactured in China. Transportation time is 40 days from date product is shipped from China.

Chinese paint $14.00 + Freight $ 8.00 + Customs $ 1.00 + Import tariff (13% of CIF value) $ 2.86 = USD $ 25.86, total cost of the Chinese product in my warehouse in Mexico.

In this example the final cost of the product is $ .86 lower from the US supplier as compared to the Chinese supplier, despite a lower initial product cost. Factor in the financial cost and time required to move the product from the factory to my warehouse, and the lowest final cost in this case would clearly come from purchasing product from the US supplier.

Mexico’s aggressive free trade strategy

Since the 1990’s Mexico has bet heavily on international free trade agreements as a method to improve their competitive advantage and increase their manufacturing base and attract foreign investment.

Mexico has signed 11 existing free trade treaties and 2 complementary economic agreements with 42 countries. It is the only country in the world to have standing free trade agreements with North American and the European community.
The free trade agreements have greatly increased international competition (imports) in Mexico (good for the consumer).

Free trade agreements have allowed Mexican exports to increase and reach destinations and markets that were closed before due to tariffs and costs. There has been increased foreign investment from countries that desired to use Mexico’s free trade competitive advantage for international manufacturing and export projects.

The Mexican manufacturers and suppliers of the national Mexican market were given a “sink or swim” option. Virtually overnight (many of the treaties were phased in over a period of 3 - 10 years), their previous protected market was filled with imported goods (more competition, lower cost, higher quality).

Those that have survived the “invasion”, have had to improve their efficiency, quality and costs. Making them much more competitive in todays global economy.

Britannica’s Definition of free trade:

“Policy in which a government does not discriminate against imports or interfere with exports. A free-trade policy does not necessarily imply that the government abandons all control and taxation of imports and exports, but rather that it refrains from actions specifically designed to hinder international trade, such as tariff barriers, currency restrictions, and import quotas. The theoretical case for free trade is based on Adam Smith’s argument that the division of labour among countries leads to specialization, greater efficiency, and higher aggregate production. The way to foster such a division of labour, Smith believed, is to allow nations to make and sell whatever products can compete successfully in an international market.”

World Bank report - Doing Business in Mexico

The World Bank has an on-line report available entitled “Doing Business in Mexico“. The study was published in December of 2005.

“Cosponsored by COFEMER, USAID, and the World Bank Group, Doing Business in Mexico is the ﬁrst state-level report of the Doing Business series in Latin America. This report investigates the scope and manner of regulations that enhance business activity and those that constrain it.

The report covers the following thirteen Mexican cities and four areas of regulation: Starting a business, Registering property, obtaining credit and enforcing a contract.”

“When compared, Mexico City and the 12 other cities differ dramatically on the four indicators the report measures. “

The cities and regulations analyzed include: Aguascalientes, Celaya, Ciudad Juarez, Guadalajara, Monterrey, Veracruz, Merida, San Luis Potosi, Torreon, Mexico City, Tlalnepantla, Puebla, and Queretaro.

Of special note is the following comment. “The report concludes that reform is sorely needed. Much of the opportunity for improvement is in local administrative procedures, which can be changed by a governor or a mayor.”

This is very important. A governor or local mayor can make an important difference on the ease of setting up and doing business in Mexico. Seek out those states and cities with pro-active leadership. Find those areas that are investing heavily in infrastructure or have a dynamic policy focused on foreign investment and economic development.

Doing Business in Mexico (PDF)

Press Release (PDF)

Airport codes for Mexico

An alphabetical listing, by city, of the 3 digit airport codes for Mexico.

AJS Abreojos

ACA Acapulco Alvarez International

AGU Aguascalientes

XAL Alamos

AZG Apatzingan

BHL Bahia de los Angeles

CPE Campeche International

CNA Cananea

CUN Cancun

CTM Chetumal

CUU Chihuahua Villalobos

ACN Ciudad Acuna International

CUA Ciudad Constitucion

CME Ciudad del Carmen

CJS Ciudad Juarez International

MMC Ciudad Mante

CEN Ciudad Obregon

CVM Ciudad Victoria

CLQ Colima

CZM Cozumel Municipal

STZ Cristobl Casas

CUL Culiacan Bachiguala

DGO Durango Victoria

ESE Ensenada

GDL Guadalajara Miguel Hidalgo

GYM Guaymas Yanez

GUB Guerrero Negro

HMO Hermosillo P. Garcia

HUX Huatulco B. Huatulco

ISJ Isla Mujeres

ZIH Ixtapa / Zihuatanejo International

IZT Ixtepec

JAL Jalapa

LAP La Paz Leon

LZC Lazaro Cardenas

BJX Leon / Guanajuato del Bajio

LTO Loreto

SJD Los Cabos

LMM Los Mochis Federal

ZLO Manzanillo

MAM Matamoros

MZT Mazatlan Buelna

MID Merida Rejon

MXL Mexicali

AZP Mexico City Atizapan

MEX Mexico City Juarez International

TLC Mexico City Morelos

NLU Mexico City Santa Lucia

MTT Minatitlan

LOV Monclova

NTR Monterrey Aeropuerto del Norte

MTY Monterrey Escobedo

MLM Morelia

MUG Mulege

NOG Nogales

NCG Nueva Casas Grandes

NLD Nuevo Laredo International

OAX Oaxaca Xoxocotlan

PQM Palenque

PDS Piedras Negras

PNO Pinotepa Nacional

PCM Playa del Carmen

PUH Pochutla

PAZ Poza Rica Tajin

PBC Puebla Huejotsngo

PXM Puerto Escondido

PJZ Puerto Juarez

PPE Puerto Penasco

PVR Puerto Vallarta Ordaz

PCV Punta Chivato

PCO Punta Colorada

QRO Queretaro

REX Reynosa Blanco

SCX Salina Cruz

SLW Saltillo

SFH San Felipe

SGM San Ignacio

SLP San Luis Potosi

UAC San Luis Rio Colorado

SNQ San Quintin

SRL Santa Rosalia

TAM Tampico Javier

TSL Tamuin

TAP Tapachula International

TCN Tehuacan

TPQ Tepic

TIJ Tijuana

TZM Tizimin

TRC Torreon Sarabia

TUY Tulum

TGZ Tuxtla Gutierrrez Llano

UPN Uruapan

VER Veracruz

VIB Villa Constitucion

VSA Villahermosa C.R. Perez

ZCL Zacatecas la Calera

ZMM Zamora

Industrial and Business Parks in Mexico

Looking for a “plug and play” solution for your business or factory in Mexico? Take a hard look at the advantages that Mexican industrial parks offer.

