DOING BUSINESS
IN MEXICO
GEOGRAPHICAL INFORMATION
• Is bordered by the United States to the north
and Belize and Guatemala to the southeast.
• Mexico's total area is 1,972,550 km².
• Mexico shares a 3,141 km border with the
United States
• Covering almost 2 million square kilometers
• Mexico is the fifth-largest country in the
Americas by total area and the 14th largest
in the world.
• Mexico is one of the 17 megadiverse
countries of the world. With over 200,000
different species.
• Mexico is home of 10–12% of the world's
biodiversity.
Mexico
• Fear of the unknown
– Language, culture
– Export paperwork
– International Insurance
– Business Loans
• Budget
• Market entry
•
•
•
•
106 million people
1.7% population growth per year
62% pop between 15-64 years
33% pop between 0-14 years
The Mexican Market
• Why is it important?
– Two defined economic groups: rich & poor
•
•
•
•
•
Poor majority does not equal insignificant market
30 million consumers w/discretionary income
Concentrated in major cities
Sophisticated shoppers
Rich = really rich = 24 out of 500
richest men are Mexican.
The Mexican Market
– Largest number of FTAs
• Trade US & CAN tripled since NAFTA 1994
– Lots of $ in Mexico - Income distribution: top 20%
earn 55% of total & private consumption lead
growth in past 2 years
– Actively seeking foreign participation in its
economy: no. state owned enterprises fell 1982
>1000, 2000 <200
The Mexican Market
• Exports: $168 billion - 2000
• Imports: $176 billion - 2000
• Infrastructure
– Airports: 238 (paved), 1610 (unpaved)
– Seaports:15 (major)
– Expressways: 3960 miles
– Highways: 56,178 miles
Expressways
Mode of Entry
• Exporting
– Direct & Indirect
• Joint Venture
– Licensing & Franchising
– Management Contracts
– Turn-key projects
– Ownership arrangements
• Foreign Direct Investment
Challenges/Success Factors
•
•
•
•
Foreigner
Language Barrier
Work approach
Relationships
• Perception Skills:
blending in
• Few words
• Access to high levels &
business etiquette
• Networking
Mexican Flag
Doing Business in Mexico
• Conscious of history and tradition - proud and
patriotic
• Patience is advised - skeptical of foreigners in
their country and business
• “Despacio que tengo prisa”
• Establish reputation by keeping
every commitment
Business Savvy
•
•
•
•
•
Initial contact with key decision maker
Networking: opens doors
Chambers
Government contacts
Before: Research & Recommendations
Business Savvy
• Telephone or verbal? In writing, email or fax &
follow up
• Need signature for agreements
• Translations & translators - avoid mistakes
• Do you really speak Spanish?
• Advertising - hire a professional
Business Savvy
• Direct selling
– Control over product
– Expenses: staff & inventory
• Branch office
– US trained personnel in control of ops
– 183 days over 12 month-period
Business Savvy
• Broker/Representative
– Familiar with your market
– Not exclusive
• Master distributor
– One client, large shipments
– One more on his list?
Business Savvy
• Joint venture
– Ownership position in your business
– Finding Mr. Right
Business Protocol
•
•
•
•
•
Non-smoking areas - unknown
Who pays? Whoever extended invitation
A woman NEVER pays.
Refer to people by their prefix
Prefix, First Name, (Middle name), Paternal
Last Name, Maternal Last name
Business Protocol
NAME
• Maiden
– María (Elena) Gómez Ramírez
• Address
– Lic. Gómez / Srita. Gómez
• Married
– María Elena Gómez de Rodríguez
Business Protocol
ETIQUETTE
• Woman enters room - stand up
• Carry plenty of business cards
• Don’t be hyperactive
• Don’t look at the watch constantly
– allow at least 2 hours per meeting (+ traffic)
• Be on time, expect others to be late
Business Protocol
ETIQUETTE
• Personal space closer
• Touching, hugging, kissing
• Louder
• Hand gestures
Business Protocol
ENTERTAINMENT
• May or may not discuss business
– Avoid talking about income, status, investment &
historically sensitive topics
• Watch out for altitude & alcohol!
