(Last updated: 29 Jul 2011)

Business opportunities

Austrade’s business development specialists have prepared a range of market profiles that offer potential to assist in your exporting investigations. Austrade’s in-market teams have identified opportunities for Australian exporters in various industries (see 'Profiled industries in this market' on the left side of this page).

Business etiquette

Business tips

Mexicans are inclined to be more formal than their Australian counterparts. When meeting with Mexican business people make sure to bring plenty of business cards, although it is common for your Mexican counterpart not to have any business cards to give you. Mexicans will always greet and farewell all people in attendance accompanied by small talk about current issues or family topics.

Cancelled meetings are common. It is advisable to confirm all appointments close to the meeting time. In fact, you may need to re-confirm your meeting several times, even on the day of the meeting. Although it is important to be punctual to meetings, it is generally accepted that visitors will often be late through no fault of their own. Given the size of Mexico City, it is important to have a good idea of exactly where you are going and an estimate of travel time. Lateness is not a sign of disrespect for your time.

Business commonly takes place over meals, primarily lunch and increasingly over breakfast. A point to note is that the bill at a restaurant is rarely divided between small parties. One person usually invites the others to a meal. It is also advisable to recognise the significance of the word ‘invite’, which in Mexico is often a synonym meaning, ‘to pay for’. Your generosity will count toward developing a personal relationship.

Mexico is still a male-dominated society, particularly in the business sector. Men still retain the majority of high-level executive jobs. Gender relations also vary depending on the sector. For example, agribusiness, energy, and automotive are very male-dominated sectors. However, women doing business in Mexico should find people are very courteous, hospitable, and open. The most common advice given in guidebooks for women is to make an effort to dress and act in a conservative way.

While Spanish is the official language in Mexico, most international managers also speak English. Mexicans are very proud of their language and prefer to speak Spanish. Accordingly, it is highly advisable to either use personnel who speak Spanish or use assistance and translators during business meetings, particularly with government officials. This is to avoid any misunderstandings or offence and to get the message across as efficiently as possible. It can be common in Mexico for people not to indicate when they do not understand something and using Spanish can avoid these types of situations. Taxi drivers, waiters and shop assistants will probably have little or no English.

Buildilng relationships

The best way to succeed in Mexico is to form strong personal and business relationships. Mexicans generally like to do business with people they know and trust. It is also important when doing business in Mexico to know that the society is very hierarchical. Responsibilities are generally not delegated so it is important to identify the key decision-makers and deal with them directly.

There is a strong emphasis on family, courtesy and appearance. Mexicans also place great weight on personal relationships and once a friendship is made, the mood typically becomes gregarious and informal.

Social status and family names are very important when choosing a potential project or investment partner. Researching the reputation of the owners, as well as the company, is very important.

Industry in Mexico may often be more political than in Australia, particularly in agribusiness. State governments are very influential in regional industries. Therefore some knowledge of the relevant government organisations and agencies and an introduction to key officials is beneficial. This is where Austrade can particularly help you.

It is very unusual for Mexicans to give a direct negative response. It is more normal to receive an indirect response or ‘I’ll get back to you’ kind of answer. Therefore, it is important to aim for specific answers and time frames.

People in Mexico use two surnames (father’s followed by mother’s). Traditionally, titles are very important. Common forms of address are:

• Licenciado (Lic) which refers to the fact that the person has a bachelor degree
• Ingeniero (Ing) stands for engineer
• Abogado is for lawyer
• MVZ for a veterinarian
• Prof for Professor
• If the title is unknown then Señor (Sir) or Señorita (Miss) can be used

Please also note: Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

Tariffs and non-tariff barriers

Tariff

Tariff is based on the Harmonised System. You can obtain tariff rates (approximate rates) for most products from the APEC Tariff Database.

Most duties are ad valorem, assessed on the FOB or CIF value or at specific rates, whichever is the greater.

The General Import Tax Law of Mexico sets out specific, general and mixed tariff rates. The general rates (ad valorem) are mainly three per cent, eight per cent, 13 per cent, 18 per cent, 23 per cent and 35 per cent, while the specific rates are established according to unit of merchandise. Mixed rates are part ad valorem and part specific rates and are applied to some products from sensitive sectors, such as sugar.

Various concessions are granted to other members of the Latin American Integration Association (ALADI).

Customs authority contact details:
Dirección General de Aduanas
Secretaria de Hacienda y Credito Publico
Av. Hidalgo No. 77
Modulo 4, Tercer piso
Col. Guerrero
06300 Mexico
Tel: (52 5) 9157 3436 (3437, 3439)
Fax: (52 5) 9157 3353

Non-tariff barriers

Import restrictions

All imports into Mexico need to be processed by a licensed customs broker. Customs brokers are experts in customs laws and procedures and should always be contacted prior to any commercial venture in Mexico. Customs is a division of the Treasury Ministry.

Very few items are subject to specific import licensing. The importer will, however, need to be appropriately registered as an importer in the National Importers Registry that is kept and updated by the Treasury Ministry. Products such as toys, wine and liquor, chemicals and textiles also require registration in a special Sector Registry. Both registrations can be carried out through the Ministry or through a customs broker.