AMPIP (Mexican Association of Business and Industrial Parks) can partner with you and provide contacts and information about Mexico’s industrial and business parks. They work closely with private industry, state and local governments and real estate organizations in order to provide solutions for companies seeking to quickly and easily establish a physical presence in Mexico.

“Investment Promotion
AMPIP has become one of Mexico’s leading agencies for the promotion of foreign investment projects, thanks to its participation in national and international shows, the advertising in specialized media, the alliance with other business associations and the permanent contact with a wide network of corporations and real estate players, as well as with government officials.

Part of the promotion activities include the registration of industrial assets owned by AMPIP members in our Industrial Real Estate Promotion System, available on-line at our Internet site, apart from the printed material, such as location maps edited in conjunction with the Mexican Bank for Foreign Trade (Bancomext), which are distributed worldwide.”

There are specific and unique advantages of industrial and business parks. Saving time and money are among the biggest factors. Access to transportation, power and communication infrastructure is another. The definition of “Industrial Park” will provide some idea of the other advantages.

“What is an Industrial Park?

An industrial park is a delimited extension of land, characterized by four main aspects:

1. It is located close to transport facilities, such as hightways, airports, sea ports and railways.

2. It concentrates essential dedicated infrastructure in one location for industrial operations, such as water (including sewer lines, drainage systems), electricity (including high power supply lines), telecommunications and roads.

3. It fulfills all the prerequisites to obtain the permission from local authorities for the set up of new operations (construction, environment, etc.)

4. It has a central administration that coordinates the internal safety of assets, the maintenance of public infrastructure, the promotion of new operations and the affairs with local authorities”

For more detailed information, contact: Associacion Mexicana de Parques Industriales, Monte Camerùn 54 - 1, Colonia Lomas de Barrilaco, C.P. 11010, Delegacion Miguel Hidalgo, Mèxico D.F., Mexico Tel. +52 (55) 2623-2216 Fax +52 (55) 2623-2218 Email ampip@ampip.org.mx

Official Government websites of the 32 Mexican states

What to dial in order to reach a cellular phone in Mexico

Advice on what to expect when doing business with Mexico

Meeting people in Mexico - kiss, shake hands or hug?

Before you go on your business trip to Mexico

Tipping Guidelines for Mexico

Mexico and international free trade treaties

Mexico has signed 11 international free trade treaties and 2 complimentary economic agreements since 1993.

Mexico is the only country in the world with active free-trade treaties that cover North American and the entire European Community.

These free trade agreements have made Mexico highly competitive in terms of manufacturing for export to world markets, for the importation of raw materials for manufacturing and for the import of consumer goods for sale in Mexico.

The free trade agreements currently in place include:

TLCAN - Includes Mexico, USA and Canada - Initiated January 1, 1994 (NAFTA in English)

TLC-G3 - Includes Mexico, Colombia and Venezuela - Initiated January 1, 1995

TLC Mexico-Costa Rica - Includes Mexico and Costa Rica - Initiated January 1, 1995

TLC Mexico - Bolivia - Includes Mexico and Bolivia - Initiated January 1, 1995

TLC Mexico - Nicaragua - Includes Mexico and Nicaragua - Initiated July 1, 1998

TLC Mexico - Chile - Includes Mexico and Chile - Initiated August 1, 1999

TLCUEM - Includes Mexico and the European Union (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Holland, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden, United Kingdom, Cypress, Czech Republic, Estonia, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia) - Initiated July 1, 2000.

TLC Mexico - Israel - Includes Mexico and Israel - Initiated July 1, 2000

TLC Mexico - TN - Includes Mexico, El Salvador, Guatemala and Honduras - Initiated on March 15, 2001 with El Salvador and Guatemala and June 1, 2001 with Honduras

TLC Mexico - AELC - Includes Mexico, Iceland, Norway, Liechtenstein and Switzerland - Initiated July 1, 2001

TLC Mexico - Uruguay - Includes Mexico and Uruguay - Initiated in July 15, 2004

AAE Mexico - Japan - Includes Mexico and Japan - Initiated April 1, 2005

In addition there are Complementary Economic Agreements (ACE’s) in place with Brazil and Argentina.

Business in Mexico, conversation themes

When going to Mexico for business, be prepared for conversations. Mexicans are social people. They love to gather in groups and socialize. You can be assured of plenty of conversations during your visit.

Most business meetings and business dinners will involve a great deal of conversation of off-topic ideas before getting to business. Your ability to participate and keep the conversation moving is an important part of creating trust and the bonds required for doing business successfully in Mexico.

What topics are of general interest in Mexico?

Be cautious about introducing your personal opinions about politics and religion. Asking others to explain the current situation, so that you can understand it, is a safe way to venture into themes related to politics and economics.

Currently (September 2006) the following themes are sure to provoke conversations, discussions and opinions when in Mexico.

The recent Mexican presidential elections. Predictions for the future, scenarios, how it will might affect business and Mexico.

Your industry or business sector. Any international or national news, information, gossip, trends or tendencies related to your business sector.

Infrastructure projects in the city or state where you are visiting

China and it’s impact on the Mexican economy

Children and family

News or current events that can be found on the front page of the local or national newspaper

Recommendations on when and where to vacation in Mexico

Advice on what to expect when doing business with Mexico

Cultural misunderstanding, it can happen to you.

When we think of industry leaders in marketing and branding, Disney comes to mind. Geniuses in promoting their brand. Magnificent marketers. Leaders in the theme park industry. Universally recognized brand.

What could possibly go wrong with their expansion into Hong Kong and the Asian-Pacific market? Cultural misunderstanding.

Expansion into international markets and working with other cultures has created unforeseen headaches and problems for Disney once again. Disneyland struggles in Hong Kong

This is not the first time Disney has encountered cultural problems in international projects. EuroDisney also suffered from problems related to culture and customs that were not predicted or not taken seriously.

Disney is not alone. Virtually all organizations seeking to export and participate in international markets face steep learning curves about culture, customs and manners. Mistakes are made, at times very costly mistakes.

