How to do business in Mexico - And Have fun Doing it

http://home.att.net/~Waynelund/index.htm

The following is to be considered as a friendly chat and not as legal advice in any way shape or form.  Doing business in Mexico is dealing with Mexicans - among the most civil people in the world. Hospitality, long lunches, occasional siestas are part of the equation. Forget what you've heard about bribes. You MUST do business without setting yourself up for never-ending blackmail by NOT participating in the 'game'.

There are roughly 100 million people in Mexico of which 20 million are extremely wealthy, 20 million with above average purchasing power and 10 million in the middle class. The rest are poor. NAFTA has opened the door to U.S. and Canadian manufacturers by reducing the traditionally stiff tariffs on goods made outside of Mexico. Mexicans love U.S. products and are known to pay whatever it takes in order to acquire what they see as quality products. Factories are retooling and growing in order to meet the challenge and this increased production is being welcomed by U.S. and Canadian consumers. The range of products include coffee, salsas, liquors, leather and glass goods, artwork, etc. Not to mention the growing number of U.S., Korean and Japanese owned factories where labor intensive operations take place on products for sale on the international market.

Doing business in Mexico is not the same as in the U.S. or Canada. Here are a few of the major differences.

1. You can do business in Mexico without ever paying a bribe. In fact, this should be uppermost in your planning strategy. And you don't need nor want a lawyer as you will see later.
2. The telephone is for making appointments, the first lunches are to get to know each other and no business is discussed, later they are for broad strategic meetings. The office is for working out the details and signing the contract, then assigning the work to underlings.  Don't try to conduct business over the phone or E-mail. Don't send somebody less than a CEO to meet with a Mexican CEO. If you want to get things done, deal with the rich people; you can have fun with anybody else but not make a deal come to life.
3. When dealing with a Mexican company make sure they have access to you via live-person phone contacts. Answering machines and voice mail will not do the job. Faxes must be followed up with personal contact.
4. Take the trouble to learn the exchange rate and understand that when they talk 35 interest/margins it is because of the inflation rate. Practice converting Dollars to Pesos and Pesos to Dollars. Today it is roughly $9 Pesos per Dollar,  or $10 Pesos is $1.11.
5. Wages are net. If you hire a salesman at $50 Dollars a week your actual cost will be the $50 plus Seguro Social, plus Hacienda, etc.
6. Roman Law applies; everything is in a book. The book is read and interpreted by Notary Publics. You do not need nor want a lawyer to assist you in establishing a business presence in Mexico. Select a Notary who will assist you. They will provide the forms and give you instructions of where to take the forms. An accounting firm will help by providing runners to do this. Hire a lawyer and you will pay ten times what it would cost otherwise. (And gain nothing in additional value added).
7. Contracts are enforceable if you can get help from the Dept. of Commerce. Research the parties you intend to do business with. A handshake is as valuable as a contract, perhaps more so. The rule here is to build strategy around never having to go to court since this is one place you may have to use the bribe if you intend to win. There is change in the air, however. Check with your professional association to stay on top of this issue.
8. A business presence is a must if you intend to invoice any business in Mexico. A Mexican business cannot expense-out an invoice without an RFC. The RFC is your number issued by Hacienda - the equivalent of the IRS. When they ask you if you can invoice them, they are asking if you have the RFC. If you ship directly from the U.S. use the letter of credit or wire-transfer method which allows you do to business in Mexico without establishing legal presence.
9. An airplane ticket from Mexico City to Cancun will be roughly $150 Dollars. A first class bus for a 20 hour ride will cost $35. Taxi drivers charge $5 to $7 Dollars per hour except in places such as Tijuana and Cancun. First class hotels range from $30 to $120 in most cities.
10. You can hire a college graduate almost anywhere in Mexico for $500 Dollars a month.
11. If you do not speak Spanish make sure you link to a trustworthy interpreter and have that person with you at all times. Make it a point to learn the language.
12. In my experience crime is no greater in Mexico than in the U.S. However I feel safer when walking the streets in any Mexican city than I do in my home-town of San Diego. Take the normal precautions such as not wearing a Rolex or showing a thick wallet.
13. U.S. credit cards and U.S. ATM cards are welcome almost anywhere. During a recent trip from Mexico City to Puebla, Orizaba, Veracruz, Coatzalcoacos, Minatitlan, Villa Hermosa and Cancun I was able to charge all hotels and restaurant meals on my Visa with no trouble at all. When billed the bank uses whatever exchange rate for that date and bill me in Dollars.
14. You must get a Visitor's Permit to conduct business in Mexico. If going by air, the airline will provide you the form. Select the Business permit and pay the $18. Otherwise this will involve paperwork from the Mexican Consulate near you. Don't use a Tourist Card and expect to be welcomed at a Mexican firm if you are looking for business.  They are being scrutinized by their own version of the INS and face stiff fines if they allow foreigners without papers on their premises.
15. You can now start a company in Mexico without having to have a Mexican national as part of the company as it used to be. You can also buy and legally own property in Mexico as long as it is not close to the border or coastal regions.
16. Never show your anger when left standing in the hotel lobby until 5:14 when you were sure the meeting was set for 4. Time in Mexico is approximate, within hours.
17. Mexicans love their families, are family oriented and most are Catholic at heart. Respect their beliefs and you will be a welcome guest.
18. Doing business in Mexico is very much a person to person affair. The least contact you have with government agencies and offices the better. Trust the advice of your business partner once you decide to do business with them.
19. You get to meet people through references. Meet with a banker or Dept. of Commerce person and ask for leads. Follow each lead who in turn will provide more leads. Direct mail and many other forms of prospecting we are used to don't work.
20. Don't use Mexican mail if you expect delivery in less than two weeks. All invoicing is done in person, by messenger or carrier, delivered, signed for, then at a predetermined time to collect the check, in person. (Except Letters of Credit and some other international money transactions).

Mexico is an exciting country and culture. Every town and village have their unique differences. Television is everywhere and slowly degrading this uniqueness. Now is the time to get into business in Mexico before the magic is lost and before Mexico becomes just another shopping mall.

This article and a complete online manual on how to implement an international trade system within your organization can be found at http://home.att.net/~Waynelund/index.htm and includes links to valuable free information from hundreds of sources. It is geared for both English and Spanish speaking clients of the California Mexico Trade Assistance Centers and Mexican businesses. It's all for free; paid for by the taxpayers in California.