CleverName Incorporated,
an information provider headquartered in North Carolina, recently experienced
tremendous growth and is looking to expand into Mexico. CleverName Inc.
approached the local Chamber of Commerce for information on doing business in
Mexico, and asked for general
information on the country, business
protocol, as well as information on the political,
economic and legal climate. The following is a response to this information
request.
Map Source: The
Economist Intelligence Unit, 2004.
Flag
Description: three equal vertical bands of green (hoist side), white, and red;
the coat of arms (an eagle perched on a cactus with a snake in its beak) is
centered in the white band
Source: CIA World
Factbook, 2004
Capitol: Mexico
City
Climate: Varies by altitude.
Tropical
southern region and coastal lowlands: hot and wet, avg. temp 65F
Highlands
of the central plateau: temperate
Northern
and western regions: temperate
Population: 101,965,000 (2002)
Language: Spanish (90%)
Indigenous
languages (8%)
Religion: Christianity (90% Roman Catholic)
Education: Free State education
-
6 years primary ed. (beginning at age 6)
-
3 years secondary (at age 12)
Government: Federal Republic with
31 states
Economy:
§
GDP increased avg. rate 2.9% from 1990-2002
§
Nominal GDP (2003 est.): $615 billion. (7,4 trillion pesos, 2004
Q2).
§
Per capita GDP (2003 est.): $5,945.
§
Annual real GDP growth 2003 (1.3%); 2002 (0.9%); 2001 (-0.3%);
2000 (6.6%)1999 (3.7%).
§
Avg. real GDP growth (1999-2003): 2.1%.
The above GDP figures are taken directly from the State Department
website at http://www.state.gov/r/pa/ei/bgn/35749.htm
Agriculture:
-
4% of GDP
-
18.9% of employed work force
-
Staple food crops: maize, wheat, sorghum, barley, rice, beans, and
potatoes
-
Staple cash crops: coffee, cotton, sugar cane, fruit and
vegetables (tomatoes the highest)
-
Note: after NAFTA, agriculture was hurt by the removal of import
tariffs
Industry:
-
26.1% of GDP
-
25.9% of employed work force
Manufacturing:
-
20.4% of GDP
-
18.9% of employed work force
-
Primary manufactured products: metals and machinery, food,
beverages, tobacco, and chemicals
Services:
-
69.9% of GDP
-
55.6% of employed work force
-
Tourism is the primary source
Trade:
Principle
exports (2002):
-
electric and electronic products
-
parts for road vehicles
-
industrial machinery
-
89.1% of exports to the US
Principle
imports:
-
electric and electronic products
-
industrial machinery
-
transportation equipment
Trade
agreements:
-
Inter-American Development Bank
-
Latin American Integration Association
-
Asia-Pacific Economic Cooperation Group (APEC)
-
Organization for Economic Cooperation and Development (OECD)
-
North Atlantic Free Trade Agreement (NAFTA)
-
Reached a trade agreement with Japan mid-2004
Source: The Europa World Year Book. (2004).
(45th ed.). London: Europa Publications Limited.
Online Resources
The CIA World Factbook
http://www.cia.gov/cia/publications/factbook/
Portals to the World: Resources Selected by Library of Congress
Subject
Experts
http://www.loc.gov/rr/international/hispanic/mexico/mexico.html
The World Factbook 2003
http://www.loc.gov/rr/international/hispanic/mexico/mexico.html
U.S. Department of State Country Info
http://www.state.gov/p/wha/ci/mx/
Overview
While Mexicans
share a common language with Spain and other Central and South American
countries, Mexico claims many cultural and social customs of its own. Mexicans
are warm, expressive, and highly value family and tradition.