• Dining takes long, no rush
• Different hours - snacks
Business Protocol
Weekly Schedule
• 8:00-9:00/10:00 Breakfast
• 10:00-2:00 - Office hours
• 2:00-4:00/5:00 - Lunch
• 4:30-6:00/7:00 - Office hours
• 7:00-9:00 - Cocktails, happy hour
• 9:00-Midnight/beyond - Dinner
POLITICAL INFORMATION
•
Capital: Mexico City
•
Official languages: Spanish
•
Government Presidential Federal republic
•
President Felipe Calderón(PAN)
•
Population: 2007 estimate108,700,891 (11th)
•
2005 census 103,263,388
•
Mexico is the most populous Spanish-speaking
country in the world
•
The United Mexican States are a federated union of
31 free and sovereign states.
ECONOMICAL INFORMATION
•
GDP (PPP) 2006 estimate
– Total $1.149 trillion (12th)
– Per capita $11,249 (63rd)
•
GDP (nominal) 2005 estimate
– Total $840.012 billion (short scale) (13th)
– Per capita $8,066 (55th)
•
Currency: Peso (MXN)
•
Mexico has a free market economy.
•
Approximately 90% of Mexican trade has been
put under free trade agreements with over 40
countries, of which the North American Free
Trade Agreement remains the most influential.
CULTURAL INFORMATION
•
Mexico is influence by USA.
•
Mexico is 87 percent Christian of whom 80 percent are
Catholic.
•
Mexico is known worldwide for its folk art traditions
•
Mexico City hosted the XIX Olympic Games in 1968,
making it the only Latin American city to do so.
•
Football (soccer) is often considered to be the favorite
•
The vast array of popular music genre in Mexico
shows the diversity of its culture.
MEXICAN ATHLETES
Lorena Ochoa, world's number 1
golfer according to the LPGA
Ana Guevara, is a Mexican track
and field athlete, specializing in
the 400 meters.
Fernando Platas, is a Mexican
diver
FOREIGN RELATIONS
•
the Government of Mexico has sought to maintain
its interests abroad and project its influence largely
through moral persuasion.
•
In particular, Mexico champions the principles of
nonintervention and self-determination.
•
In its efforts to revitalize its economy and open up
to international competition, Mexico has sought
closer relations with the U.S., western Europe, and
the Pacific Basin.
•
Mexico is currently the country with most free-trade
agreements in the world.
DOING BUSINESS IN MEXICO
Ease of...
Doing Business 2008 Doing Business 2007
rank
rank
Change in rank
Doing Business
44
..
..
Starting a Business
75
62
-13
Dealing with
Licenses
21
20
-1
Employing Workers
134
134
0
Registering Property
71
79
+8
Getting Credit
48
45
-3
Protecting Investors
33
32
-1
Paying Taxes
Trading Across
Borders
135
140
+5
76
69
-7
Enforcing Contracts
83
79
-4
Closing a Business
23
23
0
Note: Doing Business 2007 rankings are being recalculated to reflect
changes to the methodology and the addition of three new countries.
STARTING A BUSINESS
The challenges of launching a business are shown below. Included are: the number of steps
entrepreneurs can expect to go through to launch, the time it takes on average, and the cost and
minimum capital required as a percentage of gross national income (GNI) per capita.
Indicator
Mexico
Region
OECD
Procedures (number)
8
9.8
6.0
Duration (days)
27
68.3
14.9
Cost (% GNI per capita)
13.3
43.6
5.1
Paid in Min. Capital (%
of GNI per capita)
11.6
13.1
32.5
DEALING WITH LICENSES
Shown below are the procedures, time, and costs to build a warehouse, including obtaining necessary
licenses and permits, completing required notifications and inspections, and obtaining utility
connections.
Indicator
Mexico
Region
OECD
Procedures
(number)
11
16.9
14.0
Duration (days)
131
238.6
153.3
Cost (% of income
per capita)
103.5
268.2
62.2
PROTECTING INVESTORS
The indicators below describe three dimensions of investor protection: transparency of
transactions , liability for self-dealing, shareholders’ ability to sue officers and directors for
misconduct and Strength of Investor Protection Index. The indexes vary between 0 and 10,
with higher values indicating greater disclosure, greater liability of directors, greater powers of
shareholders to challenge the transaction, and better investor protection.