The lesson to be learned is to spend the time and money to understand your international markets and the culture where you will be doing business. It’s not enough to understand your brand and current customers. Never underestimate any cultural factor, and never assume that your model, project or way of life will be embraced fully and without reservations.

Stereotypes and global business

Create great international business relationships

Working with individuals and ideas from cultures different from our own is complex, and filled with opportunities to misunderstand and offend everyone involved. It requires time to develop trust and understanding for all the players involved.

Take the time to learn how and why business is done in the country. Don’t judge the results based upon your culture and your country’s standards.

There is nothing more damaging to an international relationship than criticism based upon a lack of understanding. You must learn before you attempt to teach new ideas, strategies and procedures.

When doing business in Mexico remember that no matter what you feel or believe about your company’s products or procedures, Mexicans know their market and people better than you do. They know the correct business etiquette and the “invisible” cultural nuances that are required in order to do business in Mexico.

If you enter into business in Mexico with the idea that you are going to “teach the Mexicans how business is really done” I am confident you will suffer some serious problems.

Pushing procedures and business strategies into Mexico will surely cause divisions, it can turn into an “us versus them” situation for employees and customers.

I recommend that your focus be on learning and understanding how business in currently done in Mexico, and why. Once you have this knowledge, teach and explore your cultures and organizations solutions and strategies with your Mexican collaborators. I’ll bet the ideas will get modified if necessary, implemented and embraced quickly.

The creation of hybrid strategies, using elements from both cultures, will guarantee unification and understanding for everyone involved.

Before you start a revolution it’s essential to fully understand the status quo.

Related Links

International Business Tips

Stereotypes and global business

International business traveller - ambassador, explorer, map-maker

Official government websites of the 32 Mexican States

Links to the Official Government Websites of the Mexican States

Aguascalientes

Baja California

Baja California Sur

Campeche

Chiapas

Chihuahua

Coahuila

Colima

Durango

Guanajuato

Guerrero

Hidalgo

Jalisco

Mexico DF

Michoacan

Morelos

Nayarit

Nuevo Leon

Oaxaca - Not currently available

Puebla

Queretaro

Quintana Roo

San Luis Potosi

Sinaloa

Sonora

State of Mexico

Tabasco

Tamaulipas

Tlaxcala - Not currently available

Veracruz

Yucatan

Zacatecas

Many of these sites have the information available in the english language. Search the entry page for links to versions in english (or ingles).

Related Links

What to dial in order to reach a cellular phone in Mexico

Advice on what to expect when doing business with Mexico

Meeting people in Mexico - kiss, shake hands or hug?

Before you go on your business trip to Mexico

Tipping Guidelines for Mexico

Tipping guidelines for Mexico

Tipping is always a concern for travellers. In Mexico, tipping is very common and expected, but there are no fixed rules for the amount of the tip. If someone is providing an extra service or favor for you, a tip would be expected and welcome.

You should always have loose change and low denomination bills with you in order to make the transaction effortless.

You should tip with the quantity that you feel comfortable with. I’ve provided some tip guidelines that should help get you started.

Basic guidelines for tipping in Mexico.

Restaurants - the normal tip amount is 10% -15% of the bill. There is a national value added tax (IVA) of 15% included on all restaurant bills, this is not the tip, this is a tax. Many people leave a tip equal to the IVA, 15%, or leave 10% of the total bill that has the IVA tax included.

Bellhops and luggage handlers - $ 10 - $ 20 pesos per bag.

Hotel maids - $ 20 - $ 50 pesos per day.

Taxis - Depends upon the city, type of taxi (meter or negotiated price). If a metered cab, a tip would be expected perhaps 10% of the total. If the taxi is a negotiated price no tip would be expected. If a fixed rate to destination cab (for example airport cabs) a tip would be appreciated $ 10 - $ 20 pesos.

Gas station attendants - $5 - $ 10 pesos depending on the level of service

Bars - 10% of the total bill

Valet parking - $ 10 - $20

Grocery store baggers - $ 5

Related Links

Advice on what to expect when doing business with Mexico

What to dial in order to reach a cellular phone in Mexico

If you plan on living or doing business in Mexico, you will be calling cellular phone users.

I’ve listed examples of how to correctly dial in order to reach a cellular telephone in Mexico. There are 3 scenarios; local calls, domestic Mexican long distance and international long distance.

Let’s assume you want to call a cellular telephone in Leon, Guanajuato and the cellular phone number is 123-4567.

Example #1: Local call. If you are in Leon, Guanajuato and are calling a cellular phone number in Leon, you would dial from any phone:

044-477-123-4567

The 044 is the local access code for local cellular numbers.

The 477 is the area code of Leon, Guanajuato.

The 123-4567 is the telephone number.

Example #2: Domestic Mexican long distance. Calling a Leon cellular phone number from another city in Mexico. In this case you would dial

New dialing code Nov. 4, 2006 045-477-123-4567

Where 045 is the Mexico domestic long distance access number for cell phones.

477 is the area code for Leon.

123-4567 is the telephone number.

Example 3#: International long distance. If you are calling from the USA to a Mexican cellular phone in Leon, Guanajuato. You would dial;

New dialing rule Nov. 4, 2006 011-52-1-477-123-4567

011 is the international access code.

52 is the country code for Mexico.

1 is the cellular phone code.

477 is the area code of Leon.

123-4567 is the telephone number.

Remember that area codes for Mexico City (55), Guadalajara (33) and Monterrey (81) are 2 digits, followed by the telephone number that has 8 digits. All other cities have a 3 digit area code and 7 digit telephone number.

Mexican Area Code Search (TELMEX)

Before you go on a business trip to Mexico

How to negotiate with Mexican business people

Mexico has a culture that embraces and enjoys negotiations. From the schoolyard to the local markets to the executive boardrooms, negotiations are an important part of everyday life for Mexican citizens.

Mexican business people are good negotiators and enjoy the process.

You can expect tough negotiations if you are doing business in Mexico. Tough negotiations in the sense that they will question everything, and spend a great deal of time trying to get you to accept their point of view or conditions. The arguments may be based on emotions or facts, or both.

You should always come into the negotiation very well prepared. Know what you want, and have the evidence to support your claim. Your arguments, supported by facts, will be heard and processed by your Mexican counterparts. If facts are presented that are new, take the time to verify the information and sources before you reach a conclusion.

