Business Opportunities in Mexico

From job shops to adventure travel extravaganzas, herbal remedies to maguey worms, computers to software, Mexico is ripe and fertile ground for investments.

For over five centuries the Mexican people have been subjected to one form of dictatorship or other in their society and in the workplace. This has prevented the blossoming and flowering of an incredibly talented and resourceful group of people. When given the chance to show their talents the average Mexican can outproduce and outperform almost anyone on earth. To illustrate this incredible resilience is a case study of a grocery store that saw the light and is now the top producer in it's market. As an investor you will see the incredible potential that exists under modern management techniques.

Two years ago the Bodegas Gigante in Coatzalcoacos, Veracruz, Mexico was another run of the mill store selling everything from fruits and vegetables to blouses and tires. In this city of some 120,000 people there are five major competitors, 2 Chedraui, 1 Government store and 2 very busy 'popular markets'. Gigante management in Mexico City was about to shut down their small store in Coatzalcoacos when the store manager pulled off the miracle and became the number one store in the whole company in competion with 196 other stores across the country.

Her name is Rosalia, one of two female managers in the chain. Along with the other managers she attended a series of seminars designed to bring about the kind of cultural change that would allow Gigante to compete against the Wal-Marts, K-Marts, Carrefourts -- and others invading their market due to NAFTA. As she listened to the lessons on developint teams, of listening to customers, of listening to clerks, of becoming a manager who helps people achieve their maximum potential she knew it could never happen in Mexico. People do what they are told to do. Period. But a few sessions later as other managers began relating their successes using the technicques from Dale Carnegie, Steven Covey, Deming, Peters & Waterman, Drucker, Andy Grove, LeBoeuf and others, she decided to try them.

Before the transition sales per employee were in the $30,000 peso per employee per month range. Her latest report shows sales per employee at $80,000. This is the message for this case study. If management uses the techniques so well publicized in American literature in Mexico, the Mexican worker will rise to the challenge and create miraculous results. Any U.S. company wanting to do business in Mexico should make sure their management team is based on theory Y and not theory X. Forget Taylor and Industrial Engineering parameters and go for 'people management' principles. Since 99% of all Mexican companies are still using the power of arrogant management, you will be able to walk all over them and take whatever share of the market you want.

Rosalia called her people to meetings and through gentle persuasion got them to tell her about their ideas, and what could they do to increase sales, make customers more satisfied, make the work environment better and what bothered them the most. It was not easy because nobody had ever done it before and there was mistrust that they were being set up for something. But she persisted and gave each idea the power to succeed. Then she publicly recognized individual efforts from sweeper to department manager. The word spread like wildfire. She showed them the store sales in comparison to the division and in comparison to the chain. She got them mad they were in the lowest ranks and converted that anger into positive action. They began working as a team toward a common goal; one they all believed in.

Within a few months Rosalia  began sharing her experiences with fellow store managers at the continuing seminars every fifteen days. In six months four others had picked up the message and were pulling off the same kind of change at other stores. Few competing Mexican managers will recognize the reason for their success. As it happens today, the competition come into the stores, take notes of prices and layout and are blind to see that the real difference is in the way the employees 'feel'. That feeling of satisfaction, of being goal oriented, is what makes the customer 'feel' good in that store. When customers feel good, they will return and buy. They will be customers! The premise is so simple that one must wonder why it is so difficult to grasp. But it happens every day - the competitors walk into the stores, corner the store manager, and beg them to tell them the secret. The secret is there, staring them in the face, but they can't see it because to them managers give orders and people do what they are ordered to do. There is simply no other way to manage in their point of view.

It's this blind spot the American businessman can use to leverage themselves into dominating whatever market share they chose to dominate.

Under today's laws an Amercian can establish a business in Mexico much easier than ever before. Get capital from any source except Mexico because interest rates in Mexico are in excess of 50%. Inflation last year was 27.34% - the reason for interests. Capitalize with equity so you have a few years to develop your teams. It will take a lot of training to change the cultural mentality from one of taking orders to one of being responsible. As this case study shows, it can be done, and done so well that the competition simply does not stand a chance.

The best possible business opportunity of all is in contract manufacturing with the customers in the United States or Europe, being paid in Dollars, Pounds or Marks while expenses are in Pesos. In a previous article I explained the maquiladora concept where $3/hr fully burdened labor rates are a reality as compared to the lowest, lowest possible in California of $15/hr. But there is more than manufacturing. Artifacts, computer programming, design, travel, adventures and a zillion other things that are possible in Mexico and not in the U.S. One reason is that Mexico has yet to over regulate everything as we have in the States.  For example, you can set up a diving school and start charging the very next day without worrying about all the laws, regulations and tort lawyers hanging out on your doorstep. You could set up a travel adventure company on a normal business plan approach and be in business the next day. You can not do that in the U.S. for fear of being sued  or regulated out of business.

Best of all, Mexico is a fun place to be. Every town and village is unique, the people are the most civil in the world, the food - well, you could live all your life without ever having to eat the same thing twice. But you will fall in love with certain dishes and along with them the conversation, music and art that goes along with them. Mexico is ready for smart investments and smart management.