Mexico and India sign investment protection agreement

24 05 2007

Mexico has signed a 10 year bilateral investment promotion and protection program (BIPA) with India on May 21, 2007.

This is significant for several reasons.

  • Allows investment protection to foreign investors in both countries
  • Free repatriation of funds to investors
  • Allows Indian companies access to the USA and European market through manufacturing in Mexico
  • Offers protection of Intellectual Property (IP)
  • Opens the door for Preferential or Free Trade Agreement negotiations in the future

India’s government and private industry sees Mexico as a “trampoline” to the US market, and also entrance into Mexico and Central America.

I have no doubt we will begin to see some Indian investment in Mexico and India-Mexico joint ventures in the very near future.

I strongly recommend that Mexico review, simplify and speedup the time and reduce the costs related to obtaining a travel visa for Indian business people.

Related Links

India, Mexico sign investment protection agreement

India looks for key to NAFTA in Mexico

India eyes free trade with Mexico for better access to NAFTA

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Top states for business in Mexico – World Bank Report 2007

17 11 2006

I highly recommend that you download and read the Doing Business in Mexico 2007 report, released on November 15, 2006.

For anyone currently doing business in Mexico, or thinking about doing business in Mexico, this is a must read.

The World Bank Group has announced that “Doing business became easier in many Mexican states in 2005-2006, according to the new Doing Business in Mexico 2007 report, released today in Mexico City. The report finds that some states compare well with the best of the world, while others need much reform to become globally competitive.” – November 15, 2006

Quick results of the top ten Mexican states based upon the factors of; starting a business, registering property, obtaining credit, and enforcing a contract include:

  1. Aguascalientes, Aguascalientes (Easiest)
  2. Guanajuato, Celaya
  3. Nuevo Leon, Monterrey
  4. Sonora, Hermosillo
  5. Campeche, Campeche
  6. Zacatecas, Zacatecas
  7. Queretaro, Queretaro
  8. Michoacan, Morelia
  9. Sinaloa, Culiacan
  10. Mexico City (Most difficult)

A full listing of all the 31 Mexican states is available in the report.

Excerpt from the report: “If you were to open a new business in Mexico City, the start-up procedures would take 27 days on average, 8 days fewer than in Shanghai. If you decided to open a business in Guanajuato or Aguascalientes, you would have to wait 12 days—only one day longer than your competitor in Amsterdam. But if you needed to take a customer to court for a simple debt default in Guanajuato, resolving the dispute would take 304 days—far longer than the 217 days it takes in Dublin,1 but significantly shorter than in Baja California Sur where it takes 581 days. These examples illustrate two patterns. First, some Mexican states compare well with the best in the world. Second, many states need much reform to become globally competitive.”

Related Links

Press release on Doing Business in Mexico 2007 (PDF, 75KB)

Doing Business in Mexico 2007 (PDF, 1.26MB)

World Bank Report – Doing Business in Mexico 2005





Sourcing and supply chain strategy – Mexico

16 11 2006

Purchasing from Mexico and Mexican suppliers?

Don Gringo at Catemaco News and Commentary brought these items to our attention.

Sourcing in Mexico gets easier.  The article points out that doing business with Mexico is easier than in the past.

  • The proximity of Mexico to the US markets impacts communication, logistics, costs and time factors.
  • Mexico has a history of dealing with the US, and are familiar with competitive manufacturing techniques.
  • Relationships are critical to success.
  • Beware of stereotypes.
  • Take the time to find the “right” partner.
  • Do’s and don’ts for doing business in Mexico

Does your supply chain strategy include Mexico?  It should.  Al Brown president of SupplyMex writes that Mexico offers:

  • Logistics infrastructure, highways, rail and port system that has been improved over the past 10 years.
  • Free trade agreements with 42 countries.
  • Global production and quality standards.
  • Stable political and economic environment.
  • Skilled workforce.

Thanks Don.
Related Links

Purchasing.com

Why you should pay attention to free-trade treaties 

Maquiladoras in Mexico

Industrial and Business Parks in Mexico





Corruption in Mexico

15 11 2006

Corruption in Mexico.

Quite a bit of interest generated from the piece regarding corruption and bribery in Mexico. Corruption, bribes, mordidas, tips – Doing Business in Mexico

Don Gringo says “Mexico possibly has one of the best governments anyone could buy. And cheap, too.” Catemaco News and Commentary

Bernard Wasow writes in the Globalist “It is no secret that the at law enforcement in Mexico is a “for-profit” business.” Greasing Palms: Corruption in Mexico.

Wide Angle presents a Corruption Chart; How big is Mexico’s problem. Which gives a great state by state overview and comparison of corruption levels in Mexico.