Some imports that require specific licensing include health and food articles, machinery, chemicals and pharmaceuticals. One or more government ministries such as the Commerce, Health or Agriculture ministries may issue these.

NOMs, known as Official Mexican Standards, are obligatory for both domestic and imported goods and services. Traders need to be aware of the existence and content of the guidelines that apply to their particular product. Every ministry of the Federal Government is in charge of the standards related to its specific function. Domestic and imported goods and services must comply with labelling NOMs by Authorised Verification Units.

Foreign exchange controls are administered by the National Bank (Banco Nacional de Mexico).

Product certification, labelling and packaging

For the purpose of the certification procedure the following definitions are issued:

• Product Certification: Proof of compliance with the applicable Mexican standards. An accredited certification body must issue these certificates
• DGN General Bureau of Standards, Ministry of Economy, this agency authorises the operation of certification and calibration laboratories and verification units, according to the Federal Law of Standardization and Metrology
• Accredited Laboratory: Institutions authorised to test or calibrate products subject to Mexican standards
• Accredited Unit for Sampling Verification: Authorized Unit for product sampling verification
• NOMs (mandatory)
• NMX: Mexican Standard (voluntary)

Labelling

All products intended for retail sale in Mexico must bear a label in Spanish prior to their importation to Mexico. Products must comply with commercial and commercial/sanitary information. NOMs must follow the guidelines as specified in the applicable NOM. Most NOMs require commercial information to be affixed, adhered, sewn, or tagged onto the product, with at least the following information in Spanish:

• Name of the business name and address of the importers
• Name of the business name of the exporter
• Trademark or commercial name brand of the product
• Net contents
• Use, handling and care instructions for the product as required
• Warnings or precautions on hazardous products

This information must be presented attached to the product, packaging or container depending on the product characteristics. This information must be on products as prepared for retail sale. Listing this information on container in which a good is packed for shipment will not satisfy the labelling requirement.

Packaging

As tariff charges are levied on gross weight for many items, packing should be as light as possible, commensurate with security.

Packing of hay or straw must be accompanied by a certificate of health, in duplicate, issued by the competent authorities and legalised by the Consul.

Marking on packages should indicate net, gross and legal weights, marks and numbers, as specified. Marks should be applied by brush or stencil and must be written in Spanish.

Labels on products registered at the Mexican Department of Health and Sanitation must indicate the licence number issued by the Department.

Silver, silver and nickel-plated articles, wearing apparel, leather goods and certain other articles are subject to special labelling regulations. Details should be requested from the buyer in each case.

Special certificates

Phytosanitary certificates are required for all kinds of agricultural seeds and other products intended for sowing and propagation. The certificates must describe the origin of the goods and be issued by an authorised inspection service in the exporting country. In Australia this is usually the Australian Quarantine and Inspection Service, the Commonwealth Department of Agriculture, Fisheries and Forestry or the relevant state department of agriculture.

Livestock and animal products require sanitary certificates issued by agricultural authorities in the export country. As conditions with regards to the export of live animals can change quickly, it is higly recommended that exporters contact the Commonwealth Department of Agriculture, Fisheries and Forestry or contact Austrade Mexico.

Hides, furs, animal by-products and live animals require health certificates issued by a competent veterinary and countersigned by agricultural or quarantine authorities in the exporting country.

Alcoholic beverages must be accompanied by a certificate stating alcoholic strength, as determined by the Gay Lussac Scale. A certificate of age may be required for spirits.

All these certificates must be in duplicate and legalised at the Mexican Consulate.

Methods of quoting and payment

As insurance arrangements may vary, it is recommended that quotes include FOB, C&F and CIF values.

Credit terms vary. For consumer goods, raw materials and other general items, terms range from cash against documents to 90 days. For some products, for example, wool, 120 days is usual and, in some cases, terms as long as 180 days have been obtained.

For imports of capital equipment where large amounts are involved, deferred payment of up to five years is common.

Payment is by letters of credit, documentary drafts or open account. Letters of Credit are not popular amongst local companies because they can take some time to organise and can be difficult to arrange. However, as this is the most critical issue in the order of goods, it is highly recommended that all exporters carefully weigh the payment options and conduct all necessary due diligence on buyers before agreeing to specific terms.

It is highly recommended that exporters to Mexico seek advice from the Federal Government's Export and Finance Insurance Corporation (EFIC), prior to finalising any contracts.

Documentary requirements

Commercial invoice

For tax purposes all Mexican importers must apply and be listed on he ‘Padron the Importadores’ maintained by the Ministry of Finance and Public Credit (Hacienda). In addition Hacienda maintains special sectors registries. To be eligible to import more than 400 different items, including agricultural products, textiles, chemicals, electronics, and auto parts.

The basic import document is the ‘pedimento de importacion’. This document must be accompanied by commercial invoice (in Spanish), a bill of lading, documents demonstrating guarantee of payment of additional duties for overvalued goods if applicable, and documents demonstrating compliance with the Mexican product safety and performance regulations, if applicable.

The import documentation may be prepared and submitted by a licensed Mexican custom broker or by an importer with sufficient experience in completing the documents.