Official Business
Holidays
2005
January
1 Año Nuevo - New Year's Day
February
5 Día de la Constitución - Anniversary of the Mexican
Constitution
March
21 Día de Nacimiento de Benito Juárez - Birthday of Benito Juarez
March
24 Holy
Thursday
March
25 Good
Friday
May
1 Día del Trabajo - Labor Day
May
5 Cinco de Mayo - Celebration of Mexico's victory over the French
army at Puebla in 1862
September
16 Día de la Independencia - Independence Day
November
2 Día de los Muertos – Day of the Dead (All
Souls¹ Day)
November
20 Día de la Revolución - Revolution Day - Anniversary of the
Mexican Revolution of 1910
December
25 Día de Navidad - Christmas Day
In addition to the official
holidays, there are some unofficial holidays that are observed by most
businesses in Mexico. These
include Mother¹s Day (Día de la Madre -May 10),
and Virgin of Guadalupe Day, Mexico¹s Patron Saint (Día
de la Virgen de Guadalupe - December 12).
Furthermore, many business contacts may be unavailable during the
Christmas holiday season, which in Mexico begins around December 16 and extends
to January 6, the Day of the Epiphany (Día de los Reyes
Magos / Three Kings' Day).
This holds true as well for the two weeks around Easter during Semana
Santa (Holy Week - March/April).
Business Protocol
Aspect |
United States |
Mexico |
Communication Style |
·
Direct and to the point ·
Like to debate |
· Indirect · Shun confrontation |
Problem Solving |
·
Pragmatic & Practical Approach |
· Application of abstract
ideas is sometimes not a concern |
Group Dynamics |
·
Individualism and diversity of opinions valued ·
Equality regardless of age, gender, etc |
· Conformity to group
opinions · Machismo emphasizes
authority over women |
Truth |
·
Truth is absolute |
· Truth is relative |
Status |
·
Money |
· Professional title
& position as well as money |
Management Style |
·
Delegate responsibility |
· Concentration of power
at the top |
Staffing |
·
Nepotism and favoritism not acceptable |
· Family and friends are seen as trustworthy
employees |
Deadlines |
·
Punctuality important and schedules are expected to be adhered
to ·
Fast pace ·
Time is money |
· Time is relative and
fluid · Slow pace · Time is power · Interruptions and
delays are to be expected |
Contracts |
·
Legalistic and detailed |
· Dislike detailed
contracts; more often, contracts contain lofty principles than concrete
details |
Negotiation |
·
Task oriented ·
Win/Lose approach to negotiation ·
Dislike haggling |
· Relationship oriented · Win/win approach to negotiation · Enjoy haggling |
Source: ³Business
Mexico: A Practical Guide to Understanding Mexican Business Culture² by Peggy
Kenna and Sondra Lacy
Online
Resources
US Commercial Service (International Trade Administration)
http://www.export.gov/comm_svc/
The U.S. Commercial Service helps U.S. business export goods and
services to markets worldwide. Each year the Commercial service issues Country
Commercial Guides that provide information on the many aspects involved in
conducting business with foreign
countries. Information includes business protocol and common country practices.
Mexico
2005 Country Commerical Guide- Ch 08: Business Travel [Last updated
2/09/2005]
US State Department
Consular Information Sheet - http://travel.state.gov/travel/cis_pa_tw/cis/cis_970.html
Provides access to consular information sheets
about Mexico targeted to US Citizens. Information is updated daily, pertaining
to topics including country entry, dual nationality, safety & security,
crime & criminal penalties, medical and health facilities, aviation and
road safety, tourism and real estate/timeshares, drug & firearm penalties,
human smuggling, adoption and embassy/ consular locations.
Mexican Ministry of Tourism (SECTUR) - http://www.sectur.gob.mx
Consulate of
Mexican Tourism / Consejo de
Promoción Turistica
VisitMexico.com provides a wealth of
information about the geography, culture and holidays
of Mexico.
Magazines
³Business Mexico² from
the American Chamber of Commerce - http://www.amcham.com.mx/
Issued four times a year, this publication
explores topics that affect the U.S./Mexico business community. Published in
English, monthly editions contain cover stories focusing on current affairs,
sections on banking & finance, environment, management, and industry, as
well as investment summaries, and cultural features.
Books
³Business Mexico: A Practical Guide to
Understanding Mexican Business Culture² by Peggy Kenna and Sondra Lacy
³Doing Business In Mexico: A Practical Guide² by
Gus Gordon and Thurmon Williams
³Business in Mexico: Managerial Behavior,
Protocol and Etiquette² by Candace Bancroft McKinniss and Arthur A. Natella Jr.
