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
§ 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
- 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
- 26.1% of GDP
- 25.9% of employed work force
- 20.4% of GDP
- 18.9% of employed work force
- Primary manufactured products: metals and machinery, food, beverages, tobacco, and chemicals
- 69.9% of GDP
- 55.6% of employed work force
- Tourism is the primary source
Principle exports (2002):
- electric and electronic products
- parts for road vehicles
- industrial machinery
- 89.1% of exports to the US
- electric and electronic products
- industrial machinery
- transportation equipment
- 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.
The CIA World Factbook
Portals to the World: Resources Selected by Library of Congress Subject
The World Factbook 2003
U.S. Department of State Country Info
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
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).
· Direct and to the point
· Like to debate
· Shun confrontation
· Pragmatic & Practical Approach
· Application of abstract ideas is sometimes not a concern
· Individualism and diversity of opinions valued
· Equality regardless of age, gender, etc
· Conformity to group opinions
· Machismo emphasizes authority over women
· Truth is absolute
· Truth is relative
· Professional title & position as well as money
· Delegate responsibility
· Concentration of power at the top
· Nepotism and favoritism not acceptable
· Family and friends are seen as trustworthy employees
· 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
· Legalistic and detailed
· Dislike detailed contracts; more often, contracts contain lofty principles than concrete details
· 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
US Commercial Service (International Trade Administration)
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
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.
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.
Structure: Presidential with strong Congress. The President (http://envivo.presidencia.gob.mx/?NLang=en) serves one six-year term.
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/;
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.
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
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
³Lessons from NAFTA for Latin America & the Caribbean²
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.
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.
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)
This cabinet level agency is responsible for environmental policy.
National Institute of Ecology (Instituto Nacional de Ecología, INE)
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.
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.
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.
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.
Approximately 40% of workers belong to a union. The major unions are:
Confederation of Mexican Workers (Confederación de Trabajadores de México,
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
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.
Last updated: April 25, 2005