Indicator
Mexico
Region
OECD
Disclosure Index
8
4.2
6.4
Director Liability Index
5
5.0
5.1
Shareholder Suits Index
5
6.0
6.5
Investor Protection Index
6.0
5.1
6.0
PAYING TAXES
The data below shows the tax that a medium-size company must pay or withhold in a given year, as well
as measures of the administrative burden in paying taxes. These measures include the number of
payments an entrepreneur must make; the number of hours spent preparing, filing, and paying; and the
percentage of their profits they must pay in taxes.
Indicator
Mexico
Region
OECD
Payments (number)
27
39.4
15.1
Time (hours)
552
406.6
183.3
Profit tax (%)
22.4
21.8
20.0
Labor tax and contributions
(%)
26.9
14.5
22.8
Other taxes (%)
1.9
11.7
3.4
Total tax rate (% profit)
51.2
48.0
46.2
CLOSING A BUSINESS
The time and cost required to resolve bankruptcies is shown below. The data
identifies weaknesses in existing bankruptcy law and the main procedural and
administrative bottlenecks in the bankruptcy process. The recovery rate,
expressed in terms of how many cents on the dollar claimants recover from the
insolvent firm, is also shown.
Indicator
Mexico
Region
OECD
Time (years)
1.8
3.2
1.3
Cost (% of
income per
capita)
18
16.4
7.5
Recovery rate
(cents on the
dollar)
63.9
25.9
74.1
TOTAL IMPORTS OF MEXICO
• Total Imports (billons dlls)
IMPORTS OF MEXICO
•
Since the implementation of NAFTA, Mexican imports
from the U.S. have increased exponentially, from
US$41.6 billion in 1993 to over US$ 120 billion in 2005.
•
Through November 2006, U.S. exports to Mexico were
US$124.1 billion, up over 12.7 percent over the same
period in 2005. 2006 is expected to set new records for
U.S.-Mexican trade.
•
Although China just surpassed Mexico as the second
largest trading partner of the U.S., U.S.-Mexico bilateral
trade has more than tripled since the implementation of
NAFTA: from US$81.5 billion in 1993 to US$290.5 billion
in 2005 (which represents an increase of 256%).
•
•
69% of Mexico’s bilateral trade is with the United States.
IMPORTS OF MEXICO
Total Imports of Petroleum (Top 15 Countries)
(Thousand Barrels per Day)
Country
Jul-07
Jun-07
YTD 2007
Jul-06
Jan - July 2006
CANADA
MEXICO
SAUDI ARABIA
VENEZUELA
NIGERIA
ALGERIA
RUSSIA
IRAQ
ANGOLA
VIRGIN ISLANDS
UNITED
KINGDOM
COLOMBIA
KUWAIT
BRAZIL
2,360
1,611
1,436
1,386
906
730
525
460
404
372
2,375
1,529
1,534
1,364
968
709
285
573
514
218
2,414
1,595
1,443
1,360
1,053
722
417
475
556
327
2,114
1,709
1,313
1,467
1,073
743
425
592
695
353
2,250
1,784
1,442
1,455
1,171
606
349
553
501
305
369
345
321
340
294
231
202
198
164
263
159
138
202
207
156
155
279
185
165
177
184
170
116
116
81
LIBYA
Doing Business in Mexico
• The conclusions are that Mexico has been importing a lot of
products lately, mostly are in the agriculture industry, because
the great impact that the United States has been doing in this
sector in the past few years.
• Mexico is in the second place of the world oil imports,
although Mexico still has a lot of this product we cant process
it because the lack of machinery this country has. So our
neighbor country (U.S.) imports us all the oil we export to
them.
• Mexico has a lot of restrictions policies that slows the process
to make business here, so the foreign industries search for
another nations. Although we have a very cheap labor, that’s
why the Maquiladoras has have a lot of success here.
BIBLIOGRAPHY
•
http://es.wikipedia.org/wiki/M%C3%A9xico
•
http://en.wikipedia.org/wiki/Foreign_relations_of_Mexico
•
http://www.doingbusiness.org/ExploreEconomies/?economyid=127
•
http://translate.google.com/translate?hl=es&sl=en&u=http://www.doingbusi
ness.org/Main/Mexico.aspx&sa=X&oi=translate&resnum=1&ct=result&prev
=/search%3Fq%3Dwhen%2Bdoing%2Bbusiness%2Bmexico%26hl%3Des
•
http://www.mexico-trade.com/DOINGMX.htm
•
http://www.dfat.gov.au/publications/business_mexico/
•
http://www.importexporthelp.com/doing-business-in-mexico.htm