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





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)





The definitive guide on how to dial to Mexico

4 11 2006

Starting today, November 4, 2006 there are changes on how to dial to cellular phones in Mexico.

The program called “El que llama paga”, which means “whoever calls, pays for the call”, allows you to call any cellular phone in Mexico and the recipient of the call does not have to pay. Previously the cost of the call was shared between both parties.

If calling Mexico from out of the country (International long distance):

  • To a fixed landline phone: the exit code of the country (in the USA – “011”) + 52 + area code + telephone number
  • To a Mexican cellular phone: the exit code of the country (in the USA – “011”) + 52 + 1 + area code + telephone number

If in Mexico, calling from a fixed landline phone to a Mexican cellular phone

  • To a cellular phone in the same city: 044 + area code + telephone number
  • To a cellular phone in another city: 045 + area code + telephone number
  • To a Nextel of the same city: telephone number
  • To a Nextel of another city: 01 + area code + telephone number
  • From a fixed landline that is NOT Telmex to a cellular phone of another city:  01 + area code + telephone number

If in Mexico, dialing from a cellular phone

  • To a fixed landline in the same city: telephone number
  • To a fixed landline in another city: 01 + area code + telephone number
  • To a cellular telephone in the same city: area code + telephone number
  • To a cellular telephone in another city: 045 + area code + telephone number
  • To a NEXTEL: telephone number
  • To a NEXTEL in another city: 01 + area code + telephone number

Related Links

How to call Mexico from the USA

Changes for dialing long distance to cellular phones in Mexico





Use of business titles in Mexico – Doing Business in Mexico

3 11 2006

The use of business titles in Mexican business life is important.

Most people with professional degrees are addressed using their professional title. This is especially true in written communication. Failure to do so can be seen as lack of education and offensive.

Until you get to know a person, always use the professional title or full name, never address them by their first name until it is clear that they are comfortable with this.

You can ask how they wish to be addressed if unsure. It’s better to make a mistake on the side of formality.

Some titles are general, and when in doubt regarding the professional title, you should use these:

  • Joven – refers to any young man from birth to adolescent.
  • Señor (Sr.) – refers to any male older than an adolescent.
  • Don – a term of great respect used to recognize older males.
  • Señorita (Srta.) – refers to any unmarried female. Once a woman is above a certain age, she is referred to as Señora, even if unmarried.
  • Señora (Sra.) – refers to any married or widowed woman.
  • Doña – a term of great respect used to recognize older females.

Professional titles

  • Doctor (Dr.) masculine, or Doctora (Dra.) feminine – Refers to anyone with a PhD. or Medical Doctors degree.
  • Licenciado (Lic.) masculine, or Licenciada (Lic.) feminine – refers to anyone with a law degree (most common usage) or Bachelor’s Degree.
  • Contador Publico (C.P.) – refers to anyone with a public accounting degree.
  • Ingeniero (Ing.) – refers to someone with an engineering degree.
  • Arquitecto (Arq.) – Refers to anyone with an arquitectural degree.
  • Diputado (Dip.) masculine, or Diputada (Dip.) feminine – refers to a publicly elected official equivalent to Federal, State or Local representative in the USA.

Related Links

Doing Business in Mexico – Cultural Tips

Patience, Chaos and Doing Business in Mexico

How to do business in Mexico

Criticism – how to do business in Mexico

Meeting people in Mexico

How to negotiate with Mexican business people

How to call Mexico from the USA





Mexico manufacturing, US inventories and safety stock

21 10 2006

Manufacturers are returning to Mexico after “experimenting” in the Asia Pacific region. Some of the big reasons for this return are ; to reduce time to market, eliminate the financial costs of inventories in transit, lower the logistics costs, and to strengthen the supply chain by moving closer to just-in-time deliveries.

But moving to Mexico isn’t going to solve all the problems.