Negotiations in Mexico can be compared to the first round of a sporting event, both sides desire to “win”, but rarely do they burst onto the field with all their energy in the first 5 minutes. The process of “feeling out” the opponent, observing their strengths and weaknesses, are critical to understanding how to develop a winning strategy and understanding what you are up against.

Mexicans are often seeking a long term, stable relationship with suppliers and clients. Focus your negotiations and decisions on creating a long term business relationship and strategy with your Mexican counterpart.

Your ability to negotiate will be a reflection of your company, your character, and your abilities as a business person. Take your time, don’t get emotional, support your arguments with facts, and be consistent with your demands or desires over time. The negotiation process is helping to build trust and credibility, it’s important to build solid foundations for your future relationship.

Don’t be in a hurry to end the negotiations. The Mexican culture is more permissive about time and deadlines than you find in USA or Europe. If you are in a rush, you will lose important negotiating power.

Always start your negotiation with some margin and leeway. It will always to be to your advantage to “give” a little before the negotiations are over. It may take 4 hours for you to “give in”, but the gesture will be seen as your willingness to do business and enough for the negotiator to claim a little victory. Everyone wins.

Write down your final agreement, and the results of your negotiations and have both sides sign and retain a copy. This simple step will avoid any language, communication or interpretation problems that may develop in the future.

How to do business in Mexico, parts 1 - 28

16 Essential Questions - International Business Traveller’s Quiz

Meeting people in Mexico - kiss, shake hands or hug

What is the correct method to greet a business acquaintance in Mexico?

For a first time meeting with a business contact in Mexico a handshake is the appropriate greeting, eye contact is important, say your name, followed by the presentation of your business card. This applies to men and women.

When leaving the meeting or event it is appropriate and expected to shake everyone’s hand and say goodbye individually. This is also true for social situations.

If the business relationship has developed over time, you may find that upon arrival your host will hug you (un abrazo), giving 2 or 3 firm slaps on your back, followed by a handshake. This is a sign of confidence and friendship. This is also used when saying goodbye, especially when leaving on a trip, or when you will be separated for a long time.

Greeting women is a bit more complex. In developed relationships or personal relationships, an “air kiss” is common and expected. This is a swift encounter, cheek to cheek, and only on one side of the face. It may also be accompanied by a handshake. This greeting is common between women.

A man should always rise from his chair whenever a woman arrives at the table or is introduced.

My advice is to avoid the “air kiss” until you are approached, and it is obvious that the woman (or man) is comfortable with the kiss greeting. A handshake is the appropriate and “safe” greeting for all business and personal situations with women.

The kiss has no sexual connotations, it is a greeting of familiarity, but until you feel comfortable with it, and understand it’s use, best to be conservative and put your hand out.

Watch how others Mexicans greet one another. Learn to distinguish the differences in how business people, workers, friends, and family have different greetings.

Related Links

Doing Business in Mexico

Before you go on your business trip to Mexico

When planning a trip to visit Mexico to investigate the market, make connections or to initiate business operations, contact the following groups and organization before you go. They can assist you with information, meetings, finding contacts and understanding the country, the people and the business environment.

Mexico Business Trip Planning, sources of information

1. Contact your country’s Consulate or Embassy closest to your intended destination and see if a meeting will be possible. It is important to determine if they have a commercial or trade officer, many times the embassies or consulates only handle political matters.

2. Trade or commercial missions sponsored by your industry, city, state, or other formal business related group. These missions provide structured access to trade organizations, top business people, and politicians. They are normally of low to moderate cost, and you will be travelling with others seeking similar information about the country.

3. Contact the Sustainable Economic Development office in the Mexican state and Economic Development office in the Mexican cities you wish to visit. They can provide information on costs of doing business, permits and permissions and can help you find the contacts or information you are seeking.

4. Your state or city may have an economic promotion office in Mexico seeking to promote the city or state businesses and relationships. They are more than happy to organize meetings with possible contacts in Mexico and provide business information for you.

5. Seek trade show or international industry events in Mexico. Coordinate your trip so that you can attend the event, and consult with government and private industry contacts before of after the fair.

7 Tips for International Business

Doing Business in Mexico

International business traveller - ambassador, explorer, map-maker

The critical roles played by international business travellers.

International business travellers play an incredibly important role as ambassadors, explorers and “map-makers” inside their organizations and with their overseas contacts.

Ambassadors, Explorers, and “Map-Makers”

Ambassador of your country and culture. During your trip your actions and reactions are being watched by others. They are trying to confirm, deny or create stereotypes of your country. Everything including your inter-personal skills, business negotiation skills and manners, the way you dress and eat, your choice of hotels, table manners, social skills, and the ability to make small-talk and conversation will be watched, examined and commented upon after you leave. Keep this idea clear at all time during your trip, it is important.

Ambassador of your company. Prepare and bring all materials required for the negotiations and business interactions. Project an aura of professionalism, a willingness to learn and share, and honesty. Create relationships with a long-term vision. You may be promoted or leave the organization some day, but your international contacts will continue to do business with your company.

Ambassador of you. International business is all about relationships, and your behaviour and attitudes are critically important as the liaison and trusted representative. Make promises you can keep, follow-through on the projects and projects. Project honesty and a concern for doing business and maintaining relationships. Your actions should focus on creating a climate of trust and open communication. Don’t try to be someone you are not.

Explorer. The international business traveller, technicians, and sales and business development executives have the added responsibility of verifying existing information, establishing new contacts that will be beneficial in the future, and discovering new ideas and opportunities. It requires an inquisitive character, a bit of courage and a spirit of adventure.

Map-Maker. Often neglected by organizations is the cultural, political and personal information gathered by international business people. This information (or data), should be gathered, filtered and consolidated, and available to the organization after every overseas trip. “Maps” should be made for future consultation and reference. The map-making role requires the separation of the facts from interpretation, personal anecdotes and opinions. This information becomes the foundation for all future strategic and operating decisions.

Related Links

16 Essential Questions - International Business Traveller’s Quiz

How to do Business in Mexico, Parts 1 - 28

International Business Trip Planning, Part 6

How to call Mexico from the US

Calling Mexico from the US can be confusing to the novice.

To dial Mexico from outside the country, you must dial “011″ (access code) followed by the country code.

Mexico’s country code is “52″ (country code).

Next is the area code. Mexico telephone numbers have a three digit area code followed by a seven digit number for most of the country.

