Foreign direct investment in Guanajuato, Mexico

The State of Guanajuato, Mexico has over 572 companies with foreign capital registered and located in the state.

The following information has been translated from an article dated November 6, 2006, published in the newspaper Correo, by Vicente Ruiz, Link.

49% of these foreign companies in Guanajuato are involved in manufacturing, and 29% are commercial operations which together represent an investment greater than 1,000,000,000 (one billion US dollars).

Due to changes in laws regarding foreign investment in Mexico (in 1993, 1995, 2001), 90% of all economic activities in Mexico are completely open to foreign participation and investment.

Mexico’s growing national economy, free trade agreements with 32 countries and geographic location provide great economic and logistics advantages to companies opening operations in Mexico.

In Guanajuato, 50% of all the foreign companies are located in the city of Leon (281), followed by Irapuato (71) Celaya (52), San Miguel Allende (31), Silao (26), San Francisco del Rincon (25), Guanajuato (19) and the rest (67) throughout the state.

Guanajuato occupies the first position for foreign investment of the all the Mexican states in the North-Central region.

Principal industries in Guanajuato that received direct foreign investment include:

• The automotive industry received US $ 874.2 million
• Processed food industry (concentrates, preserved products) received US $ 99.1 million
• Manufacture of paper, cellulose and derivatives received US $ 18.9 million
• Commerce of non-agricultural items received US $ 17.3 million
• Chemical manufacturing received US $ 15.9 million
• Clothing manufacturing received US $ 7.5 million
• Textile manufacturing received US $ 5.2 million
• Plastics manufacturing received US $ 5.4 million
• Food products received US $ 4.8 million

Who has invested in the State of Guanajuato, Mexico:

Country…. Investment (Millions of US dollars)…… %

United States of America……..1’ 009, 214.00………..92.7

Holland………………23, 277.90………….2.1

Spain………………….18, 234.00………….1.7

Germany……………14, 267.30………….1.3

Denmark……………..4, 913.90………….0.5

Taiwan…………………4, 426.00………….0.4

Others………………..14, 549.60………….1.3

Total: USD $ 1’ 088, 882.70 (Millions)

Related Links

Aumenta inversion extrañjera en el Estado de Guanajuato: SE (Spanish)

Secretaria del Economia de Mexico (English)

State of Guanajuato webpage (English-Spanish)

Correo (Spanish)

Maquiladoras in Mexico

An Internet search for the definition of the terms maquila and maquiladora will turn up quite a variety of ideas and interpretations.

The maquiladoras have created quite an emotional and political reaction on both sides of the US and Mexico border. They have been accused of stealing jobs from the US, promoting sub-standard working conditions, lowering wages, exploiting workers, and not contributing to the Mexican economy.

Despite the controversy, the maquiladoras are growing and thriving in Mexico. They offer attractive benefits to organizations that are seeking competitive production and assembly costs, skilled labor and Mexico’s proximity to the US market. Recently many transnational organizations that moved manufacturing operations to China in the 1990’s have moved back to Mexico due to cost and logistic advantages.

Maquila and Maquiladoras – definitions and activities

• The term maquila comes from the Spanish term that refers to the portion paid (in grain, flour or oil) to a miller for milling a farmer’s grain.

• Maquiladoras are legal entities under Mexican law, with special tax privileges, they provide service, assembly or manufacturing operations.

• Maquiladoras are able to import raw materials or semi-processed materials from foreign countries, in order to service, process or assemble them in Mexico, and then export the finished product back to that country. These activities take place without the collection or payment of import, export or V.A.T. (value added tax) taxes.

• The maquiladora program was created by Mexico in order for foreign organizations to take advantage of low labor costs in Mexico (primarily the USA), and to provide employment to Mexican workers in Mexico. Initially the maquila operations were located close to the US border. Currently maquila operations can be found throughout Mexico.

• Maquiladoras can be 100% foreign owned, 100% Mexican owned, or a joint venture between Mexican nationals and foreign investors.

• Maquiladoras are also known as twin plants, in-bond industries, export assembly plants and offshoring.

• The maquiladoras in Mexico suffered from a crisis of plant closings in the 1990’s and early 2000’s as many companies moved operations to China. Since 2004, Mexico has seen a resurgence of the maquiladoras.

