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 • Perception Skills:
• Language Barrier blending in
• Work approach • Few words
• Relationships • 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,
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
Doing Business 2008 Doing Business 2007
Ease of... Change in rank
rank 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 135 140 +5
Trading Across
76 69 -7
Borders
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

11.6 13.1 32.5
GNI per capita)

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

103.5 268.2 62.2
capita)
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 18 16.4 7.5
capita)
Recovery rate
(cents on the 63.9 25.9 74.1
dollar)
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 2,360 2,375 2,414 2,114 2,250

MEXICO 1,611 1,529 1,595 1,709 1,784
SAUDI ARABIA 1,436 1,534 1,443 1,313 1,442
VENEZUELA 1,386 1,364 1,360 1,467 1,455
NIGERIA 906 968 1,053 1,073 1,171
ALGERIA 730 709 722 743 606
RUSSIA 525 285 417 425 349
IRAQ 460 573 475 592 553
ANGOLA 404 514 556 695 501
VIRGIN ISLANDS 372 218 327 353 305
UNITED
369 345 321 340 294
KINGDOM
COLOMBIA 231 164 138 156 185
KUWAIT 202 263 202 155 165
BRAZIL 198 159 207 279 177

LIBYA 184 170 116 116 81

 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.doingbusiness.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