The exception to the rule (and this is Mexico, there are always exceptions to the rule) can be found in 3 cities; Mexico City, Guadalajara and Monterrey. These cities have a two digit area code followed by an 8 digit number:

Mexico City “55″ + 8 digits, area code is 55
Guadalajara “33″ + 8 digits, area code is 33
Monterrey “81″ + 8 digits, area code is 81
All other cities in Mexico “3 digits” + 7 digits, area code contains 3 digits

If you were to dial Mexico City: “011″ + “52″ + “55″ + telephone number (8 digits)

If you were to dial Acapulco: “011″ + “52″ + “744″ + telephone number (7 digits).

UPDATE October 17, 2006 - If you are dialing a Mexican cellphone from the USA after November 4, 2006, you must dial “011″ - “52″- “1″ -”Area Code” - “Telephone number”, this new rule covers 90% of the cellular phones in Mexico. Changes for Dialing Long Distance to Cellular Phones in Mexico

Selected area codes for some Mexican cities:

Acapulco “744″ + 7 digits
Aguascalientes “449″+ 7 digits
Apizaco “241″+ 7 digits
Cabo San Lucas “624″+ 7 digits
Cancun “998″+ 7 digits
Celaya “461″+ 7 digits
Chihuahua “614″+ 7 digits
Ciudad del Carmen “938″+ 7 digits
Ciudad Juarez “656″+ 7 digits
Cuernavaca “777″+ 7 digits
Culiacan “667″+ 7 digits
Durango “618″+ 7 digits
Ensenada “646″+ 7 digits
Guadalajara “33″ + 8 digits
Guanajuato “473″ + 7 digits
Irapuato “462″+ 7 digits
Ixtapa “755 “+ 7 digits
Jalapa “932″ + 7 digits
Juchita “971″ + 7 digits
Leon “477″ + 7 digits
Los Mochis “668″ + 7 digits
Matamoros “871″ + 7 digits
Mazatlan “869″ + 7 digits
Merida “999″ + 7 digits
Mexicali “686″ + 7 digits
Mexico City “55″ + 8 digits
Monterrey “81″ + 8 digit
Morelia “443″ + 7 digits
Nogales “631″ + 7 digits
Nuevo Laredo “867″ + 7 digits
Oaxaca de Juarez “951″ + 7 digits
Playa del Carmen “984″ + 7 digits
Progreso “861″ + 7 digits
Puebla “222″ + 7 digits
Puerto Vallarta “322″ + 7 digits
Reynosa “899″ + 7 digits
Saltillo “844″ + 7 digits
San Francisco del Rincon “476″ + 7 digits
San Miguel Allende “415″ + 7 digits
Silao “472″ + 7 digits
Tampico “833″ + 7 digits
Tijuana “664″ + 7 digits
Torreon “871″ + 7 digits
Veracruz “229″ + 7 digits
Villahermosa “993″ + 7 digits

intl. access + country code + area code + telephone number

“011″ + “52″ + “2 or 3 digit area code” + “7 or 8 digit telephone number”

For a complete list of all Mexican cities, check out the TELMEX area code search page (in spanish) Link

Advice on what to expect when doing business with Mexico

Meeting people in Mexico - kiss, shake hands or hug?

Before you go on your business trip to Mexico

Tipping Guidelines for Mexico

Official Government websites of the 32 Mexican states

16 Essential Questions - International Business Traveller’s Quiz

Every international business traveller should be able to answer these questions about their destination before getting on the plane.

What is the size of the country; population and area?
What are the top 3 or 5 cities, and why?
Who is the President?
What are the main political parties?
What are the official languages?
What is the ethnic makeup of the country?
What is the climate and weather throughout the year?
What are some of the important geographic features (rivers, mountains, lakes)?
What are the major religions?
What countries are neighbors?
What is the currency and exchange rate?
What are the countries biggest industries; national and export?
Who are your competitors, and how long have they been established in the country?
What are 3 significant issues affecting your industry in this country?
What are 3 significant national issues that are in the news in the last 2 weeks?
What national holidays or events will be celebrated during your visit

If you can’t answer every question. Set aside an hour, fire up the Internet, and do your homework.

It may be the most important hour you spend preparing for the trip.

Related Links

Mexican Embassies and Mexican Consulates Worldwide

The Mexican embassy or consulate near you will be able to provide advice about immigration visas or other official rules, regulations and requirements in Mexico. The are NOT there to promote commercial interests of Mexico, but can put you in touch with other agencies or companies that will be able to help.

This information comes directly from the SRE (Secretaria de Relaciones Exteriores), which is responsible for the Mexican embassies and consulates worldwide. In English, this office is known as the Mexican Ministry of Foreign Affairs.

Mexican Embassies Worldwide

Mexican Consulates Worldwide

Related Links:

Mexican Ministry of Foreign Affairs

Visas for Mexico, FM-T, FM-2, FM-3, Immigration information

All countries require some sort of immigration process, and Mexico is no different. In fact, Mexico has a strict immigration policy, but it is not impossible, and for the most part can be handled without lawyers or specialists.

Basically there are 3 major types of Visas, and various other subsets and variations available:

FM-T - Tourist visa.

FM-2 - Visa for those who wish to reside permanently in Mexico.

FM-3 - Visa for those who wish to work or reside in Mexico, this is an annually renewed document.

I strongly suggest you contact the nearest Mexican embassy or consulate to get the most up-to-date information and forms.

Get an official idea of what is necessary for immigration from the Counsel General of Mexico office in New York. Counsel General of Mexico in New York Link

Other good references can be found here:

Solutionsabroad.com

Mexico@connect

Mexico Business Framework, Immigration Law, Corporate Practices, Incorporation Checklist

David Spencer has an excellent site outlining Mexican law, forms of doing business, corporate practices, working with Mexican legal counsel, immigration law and basic taxation rules and regulations.

Really great information here:

Mexico Business Framework Link

Incorporation Checklist for Mexico Link

The Immigration Law of Mexico Link

Mexico’s Code of Best Corporate Practices Link

Working with Local Counsel in Mexico Link

Related Links

DavidSpencerLaw.com Link

Basic Guide for Foreign Investors - Mexico

The Trade Commission of Mexico in Los Angeles, Mexico Information Center for North America, has a great legal guide for businesses or investors thinking about doing business in Mexico.

Basic Guide for Foreign Investors Link

Lots of good information here, and with an office in Los Angeles, easy to contact for more information.

