Why Manufacturing in Mexico should be your first option

If you are currently manufacturing or sourcing your products in China, and selling to the United States or Canada, you might want to think about manufacturing in Mexico.

There are several advantages to moving your production to Mexico, including:


1. Proximity to the United States - which means decreased transportation costs

2. Lower labor costs overall

3. Access to highly skilled workers - many who speak English

4. The majority of Mexico is on Central Standard Time, which enables you to get things done the same day, instead of the waiting a day for your Chinese manufacturer to respond.

5. Faster turnaround time

Mexico is home to manufacturing for many important companies – Whirlpool, Samsung, Victoria’s Secret, Callaway Golf, Volkswagen, just to name a few. Did you know that the majority of TVs sold in the US are actually manufactured in Tijuana, Mexico (over 20 million!)?

Manufacturing in Mexico is a great choice for companies of all sizes. Whether you are just starting out and need someone to help build a prototype of your product, or you are a well established multi-national, Mexico can cover all your needs.

New and improved Mexipreneur coming soon!

Happy Friday everyone!  

Mexipreneur is getting a new look...check back on Monday for a new and improved Mexipreneur!

Narco Violence and Americans

I try to keep these blog strictly about what's going on in the business world in Mexico, but today I wanted to point out something that is not often talked about. 

Today, while reading the news, I saw a few headlines that said "Americans killed in Mexico" or "Canadian man found dead in Acapulco".  These headlines are instilling fear into foreigners and making people think twice about traveling to or doing business in Mexico.

Here's what you don't hear...most of the "American" citizens are Mexican-Americans who were born in the US, but still live in Mexico or have strong ties to Mexico.  If you do some deeper digging into the stories most of the time (not all) you will find out that the person killed either had some ties to someone involved in organized crime or had a family member who got involved with the wrong crowd. 

I saw tons of stories about the Canadian man who was killed in Acapulco, and today it comes out that he had a criminal record in Canada.  He also had a business where he employed ex-cons to make eco-friendly purses. 

Don't get me wrong - I don't wish harm on any of these people and I think that any murder is tragic, however, I think the US media is creating an unnecessary fear in travelers by making them think that the drug cartels are now targeting Americans or Canadians.

There is a popular phrase in Mexico - el que nada debe, nada teme - which roughly translated means he who owes nothing has nothing to fear...

Take everything you read with a grain of salt, because more times than not there is more to the story. 

Starting a business in Mexico: Franchises

For those expats who are undecided about what kind of business to start, franchises are a good option.  While there are pros and cons to opening a franchise anywhere in the world, opening a franchise as an expat gives you the systems and guidelines you need to make the business work.  Another very important point is to watch the trends in the United States and Europe because Mexico tends to adapt the same trends several years later.

Here's an example:

At the beginning of 2005, a frozen yogurt chain called Pinkberry took Southern California by storm.  People were lining up to get their hands on the yogurt and soon after Pinkberry had a cult like following.  Other chains followed - RedMango, YogiBerry, etc.

Mexico didn't have many frozen yogurt shops, but I saw three franchises pop up on a two block stretch of Masaryk (The Rodeo Drive of Mexico City) in less than one month - Tasti D Lite, Yogen Früz (a Canadian chain), Moyo Frozen Yogurt.  

The point here is to always be looking for trends in other countries because most likely, sooner or later those trends will become popular in Mexico.  It is crucial to analyze the franchise and see if it really fits into the Mexican culture.  Another good way to get a gage on what could be successful is to look at where Mexicans who travel are going when they are abroad. 

Here is a link to Mexico's Franchise Expo (franchises from around the world).

Doing Business in Mexico: Opening a Mexican Bank Account

When you set up a business anywhere, one of the first tasks to take care of is to set up a bank account.  Mexico has a number of banks that offer small and medium businesses checking and savings accounts, some in Pesos and some in Dollars (NOTE:  in order to open a dollar account, you have to be a certain number of kilometers from the US-Mexico border).