A September 2006 article in CFO magazine points out how US businesses are increasing safety stocks “just in case”. Delayed in the USA The article points out how supply chain disruptions are being provoked by an increasingly saturated US highway system and bottlenecks in deepwater ports and railyards.

The good news is that Mexico is close to the USA, a truckload of goods can leave any point in Mexico and arrive at the US destination in as little as 4-5 days. The railyards and new multimodal Interior Port in Guanajuato, Mexico allow manufacturers to establish production facilities in the interior of the country. Exporters can now clear customs and load the sealed container onto the rail-car at the new (2006) high capacity Customs port located in the geographic center of Mexico.

The bad news is that unless the US begins to upgrade their highway, port and rail facilities, supply chain managers in the US will be buying and storing higher levels of inventory to assure continuity of operations, “just in case”.

Related Links

Delayed in the USA – Supply Chain

Industrial and Business Parks in Mexico

AMPIP Mexican Association of Industrial and Business Parks





Illegal immigration – USA and Mexico

18 10 2006

Immigration control is a global challenge, and yet not one developed country has developed a good workable and acceptable legal immigration plan that eliminates illegal immigration.

There are political solutions, and then there are real solutions.

Immigration between nations occurs when there are marked differences in economic wealth or living conditions between two regions. In order to eliminate massive immigration, wealth (and it’s distribution) of the economically disadvantaged country must improve or the wealthier country must lose it’s wealth.

The long-term solution to immigration will be found in changing economic conditions, policies and the creation of opportunities in the disadvantaged country.

A short-term solution will be found by building walls and increasing border enforcement (This is effective where the border areas are limited and can be totally controlled).

The current immigration situation between Mexico and the US has become a political football, and it appears political solutions are all that matter.

It’s time for both countries to work and invest in real, long-term economic solutions to solve fundamental problems in order to help and protect both countries. The US is facing a problem, and Mexico should assist their neighbor in finding solutions.

The Mexican perspective:

  • There are many opportunities and jobs available that pay much better than in Mexico.
  • There are no jobs available in Mexico for the majority of immigrants.
  • Going to the US is a “rite of passage” for many Mexicans in certain areas. Most return to Mexico after 3 – 5 years.
  • Many cross the border illegally to meet family members already in the US, and have jobs waiting for them once they arrive. Most immigrants have jobs in the US.
  • Most of the immigrants come from rural areas in Mexico, with low levels of education.
  • Mexican immigrants in the US send enormous sums of money to support family members in Mexico. Petroleum sales bring Mexico the most foreign currency income, followed by money sent by Mexicans in the USA (not all illegal immigrants) to family in Mexico.
  • For many Mexican state governments, this injection of foreign capital is very important for maintaining local economies.
  • Crossing the border illegally is dangerous and life threatening, and in many cases expensive.
  • US employers are open and supportive to employing illegal immigrants, and in many cases provide false identification and protection to the workers.
  • The majority of the millions of illegal immigrants currently in the US are working, and spending money in the local US economies.
  • The legal immigration mechanisms available (visas) reject those who are economically disadvantaged (the ones with the highest need to immigrate).
  • Mexicans believe that the US has the sovereign right to restrict and control immigration.
  • They would like to see a realistic legal migration program created.
  • The immigrants in the US pay sales taxes, and they consume goods and services in the US.

The US perspective

  • Illegal immigration takes jobs away from US citizens.
  • Illegal immigrants use social, health and welfare services paid for by US taxpayers.
  • Illegal immigrants bring crime, drugs and violence to communities.
  • Illegal immigrants don’t speak English and don’t learn English, and are forcing communities to spend money on bilingual teachers and government programs.
  • Illegal immigration can be stopped by building a wall or by enforcing the border.
  • Illegal immigrants don’t pay taxes.
  • US agricultural businesses cannot survive with competitive prices if illegal workers are eliminated. Legal immigration will increase labor costs.
  • Elimination of illegal immigrants will cause substantial increases in the costs of food, restaurants, hotels, construction and certain consumer and industrial goods and services. Immigrant labor is needed to maintain the US economy.
  • The US Border Control has stated many times that the solution is in enforcing and penalizing US employers that hire illegal workers, not by penalizing and deporting the illegal immigrant.
  • The US government and state governments understand the economic situation and provide political solutions for voters, but understand that the total elimination of immigration would severely hurt the US economy. A legal immigration solution must be implemented.
  • There is a fundamental dilema. America is the land made of immigrants, and yet now must begin to control this immigration. Huge uncontrolled borders, wealth and opportunity, and willingness of employers to hire undocumented workers combine to make the US an attractive immigration destination.