Trade Commission of Mexico in Los Angeles
50 South Figueroa Street, Suite 296
Los Angeles, CA 90071
Tel (213) 628-1220
Fax (213) 628-8466
Email tcom@mexico-trade.com

Mexican Tax Law

A brief overview of Mexican Tax Law is available at Solutionsabroad Link.

Be aware the Mexican tax law is somewhat liquid and subject to monthly changes by Congress. This information should serve as a general guide to Mexican tax law, be sure to check with Mexican legal and financial experts before signing the deal.

An Electronic Guide to Mexican Law

The Hauser Global Law School Program has provided An Electronic Guide to Mexican Law, written by Francisco A. Avalos and Elisa Donnadieu, published in November, 2005 Link

Topics include:
A Brief History of the Mexican Legal System Link
Federal Government Link
Major Primary Federal Legislation Link
Legislation Sources Link
Official Mexican Government Websites Link
Political Parties Link
State Governments Link
NAFTA Link
Overall Coverage of Mexico Link
Free Translation Sites Link

Related Links

An Electronic Guide to Mexican Law

Text of all existing Mexican Laws, in Spanish

This link will take you to the website of the Camara de Diputados in Mexico (similar to the House of Representatives in the US).

This is a complete list of all Mexican Federal Laws currently active. Archives are available in PDF, Word and Zip formats for download.

Current Federal Mexican Laws

BANCOMEXT, Invest in Mexico

BANCOMEXT has a terrific site in English, that provides information about investing in Mexico.

BANCOMEXT is a government agency dedicated to the growth of Mexican business, especially small and medium businesses. They seek to increase their participation in global markets by offering integral solutions to increase their competitiveness and create investment, through access to financing and other financial and promotional services.

Topics include:
Why Mexico Link
State Information Link
Sectors Link
Legal Link
Opportunities Link
Business Center Link
Cost Simulator Link
Projects, international investment interests concerning Mexico Link

Related Links

Invest in Mexico, BANCOMEXT

Mexico - Benchmarking business regulations

Doingbusiness, Benchmarking business regulations

This link explores Mexico and provides business regulation benchmarks as compared to other countries. Provides profiles and comparisons of 155 countries, including Mexico.

Topics include:

Starting a business
Dealing with Licenses
Employing Workers
Registering Property
Getting Credit
Protecting Investors
Paying Taxes
Trading across Borders
Enforcing Contracts
Closing a Business
Economy Characteristics

For a Mexican business economy snapshot: Doingbusiness Mexico snapshot

Related Links

Doingbusiness.org

American Chamber / Mexico

AMERICAN CHAMBER OF COMMERCE OF MEXICO, A.C.

is an independent non-profit organization dedicated to the representation, promotion, and development of business interests between Mexico and the United States. Founded in 1917, American Chamber/Mexico is the largest and oldest American Chamber of Commerce outside of the United States, serving the business community in the promotion of trade and commerce. Our main office is located in Mexico City with offices in Guadalajara and Monterrey.”Mexico City: Lucerna 78, Colonia Juarez, C.P 06600, Mexico D.F. Tel. +52 (55) 5141-3800, Fax +52 (55) 5703-2911

Guadalajara: Av. Moctezuma 442, Colonia Jardines del Sol, CP 45050, Zapopan, Jalisco Tel. +52 (33) 3634-6606, Fax +52 (33) 3634-7374

Monterrey: Rio Manzanares 434 Oriente, Colonia Del Valle, C.P 66220, Garza Garcia, N.L Tel. +52 (81) 8114-2000, Fax +52-(81) 8114-2100

Related Links

American Chamber in Mexico

US Commercial Service Reference

The US Commercial Service has a nice introductory reference on how to do business in Mexico. It is directed at US exporters wishing to sell their products in Mexico. There are some links to on-line Mexican Industry reports.

BUYUSA.GOV US Commercial Service Doing Business in Mexico

IMCO The Mexican Institute for Competitiveness

The Mexican Institute for Competitiveness (IMCO) is a private think-tank and great source for macro-economic information about how Mexico ranks in competitiveness with countries globally.

IMCO, The Mexican Institute for Competitiveness

“The Mexican Institute for Competitiveness (IMCO) is a private applied research center devoted to studying issues that affect the country’s enterprises competitiveness in a context of open market economy. IMCO is a non-profitable, independent, non-partisan institution which operates thanks to private sponsors grants.”

IMCO is actively working with and educating Mexican government officials and private industry leaders as to Mexico’s advantages and disadvantages as it concerns global competitiveness.

Most of the site is available in English.

For more information:

Instituto Mexicano para la Competividad, A.C.
Leibnitz 11 - 602
Colonia Anzures, CP 11590, Mexico D.F., MEXICO
Tel. +52 (55) 5985-1017 to 19 and 5985-0249 to 50
Fax +52 (55) 5985-0251
Email Contacto@imco.org.mx

Payments, Invoices and Banking

There is a huge underground economy in Mexico, no invoices, no taxes, no paperwork.

Estimates of the size of the underground economy run as high as 60% of the GNP of Mexico. At some time you will be confronted with a person or business who provides services or products and will ask if you want an invoice or not…..with a difference of 15% in the final cost if you chose to avoid the invoice (no invoice = not tax deductible).

This 15% is the I.V.A. (national value added tax). Avoiding the I.V.A. is illegal. Estimates of the size of the underground economy run as high as 60% of the GNP of Mexico.

Sending checks as payments through the mail is virtually unknown in Mexico. Due to the problems with mail theft and fraudulent checks, the majority of business checks are hand delivered.

There are an army of men and women, who physically go to customer’s offices, drop off the invoices, and come back for the payment check at a later date. Totally inefficient in terms of costs and time, however that’s the way the system works in Mexico.

Electronic payments and funds transfers have begun to appear in the last 5 years, and the larger companies are now using this system for payments and receivables. There is a very large percentage of Mexican businessmen who are not confident of the security and password controls (there have been numerous cases of e-bank fraud).

It is necessary to physically appear in your bank to make routine deposits, withdrawals, changes or modifications to your accounts. This seems odd to foreign business people.

The banking system in Mexico depends heavily upon providing personal identification for each transaction, and it is highly recommended to establish a relationship with your bank officials and tellers in order to facilitate business.