• Check with your attorneys and accountants in Mexico about the specific benefits of the maquila program. As of September 2006, there were important legal changes (simplification and consolidation of government compliance and monitoring programs) that will affect current and future maquiladoras.

Related Links

Why you should pay attention to free trade treaties

Industrial and business parks in Mexico

Official government websites of the 32 Mexican states

Maquila and Maquiladoras in Mexico

Why you should pay attention to free trade treaties

Globalization, transnational companies, global sourcing and outsourcing, free trade, do any of these terms sound familiar?

Obtaining products and raw materials for the lowest price possible is a fundamental concept in business. Today organizations are looking for manufacturers and locations worldwide where they can find lower costs of production in order to remain competitive.

Combine the factors of: quality control, low cost production, logistics costs, and the time involved to get the product to market from the factory, and you understand the challenge of doing business and sourcing products in today’s global economy.

To truly determine the final cost of the product, all these factors must be calculated. This will determine which country offers the best competitive advantage. Make sure you are analyzing any existing free trade agreements when you are seeking suppliers globally.

Free trade treaties between countries have a significant impact upon the final cost of goods. These free trade agreements eliminate the tariffs and taxes on imported and exported goods between the countries involved, depending upon their concentration or percentage of “local” or national raw materials (including labor), as specified in the free trade agreement.

Free trade agreements between countries are of great importance and value only if are exclusive and not accepted by all trading countries. The more free trade is embraced by the international community (through treaties or elimination of import and export tariffs) the less impact the current free trade agreements have in determining competitive advantages for a single country.

Here is a simple example of how the NAFTA (North American Free Trade Agreement) free trade treaty between Mexico and the USA, would favor the US supplier over a Chinese supplier.

Example of free trade agreeement competitive advantage:

US supplier to Mexico. If I want to purchase paint made by a US paint manufacturer and have it shipped to my warehouse in Mexico, my total cost to bring the goods to my warehouse in Mexico would be the cost of the paint, plus freight and customs clearing costs. There is no import tariff on this product due to the NAFTA free trade treaty. It would take 4 – 6 days to arrive in my warehouse in Mexico once the product has been shipped from the USA.

US paint $ 20.00 + Freight $ 4.00 + Customs $ 1.00 = $ 25.00 total cost of the US product in my warehouse in Mexico

Chinese supplier to Mexico. If I purchase the same product, from the same transnational company, but it is manufactured in China. Transportation time is 40 days from date product is shipped from China.

Chinese paint $14.00 + Freight $ 8.00 + Customs $ 1.00 + Import tariff (13% of CIF value) $ 2.86 = USD $ 25.86, total cost of the Chinese product in my warehouse in Mexico.

In this example the final cost of the product is $ .86 lower from the US supplier as compared to the Chinese supplier, despite a lower initial product cost. Factor in the financial cost and time required to move the product from the factory to my warehouse, and the lowest final cost in this case would clearly come from purchasing product from the US supplier.

Mexico’s aggressive free trade strategy

Since the 1990’s Mexico has bet heavily on international free trade agreements as a method to improve their competitive advantage and increase their manufacturing base and attract foreign investment.

Mexico has signed 11 existing free trade treaties and 2 complementary economic agreements with 42 countries. It is the only country in the world to have standing free trade agreements with North American and the European community.
The free trade agreements have greatly increased international competition (imports) in Mexico (good for the consumer).

Free trade agreements have allowed Mexican exports to increase and reach destinations and markets that were closed before due to tariffs and costs. There has been increased foreign investment from countries that desired to use Mexico’s free trade competitive advantage for international manufacturing and export projects.

The Mexican manufacturers and suppliers of the national Mexican market were given a “sink or swim” option. Virtually overnight (many of the treaties were phased in over a period of 3 – 10 years), their previous protected market was filled with imported goods (more competition, lower cost, higher quality).

Those that have survived the “invasion”, have had to improve their efficiency, quality and costs. Making them much more competitive in todays global economy.

Britannica’s Definition of free trade:

“Policy in which a government does not discriminate against imports or interfere with exports. A free-trade policy does not necessarily imply that the government abandons all control and taxation of imports and exports, but rather that it refrains from actions specifically designed to hinder international trade, such as tariff barriers, currency restrictions, and import quotas. The theoretical case for free trade is based on Adam Smith’s argument that the division of labour among countries leads to specialization, greater efficiency, and higher aggregate production. The way to foster such a division of labour, Smith believed, is to allow nations to make and sell whatever products can compete successfully in an international market.”