Political
Structure: Presidential with strong Congress. The President (http://envivo.presidencia.gob.mx/?NLang=en)
serves one six-year term.
Bicameral legislature:
Senate (http://www.senado.gob.mx/index.php?lng=en)
has 128 members who serve six year terms.
Lower house is the Chamber
of Deputies (http://www.camaradediputados.gob.mx/)
(only in Spanish) has 500 members who serve 3 year terms.
President's political
party:
Partido Acción Nacional
(PAN) http://www.pan.org.mx/
Major opposition
political parties:
Partido Revolucionario
Institucional (PRI) http://www.pri.org.mx/Version2004/index.html;
Partido de la Revolución
Democrática (PRD) http://www.prd.org.mx/;
Partido Verde Ecologista de
México http://www.pvem.org.mx/(PVEM);
Partido del Trabajo http://www.pt.org.mx/;
Convergencia http://www.convergencia.org.mx/
According to Datamonitor,
Mexican politics do not have a clear left/right division.
President Fox won the first
free and fair election in 2000.
Since then, he has been unable to push his structural-economic reform
agenda through the legislature because his party, Partido Acción Nacional
(PAN), does not have a majority in either house. PAN is falling out of favor. The Partido Revolucionario Instituncional (PRI), which ruled
for seventy years before PAN came to power, is gaining popularity. The next elections for President and
Congress will occur in July 2006.
Legal: Federal legal system consists of the Supreme Court,
appellate courts, 68 district courts.
According to the EIU
Commerce Report, the legal system is very slow and bureaucratic, and
occasionally corrupt.
Economic
Mexico's economy is heavily
influenced by the United States because Mexico exports so many products to the
U.S. The U.S. is responsible for
approximately 25% of Mexico's GDP.
After NAFTA and messy
presidential elections in the mid-nineties, Mexico's economy entered a
tailspin. Toward the end of the
decade, the economy greatly improved, thanks to many U.S. investments. The economic slowdown of 2001 hit
Mexico, but the economy began to rebound in 2002. Because of these ups and downs, the peso has been weak,
although the central bank is working to increase the peso's value.
"The Economist
Intelligence Unit¹s central forecast is for GDP to slow at a measured pace in
2005-06. However, Mexican growth will be among the most vulnerable in the event
of a sudden downturn in US demand." (EIU Country Report Mexico March 2005
Updater)
2004 GDP in U.S. dollars:
$645.8 billion
Source: Datamonitor Mexico Country Profile, EIU Country
Report Mexico
For more information:
U.S. Department of
State. Public Affairs
Division. Mexico 2005 Investment
Climate Statement http://www.state.gov/e/eb/ifd/2005/42090.htm
Ministry of Finance of Mexico. Official Economic Information. http://www.shcp.gob.mx/english/index.html
Banco de México. Mexico's central bank.
http://www.banxico.org.mx/siteBanxicoINGLES/index.html
Trade
Mexico is one of
the world's most trade dependent countries, and it is particularly dependent on
trade with the U.S, which buys approximately 88% of its exports. Top U.S.
exports to Mexico include electronic equipment, motor vehicle parts, and
chemicals. Top Mexican exports to the U.S. include petroleum, cars, and
electronic equipment.
Trade disputes
between the U.S. and Mexico are generally settled in WTO or North American Free
Trade Agreement (NAFTA) panels or through negotiations between the two
countries. The most significant areas of friction involve agricultural products
including sugar, high fructose corn syrup, apples, and rice.
Source: Mexico
Background Notes, Sept 2004, STAT-USA
NAFTA
(North American Free Trade Agreement)
The North
American Free Trade Agreement (NAFTA) is a trade agreement between the United
States, Canada, and Mexico that liberalizes restrictions on trade between the
three countries. Some of the agreement's objectives include:
Since implementation
January 1, 1994, trade between the three countries has increased more than 200
percent.