The ATM banking machines are becoming part of everyday life for all Mexicans, and direct payroll deposits to employees accounts are now very common among medium and large companies.

Mexican law and legal overview

Legal advice is necessary and extremely important when doing business anywhere. Get a good lawyer and use them to help in setting up your business. The Mexican law is different from US law, not better or worse, just different. Hire good counsel and use them in setting up or modifying your business.

Legal links for doing business in Mexico

Mexican Law with Professor Jorge A. VargasThe most authoritative, current and comprehensive book on Mexican law regarding business, investment and international trade in that country.

GUIDE TO LAW ONLINE: MexicoThe Guide to Law Online is an annotated compendium of sources accessible through the Internet. Links provide access to primary documents, legal commentary, and general government information about specific jurisdictions and topics.

GlobaLex - Electronic Guide to Mexican Law

Related Links

Doing Business in Mexico: Lee Iwan

General reference links for doing business in Mexico

Mexican state governments are actively seeking investors and FDI (Foreign Direct Investment).

The Economic Development Secretary in every state is willing to offer land, infrastructure, tax benefits and assistance with Federal and State bureaucracy in order to get your company to settle in their state.

This is a great way to get “free” advice regarding the requirements for business set-up and an honest overview of costs and time required to get your business up and running.

They will also assist in the search for Mexican partners or investors if required.

More links to help you with your Mexican business adventure.

BANCOMEXT Official Mexican government link offering statistics and “how to” advice regarding business investment in Mexico.

U.S. Commercial Service Mexico: How to do business in Mexico The U.S. Commercial Service in Mexico offers market research, consulting, trade events, and matchmaking services to help U.S. companies do business in Mexico, export goods and services to Mexico, and find Mexican business partners and distributors.

Doing Business in Mexico Good overview regarding legal structure for doing business in Mexico

Competitiveness World Bank Analysis by the World Bank on Mexico’s competitiveness against other countries

CIA - The World Factbook — Mexico Good overview of Mexico, politics, geography, strengths and weaknesses.

Shoe manufacturing in Mexico

I live in Leon, Guanajuato, Mexico….which might mean nothing to you unless you are involved in the leather industry or shoe business. Leon is home to for the majority of the leather tanneries and shoe factories in Mexico.

For those of you seeking industry contacts, here is a brief list of links to the major shoe related organizations in Mexico.

SAPICA

The biggest and most important international shoe fair in Mexico. Held two times per year. Spring/Summer and Fall/Winter.

CICEG

The Mexican Shoe Association in the State of Guanajuato.

ANPIC

The National Association of Suppliers for the Footware Industry.

COFOCE

If you want to find reliable exporters of shoes, leather, and leather goods contact COFOCE. Highly recommended.

State Government of Guanajuato

Good overview of the State of Guanajuato, business opportunities and contact information for government and industry.

For more information or consulting assistance, do not hesitate to contact me.

Taxes in Mexico

The national tax authority in Mexico is called the “Hacienda”. This is similar in function to the Internal Revenue Service in the US. The tax system in Mexico is complicated, with strict controls on transfer pricing for transnational companies, and limited tax advantages for companies seeking to avoid taxes by re-investing in their existing businesses.

Claudia Avila Connelly of AMPIP provided the following information about taxation in Mexico:

The taxation system in Mexico is primarily concentrated in the federal system. The three primary taxes are the I.S.R. (Impuesto Sobre la Renta) which is a proportion of salary, IMPAC (Impuesto al Activo) tax on assets, and I.V.A. (Impuesto a Valor Aggregado) a value added sales tax of 15%.

At the state level the only tax is the I.S.N. (Impuesto sobre Nomina), tax based upon payroll, this rate varies between states. For example in Queretaro there is no I.S.N, while in other Mexican states might vary between 0% - 2%. This may be waived depending upon the social impact and generation of employment by the investment project Other costs at the state level that may be negotiated would be the public property registration, which represents a percentage of 2% to 5% of the value of the building.

At the municipal level the only tax that exists is the Predial (property tax). There are other costs related to the construction license and title change. All of these can be negotiated as incentives but any concession granted to the investor, must be previously approved by the local town administration, with evidence of the session minutes where it is clearly stated that the concession has been granted by the administration, and signed by all members.

It is the employer’s responsibility to retain, pay, and report the taxes and income for workers (unless they are private contractors).The average Mexican worker will not ever have to fill out an income tax form.

The difference in tax law between the US and Mexico is enormous. One of the most frightening aspects for US trained accounts is that there are modifications to the Mexican tax code every month. This means that your accountants must update their knowledge of the tax code and the changes on a monthly basis.

As with all tax laws, there are “grey areas” that will be interpreted differently by the tax authority and the entrepreneurs and corporations.

Mexico has a huge underground economy, with estimates that up to 60% of the commerce and services are not registered with “Hacienda”, and do not pay taxes. This puts pressure on the legally registered businesses, and Hacienda seeks to audit and verify that those registered business are conforming. This has caused a great deal of controversy, and the term “fiscal or tax terrorism” has been used by angry businessmen who want “Hacienda” to focus their efforts incorporating those businesses outside of the system, instead of re-auditing those who are captive in the system.

Tax reform is a big issue currently in Mexico, and I believe that in the near future steps and legislation will be introduced and approved to simplify the tax code and streamline the system.

I strongly recommend a good accountant, a good internal auditor and a good external auditor for any business dealings in Mexico.

Working Hours

A normal work week for a most Mexicans consists of 44 to 48 hours. Eight hours a day Monday-Friday and 6 hours on Saturday.

Office jobs in Mexico City, Monterrey and Guadalajara have business hours from 8:30 AM – 5:30 PM, or 9:00 AM – 6:00 PM, similar to the US. Generally they work Monday - Friday.

In the medium and small cities in Mexico, all businesses open at 9:00 or 10:00, close from 2:30 to 4:30, and re-open from 4:30 until 8:00 PM.

Most retail stores, malls and supermarkets, are open from 8:00 AM - 9:00 AM and close around 9:00 or 10:00 PM, 7 days a week.

Restaurants will open for; breakfast between 7:00 AM - 11:30 AM, comida 2:00 PM - 5:30 PM, and cena 8:00 PM - 11:00 PM.

Politics and Political Parties

There are 3 main political parties in Mexico, the Institutional Revolutionary Party (PRI), the National Action Party (PAN) and the Party of the Democratic Revolution (PRD).