Related Links

Mexico and international free trade agreements

Mexico and international free trade treaties

Mexico has signed 11 international free trade treaties and 2 complimentary economic agreements since 1993.

Mexico is the only country in the world with active free-trade treaties that cover North American and the entire European Community.

These free trade agreements have made Mexico highly competitive in terms of manufacturing for export to world markets, for the importation of raw materials for manufacturing and for the import of consumer goods for sale in Mexico.

The free trade agreements currently in place include:

• TLCAN – Includes Mexico, USA and Canada – Initiated January 1, 1994 (NAFTA in English)

• TLC-G3 – Includes Mexico, Colombia and Venezuela – Initiated January 1, 1995

• TLC Mexico-Costa Rica – Includes Mexico and Costa Rica – Initiated January 1, 1995

• TLC Mexico – Bolivia – Includes Mexico and Bolivia – Initiated January 1, 1995

• TLC Mexico – Nicaragua – Includes Mexico and Nicaragua – Initiated July 1, 1998

• TLC Mexico – Chile – Includes Mexico and Chile – Initiated August 1, 1999

• TLCUEM – Includes Mexico and the European Union (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Holland, Ireland, Italy, Luxembourg, Portugal, Spain, Sweden, United Kingdom, Cypress, Czech Republic, Estonia, Latvia, Lithuania, Malta, Poland, Slovakia, Slovenia) – Initiated July 1, 2000.

• TLC Mexico – Israel – Includes Mexico and Israel – Initiated July 1, 2000

• TLC Mexico – TN – Includes Mexico, El Salvador, Guatemala and Honduras – Initiated on March 15, 2001 with El Salvador and Guatemala and June 1, 2001 with Honduras

• TLC Mexico – AELC – Includes Mexico, Iceland, Norway, Liechtenstein and Switzerland – Initiated July 1, 2001

• TLC Mexico – Uruguay – Includes Mexico and Uruguay – Initiated in July 15, 2004

• AAE Mexico – Japan – Includes Mexico and Japan – Initiated April 1, 2005

In addition there are Complementary Economic Agreements (ACE’s) in place with Brazil and Argentina.

Related Links 

Why you should pay attention to free trade treaties 

Advice on what to expect when doing business with Mexico

Advice on what to expect when doing business with Mexico and Mexicans.

1. It is difficult to reach the top executives and business owners. The first contacts are difficult or impossible to make through “cold calling”. A much better strategy is to get personal introductions from consultants or other local business people.

2. Mexico is all about personal networks. They prefer to do business “face to face”. Impersonal methods of communication will be used, but plan on meeting your clients or suppliers as often as possible in order to maintain good relations and communications.

2. Use metric measurements, forget all other systems. Inches, pounds, feet, yards are not part of the Mexican culture. This is especially true for your promotional material and catalogues.

3. Don’t expect business people will return your phone calls. If the business item is important you should call several times.

4. Business negotiations will always be preceded with small talk and light conversation. This may continue for some time before business is finally discussed. Dinners and lunches are important for negotiations and often the items of real importance surface over coffee and dessert.

5. Proper etiquette and manners are very important. You will find the Mexicans are very cordial and polite, and they expect the same treatment from others. This is true for business and social occasions.

6. Secretaries and personal assistants are very important. They control who has access to executives and decision-makers. Many times they are responsible for answering the executive’s email and correspondence. Never underestimate the power of the secretary, and always maintain a friendly cordial relationship with them.

7. Meetings don’t start, or end on time. Don’t come late, but don’t get angry or upset when it doesn’t happen at the appointed hour.

8. The entire country shuts down from December 15 until about January 3 for vacations. Do not expect to find decision-makers in their offices, and expect slowdowns in logistics, paperwork and other communications during this time.

9. Everyone has a cellular phone. Get the cellular phone numbers of your contacts to avoid the filters in place at the office.

10. Mexicans tend to be reserved with foreign business people in the first business encounters. Business in Mexico is based upon trust between people. Take the time to create a relationship and build trust with your clients and suppliers. Don’t be in a hurry to close the deal. Don’t be in a rush to get the business over with. Don’t be afraid to visit several times without a specific work agenda. Get to know the people and culture.