The requirements vary from bank to bank but here are the minimum standard requirements that you will need to open a business bank account:

• Acta constitutiva (articles of incorporation)
• Official ID (if you are a foreigner, your passport)
• FM-2 or FM-3 visa (your work or investor's visa)
• If you are not the legal representative for your company, you must have a document that testifies you can sign on behalf of the company
• Comprobante de domicilio (proof of address - must be recent, within the last month, Telmex or CFE)
• Minimum deposit (these range from bank to bank...the least I've seen is $6,000 MXN at Bancomer)
• Copy of your RFC
• Business and/or personal references

Remember to check each bank's requirements.  Bring extra copies of everything!

Moving to Mexico Without a Job

A lot of people fantasize about leaving their boring cubicle job for a new, exciting job in another country. So how easy is it for you to pack up your things and move to mexico without a job? Answer: not easy at all.


If you are a sales manager at a multinational corporation in your home country and you expect to come down and get a cushy job in middle management, think twice.  It is very difficult to get a job - even at a multinational - if you don't speak Spanish and/or don't have a Mexican work permit.

What about working at your home country's embassy or consulate in Mexico?  While the requirements aren't as tough, many of the embassies require that you live in Mexico for at least 6 months before you apply for a job.  If you apply for a job that is open to foreigners, you will be considered after EFMs (Eligible Family Members of current embassy employees).

While I don't want to discourage people from picking up and moving to Mexico, I want to stress the fact that unless you want to teach English or sell timeshares, you will have a difficult time finding a company to sponsor you for a work visa...but if you are an expat entrepreneur, you don't need a sponsor - just an idea and some seed money to get set up!

Dealing with Unions in Mexico

The other day I came across an interesting post (back from 2005!) about an expat from Belgium who was living out his dream in Lake Chapala (near Guadalajara) by running a small cafe.  The article talks about how the unions virtually shut him down because of his refusal to cooperate.  Depending on the nature of your business, you might have to deal with unions in Mexico, so this is a very important read:

Unions Frustrate Expat in Mexico

Doing Business in Mexico: Forming a Bond with your Mexican Business Partners

Note: Business Partner here means anyone you do business with in Mexico, potential client, buyer, supplier, etc.

One of the main differences that people notice when they first come to Mexico to do business is the way that business is conducted.  We've talked about the 4 hr lunches, but what is really behind the lunchis the personal relationship aspect of doing business. 

I remember when I was looking for a job and interviewed for a Latin American Sales position (mainly Mexico).  The manager went on and on about how great the job was because I wouldn't have to travel, I'd be able to do everything via phone.  I sat back and thought "I may not be traveling, but I also won't be making many sales."  The fact of the matter is that putting a face to a name in Mexico is crucial.  I don't care if you have the greatest product in the world and people are clamoring for it...you still need to meet your potential Mexican business partners in person.

Relationships are built on trust and it is very difficult to trust someone you have never met.  It happens in the US all the time - deals are made over email and the phone - but do not expect the same to work in Mexico.

Gourmet Show - Mexico City - September 2- 4

For all of you gourmet food lovers in Mexico City, this weekend's Gourmet Show is the event for you!

The Gourmet Show will be held at the World Trade Center in Colonia del Valle, September 2-4 from 11am to 8pm.  Tickets are available for $150 MXN each day (or send me a message for an invite).

Some of the conferences available:
-"Coffee in the Kitchen"
-"Truffles Laurent Trouble Style"
-"Get to know the difference between regular and organic food"
-"Salads and Dressings: A fresh alternative"
-"Fine European Pastry Making"
-"Mexican Cheeses"

This show is ideal for chefs, wine enthusiasts, foodies, sommeliers, coffee lovers, bartenders, restaurant owners, and everyone passionate about food!

I will be exhibiting at the show (booth 610) the following brands:

Robert Rothschild Farms
Rain Republic Chocolate
Sonoma Gourmet
Biscotea
Kiwa chips
De Rossetti Olive Oils
...and more

Tell your friends, neighbors, anyone who might be interested.  It is going to be a great event!

Mexican Business Terms: PyMEs

If you are doing business in Mexico, sooner or later you will come across the term "PyMEs".  You'll see it on bank websites, government websites, at trade shows, in the news.  You might even be asked if you are a PyME.  The answer, if you have your own business, will most likely be "Yes".

