Doing business
Current business situation
Mexico is actively pursuing a program designed to reduce its reliance on the USA as a trading partner. Mexico has completed free trade agreements with 33 countries giving it access to over one billion consumers.
Australian exports to Mexico have recovered strongly from the slump in the mid-1990s caused by the peso collapse.
The leading sectors in Mexico are below:
Airport and ground support equipment
Mexico has the most developed airport infrastructure in Latin America. Every city of more than 50,000 inhabitants benefits from airport services. The Mexico city airport is the largest in Latin America in terms of number of passengers and operations.
Mexico has developed an aerospace industry and important international corporations have established plants in 13 Mexican states.
Automotive parts and supplies
Mexico’s auto part industry is closely related to the US industry, There are approximately 1,000 auto parts manufacturers in Mexico and about 70 per cent of them are subsidiaries of foreign corporations, mainly from the US.
The best prospects for this sector are: collision repair parts, catalytic converters, steering wheels and sound systems and generally all types of accessories.
Electronic components
Mexico’s electronic industry continues to evolve, the growth of electronic components has lately been driven by a switch to new products lines including the aerospace, automotive, network equipment, game consoles, printers, high capacity servers, storage media, and consumer electronic industries, which continue to be the largest user of electronic components. Consumer electronics is the second most import export manufacturing industry in Mexico.
The best prospects for this sector are: switches, plugs and relays, followed by integrated circuits.
Energy sector
The sector includes the sub-sectors of oil and gas and electric power systems, equipment and services.
The best prospects are: drilling of work-over rigs, to be used in the exploration, discovery, development, maintenance, testing, depletion or production of oil and natural gas wells, pipe, valves, pumps, electrical apparatus, for switching, insulated wire cable, electric capacitors, board panels, electric transformers, electric motors and generators, static converters and rotary converters.
Environmental sector
This sector includes the sub-sectors of pollution control equipment and water resources equipment and services.
The best prospects are: liners for landfills, solid waste containers; solid waste recycling equipment, dust collectors; hazardous and toxic waste transportation equipment; autoclaves for medical waste; medical waste transportation equipment, bio-remediation technology environmental engineering services; chlorinators, desalination plants irrigation equipment primary clarifiers; water pumps; water meters; water leak detectors; water supply and distribution systems and design and engineering services.
Franchising sector
The franchise industry has grown between 15-20 per cent every year over the last decade.
Although food concepts (formal/fast food) continues to lead the industry, there are many others sectors that are growing rapidly and successfully in Mexico – education/entertainment services for children, personal care services (spas, beauty shops, health care centres), Automotive services, among others, are considered as the best prospects for the next five years.
Housing and construction
The Mexican housing construction industry has experienced constant growth over the last five years. The current administration has made housing a priority and assigned additional funds to government institutions that support the development of low-income and pre-fabricated housing. The Mexican Government also offers support to efforts of private companies’ involved in this industry through additional access to capital. With government support and private investment, the housing market is expected to grow at nearly eight per cent for the foreseeable future.
Best prospects are aligned with the Mexican firms search for new and rapid construction techniques and new materials (high quality, low prices, easy to use and install).
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 culture
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.
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.
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.
Links and resources
Government, business and trade
Secretariat of Environment and Natural Resources – www.semarnat.gob.mx (in Spanish)
Secretariat of Labour – www.stps.gob.mx (in Spanish)
Secretariat of Treasury – www.shcp.gob.mx
Secretariat of the Interior ndash; www.gobernacion.gob.mx (in Spanish)
News and media
Reforma – www.reforma.com
El Financiero – www.elfinanciero.com.mx/ElFinanciero/Portal
Please note: this list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only.