Sources:
US Commercial Service Americas: NAFTA website, accessed April 15, 2005 at
http://www.buyusa.gov/americas/50.html
Office
of NAFTA and Inter-American Affairs website, accessed April 15, 2005 at
http://www.mac.doc.gov/nafta/implement.html
NAFTA
General Information
US
Department of Commerce
International Trade Commission - http://www.usitc.gov/
United States International Trade Commission is an independent, nonpartisan,
quasi-judicial federal agency that provides trade expertise to both the
legislative and executive branches of government, determines the impact of
imports on U.S. industries, and directs actions against certain unfair trade
practices, such as patent, trademark, and copyright infringement. The USITC
regularly provides analytical studies, articles, and support for government
policymakers' and public use to meet specific client information requests and
in anticipation of emerging trade policy issues. When the Executive Branch or
Congress considers international trade proposals, wants an assessment of the
likely impact of a free trade agreement on the U.S. industry and economy, or
has an interest in U.S. industries' international competitiveness, they may ask
the USITC to begin a fact-finding investigation under one of a number of
federal laws. The resulting analysis and reports are a critical component of
U.S. government decisions regarding national trade policies. Provides industry
and economic analysis of countries that conduct trade with the US. Includes resources related to NAFTA.
Office of NAFTA and Inter-American Affairs - http://www.mac.doc.gov/nafta/implement.html
The Office of NAFTA and Inter-American Affairs¹ (ONIA) mission is
to increase access to foreign markets for U.S. exports, through the elimination
of tariff and non- tariff barriers to trade. The ONIA contributes to the
coordination and development of U.S. trade policy in the Western Hemisphere for
the Department of Commerce, advises the U.S. business community, policy-makers,
and Congress concerning market access to Canada and Mexico under NAFTA and
assists U.S. companies experiencing problems gaining access to Canadian and
Mexican markets. Provides the actual NAFTA text, and provides
insight into implementation
and compliance
of the trade agreement
International
Trade Administration
US Commercial Service (International Trade Administration) - http://www.export.gov/comm_svc/
The U.S. Commercial Service helps U.S. business export goods and
services to markets worldwide. The Americas website brings together the
resources of U.S. Commercial Service offices in 21 markets throughout the
region, providing companies with a single point of access to regional trade
events and research covering markets throughout the region.
The Americas site (http://www.buyusa.gov/americas/)
provides information on the
existing and proposed free
trade agreements
throughout the region, market research, best prospects in the region, trade
event lists, industry-specific information, business service providers, useful
links and key contacts.
NAFTA
Implications, Impact and Surrounding Issues
World
Bank
³Lessons
from NAFTA for Latin America & the Caribbean²
http://lnweb18.worldbank.org/LAC/LAC.nsf/ECADocByUnid/32E02C48D1A7695685256CBB0060CA65?Opendocument
Released
a month before the 10-year anniversary of the implementation of the NAFTA agreement on January 1, 2004,
the report
provides a summary and a full-length report analysis of the effects of NAFTA on
Latin American trade, economic health, agriculture, productivity and growth,
workers wages & jobs.
International
Trade Commission - http://www.usitc.gov/
A
variety of NAFTA-related analyses and reports can be found at the ITC website using the search tool for ³NAFTA².
The following report illustrates the type of information that is available
through this governmental body.
³Impact of Trade Agreements² - http://www.usitc.gov/pub3621/pub3621_main.html
Provides a summary (.pdf document) of trade
impact on a variety of trade agreements, including a section devoted to NAFTA
called ³The Impact of NAFTA Preference on U.S.-Mexican Trade: A Sectoral
Approach² (http://www.usitc.gov/pub3621/pub3621.pdf
- page=337)
U.S.
Department of Homeland Security
US Customs & Border Protection website (http://www.customs.gov/nafta/nafta_new.htm)
provides a variety of links and information related to issues concerning
customs procedures regarding the passage of goods between Mexico and the US.
Mexico
e-Government Website
Selling
in Mexico / Vendiendo en Mexico - http://www.gob.mx/wb2/egobierno/egob_Vendiendo_en_Mexico
Provides
information in both English and Spanish that is helpful to doing business with
Mexico, including export and trade directory information, trade shows, and
service suppliers.
Legal/Regulations
There are many places to
find Mexican law online. However,
most laws are not available in English.
