As the U.S. and Mexico enter a new trade deal, there’s new attention on Mexico’s role in the global economy. If your company is considering expansion to Mexico, here are a few key things to know.
Key Economic Facts on Mexico
· Mexico is currently the No. 15 economy in the world.
· It has the second-largest GDP in Latin America.
· It is the 13th-largest exporter in the world.
· The economy is growing (albeit slowly) and unemployment is dropping.
· By 2050, it is projected that Mexico will rise to the No. 7 economy in the world.
Mexico Business Trends
· In October 2017, Bloomberg Businessweek reported that relocation specialists were seeing an influx of companies moving their manufacturing operations to Mexico even amid uncertainty at the time about the fate of the North American Free Trade Agreement. Companies were motivated by lower labor costs in Mexico, Businessweek reported.
· Increasing labor costs in China are driving U.S. manufacturers to Mexico, the New York Times reported in 2014. The Times also cited statistics that outsourcing to Mexico benefits the U.S. economy more than outsourcing to China does.
· According to Globalization Partners, a global professional employer organization, there are several reasons that companies are expanding to Mexico. The firm cites Mexico’s strategic global position between Latin America and the U.S. and Canada as well as the “thriving consumer and talent bases” that can bolster U.S. entrepreneurs in manufacturing and ecommerce.
· The TMF Group reports that Mexico is improving its infrastructure and fostering competition in transportation, energy and telecommunications to attract more investment.
· Additionally, the TMF group says that Mexico is making it easier to start businesses there, but some complex processes remain, such as getting electricity, registering property and paying taxes.
· Citing “tremendous opportunities for U.S. businesses” in Mexico, the Robin Report says cross-pollination between the two cultures makes it easier for U.S. retailers to expand in Mexico vs. most other countries.
· Another reason for retailers to expand to Mexico is the growing middle class, the Robin Report says. As malls decline in the U.S., they’re on the rise in Mexico.
· The Robin Report also found that Mexican shoppers are tuned in to U.S. brands and want U.S.-style shopping experiences.
Companies Expanding their Mexico Operations
· Amazon Mexico announced plans to start offering drinks and food in an effort to grab a larger share of the Mexican market.
· Walmart recently acquired Cornershop, a crowd-sourced, on-demand delivery service operating in Mexico and Chile.
· The 2014 New York Times story cited numerous companies expanding in Mexico, including Caterpillar, Chrysler, Stanley Black & Decker and Callaway Golf.
Mexico’s Business Culture
Here are a few tips on doing business in Mexico from TMF Group, Export.gov, Acrecent and eDiplomat.
· Meetings tend to run longer than they do in the U.S. and to start off slowly. The most important matters often don’t come up until near the end of a meeting.
· Decisions are often made by one person instead of a board of directors.
· If you’re meeting with prospective business partners in Mexico, be sure to dress professionally.
· Be prepared for some long business lunches and to talk about other topics before the conversation turns to business.
· Mexican business etiquette involves tactful and often indirect phrasing.
· Overly aggressive negotiating isn’t effective. You’ll just be considered rude.
· In most parts of Mexico, it’s OK (and even expected) to be late to social events but not to business or government appointments.
· Confirm meetings multiple times.
· Most Americans know that “mañana” translates to “tomorrow” in English. But in Mexico it’s often used to refer to mean “in the near future.” So it’s a good idea to make sure everyone is on the same page about timing.
· Expect a little less personal space than what you’re used to in the U.S.
· Don’t stand with your hands on your hips or in your pockets.
· Don’t try to make deals over the phone. In-person meetings are better.
· Your Mexican counterparts will appreciate any attempt you make to speak Spanish and regard it as a sign of goodwill. They’ll also appreciate any knowledge you show of Mexican culture.
Prepare to do Business in Mexico with Fluency Corp
Fluency Corp’s home state of Texas is a neighbor to Mexico. Our corporate language training offerings have helped companies such as American Airlines, Ferrovial and Prevarian successfully do business in Mexico and/or with Spanish-speaking employees. Fluency Corp founder Micah Bellieu has worked in Mexico herself and created her unique approach to language training based on her experiences there. Our experienced, native-speaker instructors can work with your employees in person or online to teach them the Spanish they need for their work with your Mexico operations. Your employees will learn Spanish as it’s really spoken in Mexico, and their lessons will focus on the specific vocabulary and phrasing they need for their jobs. Fluency Corp instructors also serve as invaluable guides to Mexican business etiquette and culture. For a free consultation, contact us at email@example.com or (800) 401-3159.