Unless the imported is accredited to act as Mexican custom broker, the participation of a professional custom broker is necessary to ensure compliance with Mexico’s custom regulations. Mexican custom law is very strict regarding proper submission and preparation of customs documentation. Errors in paperwork can result in fines and even confiscation of merchandise as contraband.

For further information please visit Administracion General de Aduanas (General Customs Administration) – www.aduanas.gob.mx.

Certificate of origin

Certificates of origin prove the country of origin of the goods. They grant tariff benefits to goods originating from a country that is party to a treaty agreement. The certificate must be presented with the shipment at the point of entry in order for the goods to receive preferential tariff treatment and to avoid payment of compensatory quotas. There are several types of certificates of origin, depending on the country and the commodity.

Free sale certificate

Some types of goods require a free sale certificate at the point of customs clearance. The free sale certificate has to be issued in the country of origin and must consist of a written declaration by the appropriate authorities to the effect that, in the country of origin, the goods may be sold and consumed freely without exception and that their sale does not require a special permit.

Bill of lading/Airway bill

Normal commercial practice. To Order bills are acceptable. It should include the names, telephone numbers and contact information of the Mexican customs broker and the freight forwarder.

Packing list

The exporter must issue six copies of this document. It must include the exact description of the merchandise, its value, weight and volume. The information must coincide with the description in the commercial invoice.

Weights and measures

The metric system.

Insurance

Insurance must be taken out with Mexican firms.

Public health requirements

Alcoholic beverages, patent medicines, toilet products and foods supplied to the public in closed containers or packages must be registered with the Department of Public Health in Mexico.

Every food product for which a therapeutic application is specified must also be registered as a medical product. A certificate issued by the proper Australian authorities must accompany application for registration and be verified by the Mexican consul, stating that sale of the item is permitted in the country of origin.

Setting up in Mexico

Selection of the appropriate agent or distributor requires time and effort. Though there may be many qualified candidates, companies interested should use high standards in selecting the agent/distributor.

Since most Mexican firms are selling in a limited area, companies should consider appointing representatives in multiples cities to broaden the distribution, and rarely, if ever, grant an exclusive, national agreement. Providing the appropriate training, marketing support, samples, product support, and timely supply of spare parts is critical for success.

Many companies use a distributor and/or a retailer to distribute their products in Mexico. This channel can be used to distribute products in various regions or to distribute to several lined of business.

Usually a sales agent is a freelancer; However, some Mexican forms are interested in serving sales agents for the foreign companies. This channel can be efficient for reaching the smaller cities or more remote location of the country.

Taxation

A slew of tax reform has come into effect in recent years. Aspects of these benefit foreign firms, some of which have cited a heavy burden as an obstacle to investment in the past. Most Mexicans taxes are applied at the federal rather than the state level.

A new corporate flat rate tax of 16.5 per cent was introduced in 2008, with rises planned for future years. Companies are required to choose between the graduated and flat rate systems, paying whichever gives the highest amount of tax. Resident firms are taxed on global income. Non-resident firms pay tax on Mexican sources-income only. There is also an asset tax, charged according to the net value of assets of Mexican companies and some non-resident firms.

VAT standard rate is 15 per cent. A lower of 10 per cent applies to supplies by residents of a frontier are if they take place in that area. Exports are zero-rated, as are food, books and newspapers, fertilisers and medicines.

Exempt from VAT are construction of residential dwellings, some financial and insurance services and teaching and medical services.

Intellectual property protection

Under NAFTA and the WTO Agreement on Trade – Related Aspects of Intellectual Property Rights (TRIPS), Mexico is duty bound to implement certain standards dor the protection of intellectual property and procedures to address infringement.

Although the administration has tapped up efforts to tackle organised crime behind music, film and software – piracy remains a problem in Mexico. Indeed, the country is one of five the US Congress’ Congressional International Anti-Piracy caucus 2007 Watch List.

An agreement in 2007 between prosecutors, government officials and private –sector companies to cooperate further to improve the procedures for enforcement and seizures in the country has led to a number of large raids and seizures of counterfeit goods and duplicating equipment, as well as crackdowns on vendors selling illegal goods. The Industrial Property Law (Ley de Propiedad Industrial) and the Federal Copyright Law (Ley Federal del Derecho de autor) are the two laws providing the core of IPR protection.

Banking and finance

Mexico’s commercial banks offer a full spectrum of services within one institution. These services range from offering deposits accounts, consumer and commercial lending, corporate finance, and the operation of trust and mutual funds, to foreign exchange and money market trading.

Mexico’s commercial banking sector has been opened to foreign competition. Foreign banks are allowed to operate in Mexico. They are allowed to undertake financial inter-mediation or to solicit customers for their parent bank. Almost major banks, with the exception of Banorte are under control of foreign banks.

The Secretariat of Finance, the National Banking and Securities Commission, and he Bank of Mexico are the principal regulators of the baking system. The Secretariat of Finance is concerned with institutional issues such as licensing and set credit and fiscal policies. The Bank of Mexico (The Central Bank) implements these policies and also operates inter-bank check clearing and compensation systems.