Opportunities and possible solutions

If we agree that the illegal immigration problem is a consequence of economic situations and differences in the distribution of wealth, then the following ideas are possible solutions. None of them are easy, all of them have costs, but they are the only real long-term solutions to the immigration situation.

  • US government and businesses coordinate with the Mexican government and business sector to invest in economic development projects in the areas in Mexico with the highest degree of poverty and immigration.
  • The Mexican government must aggressively work and invest in order to improve opportunities and wealth in their country, especially for the economically disadvantaged.
  • US businesses push for immigration reform that allows for temporary workers and legal immigration. The program would increase costs to the US employers, and the workers would be paying taxes.
  • US government makes laws and enforces them against US employers that hire illegal immigrants.
  • US government finds a method to legalize current immigrants that have been and are working in the US.

Related Links

Observations on illegal immigration in the US, possible solutions

How to do business in Mexico, Parts 1 – 28

Official government websites of the Mexican States

The definitive dialing guide for calling Mexico

Top States in Mexico for for doing business – World Bank Report 2007





Maquiladoras in Mexico

28 09 2006

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

27 09 2006

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





World Bank report – Doing Business in Mexico

23 09 2006

The World Bank has an on-line report available entitled “Doing Business in Mexico“. The study was published in December of 2005.

“Cosponsored by COFEMER, USAID, and the World Bank Group, Doing Business in Mexico is the first state-level report of the Doing Business series in Latin America. This report investigates the scope and manner of regulations that enhance business activity and those that constrain it.

The report covers the following thirteen Mexican cities and four areas of regulation: Starting a business, Registering property, obtaining credit and enforcing a contract.”

“When compared, Mexico City and the 12 other cities differ dramatically on the four indicators the report measures. “

The cities and regulations analyzed include: Aguascalientes, Celaya, Ciudad Juarez, Guadalajara, Monterrey, Veracruz, Merida, San Luis Potosi, Torreon, Mexico City, Tlalnepantla, Puebla, and Queretaro.

Of special note is the following comment. “The report concludes that reform is sorely needed. Much of the opportunity for improvement is in local administrative procedures, which can be changed by a governor or a mayor.”

This is very important. A governor or local mayor can make an important difference on the ease of setting up and doing business in Mexico. Seek out those states and cities with pro-active leadership. Find those areas that are investing heavily in infrastructure or have a dynamic policy focused on foreign investment and economic development.

Related Links

Doing Business in Mexico – World Bank

Doing Business in Mexico (PDF)

Press Release (PDF)





Industrial and Business Parks in Mexico

20 09 2006

Looking for a “plug and play” solution for your business or factory in Mexico? Take a hard look at the advantages that Mexican industrial parks offer.

AMPIP (Mexican Association of Business and Industrial Parks) can partner with you and provide contacts and information about Mexico’s industrial and business parks. They work closely with private industry, state and local governments and real estate organizations in order to provide solutions for companies seeking to quickly and easily establish a physical presence in Mexico.

“Investment Promotion
AMPIP has become one of Mexico’s leading agencies for the promotion of foreign investment projects, thanks to its participation in national and international shows, the advertising in specialized media, the alliance with other business associations and the permanent contact with a wide network of corporations and real estate players, as well as with government officials.