One good place to start is:
Vargas, Jorge. Mexican Law. http://www.mexlaw.com/ This portal, maintained by a law
professor, includes descriptions of various areas of Mexican law and links to
other sources of information about Mexican law.
Environment
The General Law of Ecological
Equilibrium and Environmental Protection is Mexico's environmental protection
law.
Secretariat of Environment
and Natural Resources (Secretaría del Medio Ambiente y Recursos Naturales,
SEMARNAT)
http://www.semarnat.gob.mx/dgeia/web_ingles/index.shtml
This cabinet level agency is
responsible for environmental policy.
National Institute of
Ecology (Instituto Nacional de Ecología, INE)
http://www.ine.gob.mx/english/index.html
This agency sets policy and
conducts scientific research.
Attorney-General¹s Office for
Environmental Protection (Procuraduría Federal de Protección al Ambiente) http://www.profepa.gob.mx/seccion.asp?sec_id=169&com_id=0
This office enforces
environmental laws and policies.
Intellectual
Property
The Industrial Property Law
governs intellectual property in Mexico
EIU's Country Commerce
Mexico Report has an excellent description of intellectual property policies in
the Licensing chapter. Visit the
library to use the EIU reports.
Two good free sources are:
Mendez, Jose-Juan. Mexican Trademark and Copyright Law as
it Applies to E-Commerce. http://www.llrx.com/features/mexicoecom.htm
U.S. Embassy. Intellectual Property Rights
Toolbox.
http://www.usembassy-mexico.gov/IPR.html
Labor
Labor is governed by the
Federal Labor Law (Ley Federal de Trabajo). It regulates wages, vacation, collective bargaining, trade
unions, and strikes. Although the
rules on the books provide more protection to Mexican workers than American
workers have, in reality conditions are worse for Mexican workers.
Source: EIU Country Commerce Mexico.
Secretaria Del Trabajo y
Prevision Social (Secretary of Labor and Social Welfare).
This cabinet level position
oversees labor laws in Mexico.
http://www.stps.gob.mx/ingles/index2i.htm
International Labor
Organization. Natlex Mexico
page. http://www.ilo.org/dyn/natlex/natlex_browse.country?p_lang=en&p_country=MEX
Links to Mexican labor laws
and regulations. Most laws are in
Spanish.
Unions
Approximately 40% of workers
belong to a union. The major
unions are:
Confederation of Mexican
Workers (Confederación de Trabajadores de México,
CTM)
National Workers Union
Regional Workers
Confederation of Mexico (Confederación Regional Obrera de México, CROM)
Revolutionary Confederation
of Workers and Peasants (Confederación Revolucionaria Obrera y Campesina, CROC)
All belong to the Labor
Congress (Congreso del Trabajo, CT
Current
Events
BBC News Americas. http://news.bbc.co.uk/2/hi/americas/default.stm
Additional Information Sources:
Mexico Online.com http://www.mexonline.com A portal to all things Mexico. Includes substantial list of business
related links. Visitors must pay
for some information.
U.S. Commerical
Service. Doing Business in
Mexico. http://www.buyusa.gov/mexico/en/doing_business.html
An overview of information
presented in the Mexico Country Commercial Guide.
U.S. Commercial
Service. Mexico Country Commercial
Guide FY 2004. http://www.buyusainfo.net/info.cfm?id=120481&keyx=84A48383676873186E42930073477A4D&dbf=ccg1&loadnav=no
A comprehensive guide to
investing in and exporting to Mexico.
Includes information about political and economic situation, laws and
regulations, and many useful how-to's.
U.S. Department of
State. Background Notes: Mexico. http://www.state.gov/r/pa/ei/bgn/35749.htm
U.S. Embassy in Mexico. Business and Trade: Doing Business in
Mexico. http://www.usembassy-mexico.gov/eTrade1.htm
United States-Mexico Chamber
of Commerce. http://www.usmcoc.org/
A non-profit organization
that promotes trade, investment, and joint ventures between the U.S. and
Mexico. Site includes information
about government, NAFTA, and the economy.
Provides additional services to members.
Country Information Etiquette Political, Legal, Economic Info Back to Top
Last updated: April 25,
2005