A quote from the page: “According to anti-corruption czar Francisco Barrio, the cost of corruption by government officials and by everyday Mexicans surpassed the amount budgeted for education by more than three percentage points — some 9.5 percent of Mexico’s GDP of $550 billion. Recent studies by the World Economic Forum, an international organization that works to improve worldwide economic conditions, found that the business environment such as rule of law, transparency and corruption were disincentives for foreign investment in Mexico. Corruption, which is often described as a tax, adds to the cost of doing business. The Opacity Index, a study conducted by Pricewaterhouse Coopers, found that Mexico lost $8.5 billion in foreign direct investments in 1999 due to corruption and other suspect legal or economic practices.”

Corruption exists in every country in the world, in politics, in business, in everyday life. In some countries it’s more sophisticated or hidden, in others it’s obvious and required in order to get things done. Mexico is no exception.

People seem to ignore corruption in their own countries, and react with shock and anger to corruption in others.

Depending on where you live in Mexico, what you are trying to do, and who you are dealing with, your experience with corruption and bribery will not echo anyone else.

Evaluation of Mexico, China, Brazil, India or any other country as a potential business location or market should include an analysis of how corruption will threaten and affect your operations, efficiency and bottom line.

Your organization should have a clear understanding of the situation and create a set of rules governing how to deal with the reality and any situations that might arise.

You have to ask and answer the question, “do I want my organization to participate and be involved in corruption and bribery, and at what levels”?

Get advice and information from local businesspeople and consultants on the reality of corruption and bribery. Learn how the culture deals with it, detects it and punishes it before you commit to a strategy, path or action plan.

Related Links

How to do business in Mexico, Parts 1 – 28

Tipping guidelines for Mexico

Doing Business in Mexico – cultural tips

World Corruption Perception Index – 2006

Patience chaos and doing business in Mexico





Questions – Answers, Doing business in Mexico

14 11 2006

Have any questions about how to do business in Mexico?

Any specific problems or dilemmas related to doing business in Mexico?

Questions about the business culture in Mexico or Mexican culture in general?

Would you like to know more about a specific theme related to Mexican business?

Need references or information about organizations, people or associations in Mexico?

Send your questions to me at   lee.iwan  at  gmail.com
or post a comment here.

Related Links

How to do business in Mexico

Official government websites of the 32 Mexican States 

The definitive dialing guide for calling Mexico

Shorten your learning curve about Mexico

Business South of the Border





What does Gringo mean

8 11 2006

The term “Gringo” is used in Mexico to refer to Americans. Depending upon it’s use (and user) it may or may not be an insult.

My experience with the term in Mexico is that it is a convenient way to refer to Americans, much shorter that “Americano” or “Norte Americano”. Most of the time it’s use is not offensive or meant as a derogatory or demeaning remark.

Many Mexicans will not use the term around Americans thinking that it might offend. Even after establishing friendships when the term “Gringo” is used, often someone will apologize.

Where did the term originate? There are several stories, urban myths and rumours:

From Wikipedia: “A recurring false etymology for the derivation of gringo states that it originated during the Mexican-American War of 1846-48. It has been claimed that Gringo comes from “green coat” and was used in reference to the American soldiers and the green color of their uniforms. Yet another story, from Mexico, holds that Mexicans with knowledge of the English language used to write “greens go home” on street walls referring to the color of the uniforms of the invading army; subsequently, it became a common habitual action for the rest of the population to yell “green go” whenever U.S. soldiers passed by. This is an example of an invented explanation, because gringo was used in Spanish long before the war and during the Mexican-American War. Additionally, the U.S. Army did not use green uniforms at the time, but blue ones.

Another legend maintains that one of two songs – either “Green Grow the Lilacs” or “Green Grow the Rushes, O” – was popular at the time and that Mexicans heard the invading U.S. troops singing “Green grow…” and contracted this into gringo.

From the Snopes Urban Legends Reference Pages: “Although the first recorded use of “gringo” in English dates from 1849 (when John Woodhouse Audubon, the son of the famous nature artist, wrote that “We were hooted and shouted at as we passed through, and called ‘Gringoes'”), the word was known in Spanish well before the Mexican-American War. According to Rawson, the Diccionario Castellano of 1787 noted that in Malaga “foreigners who have a certain type of accent which keeps them from speaking Spanish easily and naturally” were referred to as gringos, and the same term was used in Madrid, particularly for the Irish. 

The true origin of gringo is most likely that it came from griego, the Spanish word for “Greek.” In Spanish, as in English, something difficult or impossible to understand is referred to as being Greek: We say “It’s Greek to me,” just as in Spanish an incomprehensible person is said to hablar en griego (i.e., “speak in Greek”).”

According to the Real Academia Española (the ultimate reference for the Spanish language): 1. Adjective: Foreigner, especially one who speaks English, in general one who speaks a language other than Spanish. 2. Foreigner 3. In Mexico, Cuba, El Salvador, Honduras, and Nicaragua an American 4. In Bolivia, Honduras, Nicaragua and Peru a blond fair skinned person 5. Unintelligible language
Related Links

Doing business in Mexico – cultural tips

Doing Business in Mexico, parts 1 – 28





Foreign direct investment in Guanajuato, Mexico

6 11 2006

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)