PyMEs stands for Pequena y Mediana Empresas, which means "Small and Medium Sized Businesses".

Mexico is a country that has a long history of encouraging entrepreneurship, and recently a campaign  staring "Pepe y Ton~o"was launched to show what an impact small and medium sized busineses owners have on the country.  PyMEs generate 8 out of every 10 jobs in the country.

How to Dial a Mexican Phone Number

I have hesitated writing this post for awhile because I thought that most people who do business with Mexico know how to dial outside the country, but the other day when I received an e-mail from a potential client saying "I don't understand how I dial your number" made me rethink the importance of this post (for the record my instructions for how to dial were pretty clear!).

Let's say someone in Mexico City gives you their cell phone number.  "Call me on my cell, it is 1234-5678".  Here's how you would dial from outside of Mexico:

011-52-1-55-1234-5678

Ok, now on to office phones...let's say the manager of your plant in Guadalajara wants you to call his office phone - and gives you a "4567-8901" number.  You would dial the following:

011-52-33-4567-8901

The general pattern goes like this:

011 (international dialing prefix) + 52 (Mexico country code) + 1 (if it is a cell phone, no need to dial if it is a house or office phone) + 55 (this is the city code - 55 is for Mexico City) + 8 numbers (the real telephone number)

So, what if you are in Mexico and dialing?  For cell phones, you will need to dial 044, the city code, and then the number.  Our first example would be:

044-55-1234-5678

NOTE:  The 044 switches to 045 when you are dialing a cell phone outside of the city you are in.

In Mexico and dialing a land line?

If you are in the same city, just dial the number as is.  If you want to dial another city or state, dial 01, then the city code, then the number:

01-33-4567-8901 (dialing a Guadalajara office phone from Mexico City)

I hope this clears up the confusion.  When all else fails and you are stuck dialing, just ask someone for help!

The importance of a good translation

How many times have you looked at a product or marketing copy and laughed because the wording just didn't seem right?  It happens all the time.  Someone within the company may claim to speak another language and be able to handle the translations for the marketing department, and next thing you know they've got thousands of brochures printed with an incorrect translation. 

What many people fail to understand is that speaking another language fluently does not mean that you are able to translate in that language.  Many people translate literally, which is a mistake.  Think about all of the expressions we have in English that if translated directly would sound very strange (the earlybird gets the worm for example).  When translating, you must convey the meaning of the phrase in the proper context.

I know that many companies get scared off when then start to get quotes for translations because they never expected prices to be that high.  "Google has a free translator, can't I just use that?" they think.  Just as you would entrust a graphic designer to handle your logos and corporate identity, you should pay a professional translator to work on your translations.

A funny video on interpretation in 7 languages:

Mexicana Airlines Files for Bankruptcy

The biggest news this week in the Mexican business world is Mexicana airlines filing for bankruptcy.   Mexicana has stated that this should not affect currently scheduled flights, but Several flights to the US have already been cancelled including 4 daily flights between Mexico City and Los Angeles. 

The decision to file for bankruptcy comes after the unions failed to agree to the new cost-saving measures that Mexicana had proposed.  Mexicana also had debts which exceeded $1 billion USD, due in part to the drop in tourism last year caused by the swine flu. 

According to Mexicana's president the average salary of a Mexicana pilot is around $220,000 USD/year.  The average salary for a flight attendant is around $53,000 USD/year.  These are considered very, very good salaries in Mexico.  Just to give you an idea, the average minimum wage per day in Mexico is around $4.50 USD/day!!!

Mexicana has two affiliate carriers which will not be affected by the bankruptcy - MexicanaLink and MexicanaClick. 

It will be interesting to see how other carriers step in and handle the passengers who use to travel exclusively on Mexicana.

Trade Shows in Mexico

A great way to start to do business in Mexico or check out a particular industry is by attending a trade show.  Mexico is home to a number of big industry trade shows, and they are held all over the country - Mexico City, Monterrey, Guadalajara, Cancun, Los Cabos, etc. 