The PRI was the ruling party in Mexico for 70 years until their recent defeat in 2000 to the PAN. Similar to the Democrats in the USA, with a platform that believes that big government is good government. Infrastructure development and social programs are viewed as job creation in and of itself. Currently in the process of breakup and re-organization, with long time members leaving for the other 2 parties. Viewed as liberal in their philosophy and orientation.

The PAN party is similar to the Republicans in the USA. Won a historic and overwhelming victory against the PRI in 2000. They believe government’s role is to help increase private industry growth and create conditions and infrastructure to support continued growth. Infrastructure projects are viewed as necessary in order to increase competitiveness. Viewed as conservative or right wing in their philosophy and orientation.

The PRD is party formed during the time of the PRI rule in Mexico, by more liberal members of the PRI. Known as the most socialistic of the parties. Seeking entirely new economic models that focus upon redistribution of wealth. Viewed as extreme liberals or socialists.

Criticism

Be very careful of how, and how aggressively, you criticize anyone, their way of life, religion, government or methods of doing business, especially in a social environment.

You may believe it is constructive, but until you create a relationship based on mutual respect, this will be seen as very negative (and ethnocentric). If you absolutely have to comment, better to ask why something is done in a certain way, let your hosts explain it, don’t pass judgment.

Form is important. How you are doing it counts, as well as the message. This is quite different from the US, failure to pay attention to the “delivery” may cause more problems than you expect.

If the criticism is specifically related to business processes or results, explain what you wish to achieve, how you want them to modify their actions or processes and why.

Focus on the expected results and ask for feedback and their observations on how to achieve the objective in Mexico.

Related Links

Squidoo - Doing Business in Mexico

Individuals, not natural team players

Mexicans are independent, and more comfortable doing it alone and doing it their way. Everyone wants to call their own shots, run their own business, make their own agenda. It can be very frustrating if you are used to strict discipline and adherence to a rule book.

This natural independence is great if you are seeking alternative methods, creative solutions, flexibility, and quick responses from your people.

Mexicans do not discourage teamwork, on the contrary, there are great opportunities to teach, support and reward group activity. Many of the most successful companies in Mexico have been able to implement teamwork and productive interactive systems. If you can harness and incorporate this individuality WITHIN your business structure, you will have a very successful adventure.

Take a look at the results of Mexicans in individual vs. team sports on an international level.

Mexicans excel at boxing, speed walking, cycling, long distance running, diving…individual sports.

Team sports, football, soccer, baseball, volleyball, rugby, and basketball are dominated by other countries and cultures.

Related Links

Squidoo - Doing Business in Mexico

Family Life

Mexicans consider family life and family events to be incredibly important, taking priority over work in almost all situations.

They expect their employers to understand the importance of these relationships and make any necessary accommodations for major events.

Related Links

Squidoo - Doing Business in Mexico

Business Management Mentality and Business Consultants

The majority of businesses in Mexico are family owned, and the focus of many current managers and business owners is geared toward running a family business or maximizing profit in a short defined period, as opposed to long-term growth and investment. This affects, and can undermine, many business decisions and relationships.

Important decisions related to; investments, planning and strategy, risk evaluation, and day-to-day operations may be stalled or create significant problems unless everyone is in agreement on the goals and objectives, investment and planning required.

There is a current boom for business management consultants, management courses and management seminars throughout Mexico, as the lack of “corporate “managerial skills are being identified and addressed by business owners and shareholders.

In general, the culture of hiring and using business consultants in Mexico is limited to the industry leaders, “forward thinking” pioneers, transnational companies or existing Mexican companies currently involved in some sort of crisis.

Things NOT to talk about

I would recommend listening and watching others before making any comments or bringing up potentially “difficult” themes (religion, politics, abortion, immigration).

Get a feel for your group and their interests (and opinions) before blundering in your comments, criticisms and “great ideas”.

Be very careful NOT to bluster, rant and rave or carry on about how magnificent and wonderful the US is compared to Mexico.

If asked your personal opinion about a “difficult” theme, be honest, but remember to keep it light and brief. Many Mexicans want you to explain your government policies and culture, immigration decisions, economic policies…. if this is not possible, be honest and don’t enter areas of conflict or spread misinformation.

Lunches and Dinners

The “normal” time to eat lunch (comida) in Mexico is between 2:00 and 4:00 PM, this is the major meal of the day. In most small to medium sized cities, people go home and eat with their families, and return to work from 5:00 until 8:00 PM.

A business lunch (comida) can last 1.5 – 6+ hours, depending upon your group. Business conversation will likely occur before and during the meal, but usually the conversation will turn to other themes after dinner.

Dinners (cena) begin after 8:30 PM, and usually not a heavy meal. During the week may last an hour or 1.5 hours. If on the weekend can last 3-5 hours.

Speaking the language

Do you speak Spanish?

If the answer is no, and you want to really be successful in your Mexican endeavors, please learn to speak Spanish. It doesn’t have to be business oriented language training, but you should be able to hold a conversation over lunch or in a relaxed environment.

Sure you can get by with English, and many people will be happy to practice with you once you arrive in Mexico.

But to really understand the Mexican business and social culture, I highly recommend you learn how to carry on a conversation in Spanish. It shows your intention to learn and understand the Mexican culture…and Mexican business people see this as a big effort on your part, and it will be appreciated.

If you cannot speak the language, and are serious about working in Mexico, hire someone or bring someone from your company who can speak Spanish. Ask your Mexican counterparts if they would be more comfortable with a translator present, and if they could arrange for one.

Language is nothing more than another barrier to doing international business, but add this hurdle to the “other” barriers (cultural, economic, social, educational) and suddenly doing business internationally seems like a difficult proposition.

It’s all about people and relationships

Business in Mexico is all about relationships and people. It is important to attend lunches or dinners with your potential customers, major suppliers, distributors and agents. If invited to weddings, or family events, it is important to attend.

These social occasions help to deepen relationships, and promote understanding, an integral part of doing long term business in Mexico.

The Mexicans use family and personal networks for business. The contacts generated through these networks are considered “trust-worthy”. The faster you establish genuine personal and social relationships in Mexico, the more you will recommended, and it will become easier to do business.

Business trips to meet and discuss issues and problems with suppliers, customers and partners, should be programmed at least twice a year, and I would recommend much more frequently when starting up a new operation or business.

Related Links