Part of the promotion activities include the registration of industrial assets owned by AMPIP members in our Industrial Real Estate Promotion System, available on-line at our Internet site, apart from the printed material, such as location maps edited in conjunction with the Mexican Bank for Foreign Trade (Bancomext), which are distributed worldwide.”

There are specific and unique advantages of industrial and business parks. Saving time and money are among the biggest factors. Access to transportation, power and communication infrastructure is another. The definition of “Industrial Park” will provide some idea of the other advantages.

“What is an Industrial Park?

An industrial park is a delimited extension of land, characterized by four main aspects:

1. It is located close to transport facilities, such as hightways, airports, sea ports and railways.

2. It concentrates essential dedicated infrastructure in one location for industrial operations, such as water (including sewer lines, drainage systems), electricity (including high power supply lines), telecommunications and roads.

3. It fulfills all the prerequisites to obtain the permission from local authorities for the set up of new operations (construction, environment, etc.)

4. It has a central administration that coordinates the internal safety of assets, the maintenance of public infrastructure, the promotion of new operations and the affairs with local authorities”

For more detailed information, contact: Associacion Mexicana de Parques Industriales, Monte Camerùn 54 – 1, Colonia Lomas de Barrilaco, C.P. 11010, Delegacion Miguel Hidalgo, Mèxico D.F., Mexico Tel. +52 (55) 2623-2216 Fax +52 (55) 2623-2218 Email ampip@ampip.org.mx

Related Links

AMPIP Mexican Association of Business and Industrial Parks

Official Government websites of the 32 Mexican states

How to do business in Mexico

How to negotiate with Mexican business people

Mexican official (and unofficial) holidays

Tip: How to call Mexico from the US

What to dial in order to reach a cellular phone in Mexico

Advice on what to expect when doing business with Mexico

Meeting people in Mexico – kiss, shake hands or hug?

Before you go on your business trip to Mexico

Tipping Guidelines for Mexico





Mexico and international free trade treaties

19 09 2006

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 





Current Resume – Lee Iwan – March 2007

27 04 2006

 

Lee Iwan

International Business Development

Sales & Management Executive

Accomplished bilingual and bi-cultural executive with broad based domestic and international experience in business discovery and development; sales, marketing and operations for start-ups, growth and mature organizations.

Results oriented, proven success in new market identification, strategic thinking, negotiations and pragmatic problem solving. Track record of “hands on” leadership increasing communication, sales, efficiency and profitability.

Thrive in dynamic and fluid environments requiring enthusiasm, creativity, communication skills and organization.

Core competencies include:

Relationships and Communication

Team Leadership

Cross Culture Liaison

Innovation and Change Management

Global Focus

Entrepreneurial Focus

Contingency Planning

PROFESSIONAL EXPERIENCE

QUIMICA CENTRAL DE MEXICO S.A. de C.V. Leon, Gto., México July 1998 – Present

Business Manager, Strategic Business Discovery & Development May 2005 – Present

Serve as independent executive working directly with CEO and Board of Directors. Fully responsible for the visualization, research, creation, communication, follow-through, analysis, planning and implementation of new business development and corporate strategic diversification projects.

Key Achievements:

  • Project Leader, pharmaceutical joint venture (Swiss-México), manufacturing and commercial operations .
  • Spearheading strategic alliance negotiations to increase long-term market share and global positioning.
  • Ongoing negotiations with India and China for product representations, agencies and toll manufacturing.

Business Manager, International Business March 2000 – May 2005

Served as Business Manager, responsible for global sales and marketing, distribution and logistics, and all corporate international negotiations with clients and suppliers.

Directed export sales and market development, international supplier strategic alliances; leadership of export sales distribution and agency networks; cross-functional team participation; business intelligence; sales and marketing strategy and leadership for the Asia Pacific and Latin American regions; sales implementation and market development; logistics and supply chain management, cross cultural communications, “globalization” of company culture and corporate special projects.