Below is a list of different venues and their calendars:

MEXICO CITY

Centro Banamex

Expo Bancomer

World Trade Center

GUADALAJARA

Expo Guadalajara

MONTERREY

Cintermex

Mexipreneur: What would you like to see

I started this blog with the two main ideas in mind.  One, to provide tips on setting up a business in Mexico with nitty gritty details that other websites may leave out.  Two, to provide interesting information on what is currently going on in the Mexican business world. 

Now I would like to know....what would YOU like to see?  What is most useful/helpful to you the reader? 

-Interviews from other expats doing business in Mexico?
-Spanish business terminology?
-Business ideas?
-ETC....

Feel free to leave comments below or shoot me an e-mail!

E-commerce in Mexico

When most people think of business in Mexico, e-commerce isn't exactly the first thing that comes to mind.  Part of this is due to the fact that a good part of the population does not own/use a computer, but things are changing.  While computers used to be something that only the uppper and upper middle classes had access to, today there are a number of programs that allow consumers to pay off a computer
in monthly payments (such asTelmex). 

In my opinion, e-commerce in Mexico is going to explode over the next few years.  Consumers are getting more used to paying bills and other services online, and it is just a matter of time before more companies realize the benefits of offering online ordering services to their customers. 




Some interesting Mexico internet facts:

• In 2008, 27.4 million Mexicans were online, a number expected to increase 82% by 2012!
• Mexico was one of the biggest growth markets for Facebook in 2009
• E-commerce sales in Mexico in 2006 were $537 million and reached $1.6 billion in 2008
• Travel packages are what Mexicans purchased the most online in 2009
• In 2007, 48% of internet users in Mexico were female, while 52% were male
• In 2008, PayPal expanded to Mexico

Best Opportunities for Doing Business in Mexico

Business opportunities are everywhere - if you know where to look for them.  Today we will look at some of the most popular sectors for foreigners doing business in Mexico.

AGRIBUSINESS

Canada's number #1 market for their beef exports? You guessed it, Mexico!  Mexicans associate American and Canadian products with high quality and value.  Also, Mexico has no national pesticide or fertilizer market, leaving the market wide open for exporters.





EDUCATION SERVICES
From English schools to computer classes, education services are growing at unprecedented rates in Mexico. 

IT SERVICES

As the number of computer users continues to grow in Mexico, so will the need for the IT infrastructure to support it. 











HOTEL & RESTAURANT

Mexico's tourism industry is one of the main industries that supports the Mexican economy and is always open to the latest and greatest services and products.  Most restaurant equipment in the country is imported, as Mexico does not have many local manufacturers of equipment. 




ENERGY
Although Mexico's energy industry has been protected (government owned PEMEX-gas, and CFE-electricity), there is a new trend towards renewable energy.  In order to make this move, Mexico will need to import technology from countries that are already more advanced in this area.

PACKAGING

Mexico is the second largest importer of packaging machinery from the US (after Canada).  The best opportunities within the packaging industry?  Food processing, cosmetics and PCG, and pharmaceuticals.





These are just a few examples of opportunities.  If you have a question about any of these (or a sector that's not listed) feel free to contact me!

Mexico Business Etiquette: The Long Lunch

Since it is Friday, I thought I'd touch on something that confuses many foreigners when doing business in Mexico - the long lunch.  If you've ever done business in Mexico then you probably know what I'm talking about.

TIME
Mexicans usually eat around 2pm, sometimes an hour earlier, sometimes an hour later, but NEVER will you have lunch before 12pm. (Make sure to have a big breakfast if you are used to eating lunch at noon or earlier!)

FOOD
Lunch is a heavy meal in Mexico, if not the biggest meal of the day.  Most Mexicans subscribe to the thought "Breakfast like a king, lunch like a prince, and dinner like a pauper."  It is not uncommon to see people ordering an appetizer, a cut of meat with beans or some other side, and then finishing it off with a dessert. 

ALCOHOL
At business meeting lunches it is common to order a bottle of wine or other alcoholic beverages (tequila!).  Mexico used to have a reputation for it's liquor-fueled lunches, but getting drunk at lunch has lost its appeal and more people are taking it easy so that they can go back to work and get things done.