11. Mexicans don’t like to disappoint others, and may prolong and delay bad news until the last possible moment. This can be prevented by establishing many short term objectives and chronologies. Constant open communication will also provide opportunities to discuss and find solutions for any set backs before it becomes a major problem.

12. Always try and deal with the boss or top executives. Business is done, approved and maintained by the top levels in the organization. Make sure the Mexican company understands that you are your company’s top executive with important decision-making powers.

Related Links

How to negotiate with Mexican business people

Meeting people in Mexico -kiss, shake hands or hug

Before you go on your business trip to Mexico

Tip: How to call Mexico from the US

How to do business in Mexico, parts 1 – 28

Curriculum Vitae (español) – Lee Iwan

Lee A. Iwan

Lee.iwan@gmail.com

 

Desarrollo de Negocios – Executiva Internacional

Planeacion Estrategico * Operaciones * Descubrimiento de Oportunidades

Executivo con experiencia en posicionamiento estrategico, operaciones, gerencia, distribucion, desarrollo y descubrimiento, integracion del cadena de suministro, planeacion estrategia en nuevos negocios, negocios de rapido crecimiento y en organizaciones maduros. Orientada a resultados, lider decisiva, exitoso en la identificacion de mercados nuevos y la solucion pragmatico de problemas. Historia de éxito en incrementando ventas, participacion en el mercado global y utilidades. Prospera en ambientes dinamicos y fluidos mientras manteniendo enfoque y organización. Competencias incluyen:

Planeacion estrategica y su implementacion * Identificacion del mercados
Gerencia de Cambios * Gerencia de Operaciones
Desarrollo de Negocios * Portavoz * Liderazgo del Equipo

 

EXPERIENCIA PROFESIONAL

QUIMICA CENTRAL DE MEXICO S.A. de C.V., Gto. México
mayo 2005 – presente
Gerente de Negocios, Desarrollo y Descubrimiento
Executivo independiente reportando directamente al Director y Consejo de Administacion. Responsible por la visulaizacion, investigacion, creacion, comunicacion, seguimiento, analisis, planeacion y implementacion del desarrollo y descubrimiento de nuevos negocios y proyectos de diversificacion estrategicas.

Logros importantes:

• Lider del negociaciones y proyecto, Joint-Venture farmaceutica (Mexico-Suiza), fabricacion y comercializacion, acuerdo firmada enero 2006.
• Negociaciones para alianzas estrategicas para incrementar la posicionamiento global y nacional del empresa a largo plazo.

QUIMICA CENTRAL DE MEXICO S.A. de C.V., Gto. México
marzo 2000 – mayo 2005
Gerente de Negocios, Ventas y Proveedores Internacional
Responsable por descubrimiento de negocios y alianzas estrategica, participacion del equipos, inteligencia del negocio, estrategia para las Asia-Pacifco y America Latina, implementacion de ventas y desarrollo del mercado, control y manejo de distribuidores y agentes, gerencia de logistica y cadena de sumistro, comunicaciones internacionales, globalizacion del cultura corporativa, projectos especiales corporativas.

Logros importantes:

• Creacion y implementacion de estrategia de ventas y promocion para el mercado en Asia-Pacifico. Ventas de US $ 5 M en 3 años.
• Iniciado y mantenido alianzas estrategicas con proveedores internacionales, ahorros de USD $ 2 M, fortificamos posicionamiento.
• Negocio representacions exclusivo de empresas de Sud Africa y EUA. Valor de ventas primer año US $ 2.5 M
• Incremento competitivida utilizando el departamento de exportacion a manejar y empujar cambios culturales corporativas en planeacion, produccion, tiempo al mercado, cadena de suministro y logisticas, ventas, mercadotecnia y administracion.
• Negocio descuentos en logistica, ahorros de USD $ 500 K

QUIMICA CENTRAL DE MEXICO S.A. de C.V., Gto. México
julio 1998 – marzo 2000
Gerente de Exportaciones
Responsable para ventas, distribucion, mercadotecnia y desarrollo del negocios en 20 paises, incluyendo America Latina, EUA, Europa y Taiwan.

Logros importantes:

• Creacion estructura de precios bases y comisiones para agentes y distribuidores en America Latina, resultados incremento en lealtad y ventas de 8%.
• Re-ingenieria de sistemas administrativas de comunicaciones, facturacion y envio del los productos para incrementa leatad con clientes y distribuidores y incrementar ingresos.