Key Achievements:

  • Created and implemented commercial entrance for Asia-Pacific market, first 3 years revenue $ 5 M (US), projected annual sales growth of 200%.
  • Initiated and maintained strategic alliances with international suppliers, raw material cost savings of $ 2 M (US) fortified long term strategic positioning.
  • Negotiated exclusive agency representations in Mexico for South African and US specialty chemical manufacturers.
  • Increased company global competitiveness utilizing the export department to drive corporate cultural changes in strategic planning, production, time to market, supply chain and logistics, sales, marketing and administration.

Export Manager July 1998 – March 2000

Served as Export Manager, responsible for sales, distribution and marketing strategy and management for 20 countries including Latin America, US, Europe and Taiwan.

Key Achievements:

  • Created new commission and base price structure for agents and distributors resulting in increased loyalty and increased revenue of 8%.
  • Re-engineered department systems to increase revenue and customer loyalty through increased efficiency in communications, administrative processes and product shipping.
  • Managed international sales force in Latin America and Asia Pacific regions (18 distributors / agents).

NUVIDA S.A. de C.V., León, Guanajuato, México January 1993 – July 1998

Owner–President–Entrepreneur

Served as President for start-up specialty service business, corporate and government clients.

Key Achievements:

  • Alliance between private industry, State and Local government to create and maintain 100-acre interactive ecological area – Parque Explora.
  • Managed workforce of 45.
  • First workforce in the State to receive State Certification (training and operations procedures).

FLOWERS FLOWERS INC., Evanston, IL, USA March 1986 – August 1993 Owner–President-Entrepreneur

Served as President for start-up innovative luxury consumer goods and service business.

Responsibilities included: strategy and planning, management, sales and marketing, purchasing and operations.

EDUCATION

Bachelor of Science Agricultural Economics * University of Illinois – Urbana, IL 1980

PROFESSIONAL ACHIEVEMENTS

Board Member, State Chemical Industry Export Committee, COFOCE, February 2007 – Present

Weblog: Business South of the Border August 2006 – Present

Weblog: Lee Iwan Accumulated Experience April 2006- Present

Business Development Mission, Chennai, India, February 2007

Chromium Industry Conference, Cape Town, South Africa, February 2006

Commercial Mission, New Delhi, Mumbai India, November 2005

Course: Finance for Non-Financial Managers, 2005

Business Development Mission: Buenos Aires, Argentina, 2004

Board Member, State Leather Industry Consulting Committee, COFOCE, 2000 – Present

ANPIC, Mexican Leather Industry Fair, Leon, Gto., Mexico, 1999 – Present

ISO 9001:2000, Certification Process, 2003 – 2006

Business Development Mission: Geneva, Switzerland & Moscow, Russia, 2004

Business Development Mission: Istanbul, Turkey, 2003

All China Leather Exhibition (ACLE), Shanghai, China 2002 – 2005

Guangzhou Leather Fair, Guangzhou, China, 2002 – 2005

Business Development: Geneva, Switzerland, 2002

Commercial Mission: Mexico – Central America, 2000 – 2002

Asia Pacific Leather Fair, Hong Kong, 1999 – 2005

Linneapelle, Bologna, Italy, 1999 – 2005

Commercial Mission: Mexico – China, 2000 – 2001

Business Development: Amsterdam, Holland, 2000

Business Development: Guatemala, El Salvador, Honduras, 2000

Miami Leather Fair, Miami, FL, USA 1999 –2001

Business Development: Uruguay, Brazil, Argentina, 1999

FENAC, Leather Fair, Novo Hamburgo, Brazil, 1999

Course: Mexican International Commerce Legislation, 2001 – 2004

Diploma: Modifications in the Mexican Customs Legislation, 2003

Diploma: International Commerce – Logistics, 2001

Diploma: International Commerce, 2000

Course: The Strategic Salesperson, 1999

Periodico AM, Newspaper Columnist. 1994 – 1996

Society of American Florists, Editorial Board, 1990 – 1992

Chicago-Dempster Merchants Association, Vice President, 1988 – 1990

Lee.iwan@gmail.com