CONVERSATION
If you have something important to discuss, make sure you leave it to the middle of the meal.  Start off getting to know eachother and eachother's cultures.  Jumping right into business can be a culturally insensitive move that may cost you the deal.

LENGTH OF LUNCH
This is where things get tricky...depending on who you are with, what you are discussing, and how much tequila you have had a business lunch in Mexico can last anywhere from an hour and a half to 6+ hours.  It is not uncommon, especially on Fridays, to see the lunch crowd at a restaurant when the dinner crowd starts to role in.  My point is this: don't budget an hour of time for the lunch because you never know how long it is going to go. 

Business Matchmaking in Mexico

You've got a great product.  It's selling like hotcakes in your home country and the time has come to expand your market.  How do you go about entering the Mexican market when you don't speak the language, understand the business culture or know who the key players are?

That's where our business matchmaking service comes in.  Think of it as speed dating for your business with pre-screened candidates.  Finding the right distributor or value added reseller to carry your products can be very tough.  We take all of the guess work out of it for you.  Let's say you have some "must haves" in a distributor...you may spend thousands of dollars (and valuable hours) on a trip to Mexico and get here only to discover that the particular distributor you thought sounded so great doesn't have what you really need. 

Many people think "Oh I'll just do a Google search for distributors in Mexico and find one that way."  I hate to let you down, but many of the most successful distributors in Mexico don't even have websites!!  It may seem hard to believe, but it is true.

If you really want to sell your product in Mexico, let us take on the challenge while you concentrate on building your business at home. 

BMW May Invest $1 Billion in Mexican Auto Parts, Minister Says

This article was sent to me by one of Mexipreneur's loyal readers, Kyle.  Thanks Kyle!

By Jens Erik Gould


June 30 (Bloomberg) -- Bayerische Motoren Werke AG, the

world’s largest maker of luxury cars, may invest more than $1

billion in Mexico to prepare local auto-parts companies to boost

supplies to its U.S. plants, Mexican Economy Minister Gerardo

Ruiz Mateos said.

“They want to increase the production of auto parts here

in Mexico,” Ruiz Mateos said in an interview in Bloomberg’s

Mexico City office yesterday. He said he’s going to Germany in

the coming weeks to discuss the project with BMW.

BMW is purchasing more supplies outside Germany as part of

a goal to lower costs by more than 4 billion euros ($4.9

billion) by 2012 and to reduce the impact of foreign currency

swings on earnings. By buying parts in Asia and North America,

the company will cut currency risk by 1 billion euros by 2012,

Herbert Diess, BMW’s purchasing and logistics chief, said in a

May 4 interview.

For Mexico, the BMW initiative would help President Felipe

Calderon’s plan to increase foreign investment at a time when

the country’s share of North American auto production may rise

at a quicker pace as U.S. automakers seek lower labor costs.

Mathias Schmidt, a spokesman for BMW in Munich, didn’t

immediately have a comment.

Chrysler Group LLC, the U.S. automaker run by Fiat SpA,

said in February it would invest $550 million to begin producing

the Fiat 500 model at a plant in Toluca, Mexico. Last month,

Ford Motor Co. reopened an assembly plant in Cuautitlan to build

2011 Fiesta cars. The factory will generate 2,000 jobs and is

part of $3 billion in investments announced since 2008.



More Investment



Mexico’s share of North American auto production will rise

to 19 percent over the next decade from an average 12 percent in

2000 to 2009, said Dennis DesRosiers, president of DesRosiers

Automotive Consulting Inc in Richmond Hill, Ontario.

The U.S. is BMW’s second-largest market after Germany. In

the first five months, almost one in every five BMW vehicles was

sold in the U.S.

BMW is investing $750 million at its plant in Spartanburg,

South Carolina, to boost capacity by 50 percent. The factory,

which manufactures X3, X5, and X6 sport-utility vehicles as

BMW’s sole U.S. assembly plant, will have capacity to produce

240,000 vehicles a year by 2012.