 

MARLY MEXICO SA de CV – Leon, Guanajuato, Mexico
1994 – 2005
Consultor

CLUB ROTARIO LEON – Leon, Guanajuato, Mexico
1997
Consultor

NUVIDA S.A. de C.V., León, Guanajuato, México
enero 1994 – julio 1998
Dueño – Presidente – Fundador
Presidente y Director de Operaciones para negocio de servicios. Clientes corporativos, gobierno y privadas. 80 empleados.

FOLLAS NOVAS S.A. de C.V., Silao, Guanajuato, Mexico
septiembre 1993 – junio 1994
Socio
Proyecto de produccion y supervision de operaciones

FLOWERS FLOWERS INC., Evanston, IL, EUA
marzo 1986 – agosto 1993
Dueño – Presidente – Fundador
Presidente y Director de Operaciones para innovadora start-up negocio de bienes y servicios para el consumidor. Ventas de USD $ 750 K anual.

AMLINGS FLOWERLAND, Niles, IL, EUA
junio 1980 – mayo 1986
Gerente de Sucursal
Responsable por operaciones del sucursal. 70 empleadas. Ventas USD $ 3 M anual.

 

EXPERIENCIA LABORAL DURANTE UNIVERSIDAD Y PREPARATORIA

RECORD CITY, Niles, IL, EUA

KAPS, Champaign, IL, EUA

UNIVERSITY OF ILLINOIS, College of Agriculture, Urbana, IL EUA

UNIVERSITY OF ILLINOIS, College of Life Sciences, Urbana, IL EUA

CRATE & BARREL INC., Chicago, IL EUA

SKIL SAW INC.., Wheeling, IL, EUA

UNITED PARCEL SERVICE, Northbrook, IL EUA

IWAN ELLIS PAINTING, Northbrook, IL EUA

FOLEY KOCH LANDSCAPING, Mount Prospect, IL, EUA

ALLGAUERS RESTAURANT, Northbrook IL EUA

DUNKIN DONUTS, Wheeling, IL EUA

JEWEL FOODS, Wheeling, IL EUA

DEPUSSEY CATTERY, Northbrook, IL EUA

EDUCACION

Bachelor of Science Agricultural Economics, University of Illinois – Urbana, IL, EUA

LOGROS PROFESSIONALES

Weblog: https://leeiwan.wordpress.com April 2006- Presente

Conferencia de la Industria de Cromo, Sud Africa, 2006

Mision Comercial, Mexico India 2005

Curso – Finanzas por no financieros, 2005

Consejero de COFOCE, Comité de proveedores, industria del calzado, 2000 – Presente

Participación en la certificación del ISO 9001:2000, 2004

Misión de Proveeduría, Moscu, Rusia 2004

Misión de Proveeduría, Estambul, Turquía 2003

All China Leather Exhibition, Shanghai, China, 2002 – 2005

Guangzhou Leather Fair, Guangzhou, China 2002 –2005

Misión Comercial México-Centro América, 2002

Asia Pacific Leather Fair, Hong Kong, 1999 – 2005

Linneapelle, Bolonia, Italia 1999 – 2005

Misión Comercial México-China, 2001

Misión Comercial México-Centro América, 2001

Misión Comercial México – China, 2000

Mision Proveeduria, Amsterdam, Holanda, 2000

Miami Leather Fair, Miami, EUA, 2000

FENAC, Leather Fair Novo Hamburgo, Brasil 1999

Miami Leather Fair, Miami, EUA, 1999

Curso – Resolución Miscelánea de Comercio Exterior 2004 a Fondo

Curso – Resolución Miscelánea de Comercio Exterior 2003 a Fondo

Diplomado – Modificaciones a La Legislación Aduanera 2003

Curso – Resolución Miscelánea de Comercio Exterior 2002 a Fondo

Diplomado – Logística de la Comercio Exterior, 2001

Curso – Resolución Miscelánea de Comercio Exterior 2001 a Fondo

Diplomado – Comercio Exterior, 2000

Curso – El Vendedor Estratégico

Periódico AM, Periódico. 1994 – 1996

Society of American Florists, Consejo Editorial, Washington D.C., EUA 1990 – 1992

Chicago-Dempster Merchants Association, Vice-Presidente, Evanston, IL EUA 1998-1990

Lee.iwan@gmail.com