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Starting a Business in Mexico

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Starting a Business in Mexico

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Why Start a Business in Mexico?

Down Mexico way. America's neighbour to the south and Guatemala's northern rock. Mexico is a topographical artwork, a cultural tapestry and a canvass of opportunity. It's all climate, conquistadors and corporation, a delicate balance of history and innovation.

The former Spanish colony vaunts a staggering range of corporate opportunity, and a fast-growing middle class means untapped potential for UK investors in many areas of industry. After all, the consumer class keeps the business world buoyant and Mexico's economical prudence has ensured openings, stability and an attractive investment policy. But tourism remains Mexico's byword, and who could argue with its gilded sands and skies bluer than early Picasso. 20 million visitors can't be wrong.

Mexico lies on the equator of the Americas. It enjoys the close proximity of two continental markets, and is therefore surrounded by both distinctly developed and excitable emerging economies. Opportunity for the foreign investor are indeed vast. Mexico has more free trade agreements than any other nation in the world: 12 bilateral agreements with over 43 countries.

And those economic soothsayers have been caressing their corporate crystal balls again, predicting that the Mexican economy will supersede that of England's by 2040. So your transitional timing may never be better. The UK is already one of the largest investors in the Latin State, and demand for our products and services span the entire Mexican economy, from education and healthcare to infrastructure and food. The UK is regarded as a reliable, amicable trader and investor - so rest assured, your reputation precedes you.

And if that sounds like your entrepreneurial idyll, then read on to find out why Mexico may just be the business move of a lifetime.

Business Law

The Diario Oficial is a government newspaper which is edited daily. It contains updated information about new federal laws. It is important to keep abreast of the latest legislation. It is possible to buy specialized selections of it according to your line of business, and it can be purchased and subscribed to online.

Mexican Foreign Investment Law

New amendments to the Mexican Foreign Investment Law, were created in order to:

  • Reduce delays in the processing of many government business requirements
  • Promote foreign investment
  • Provide added security to foreign investors investing in Mexico
  • Simplify procedures for investment in Mexico

As a result of the different regulatory requirements of the many states in Mexico, in addition to differences in the operation of national-level regulations, this plays a part in the quality of local business activity. However local governments have been motivated to reform as a result of all the awareness being raised about the ease of doing business in Mexico.

There are certain industries in Mexico which are limited to ownership by Mexican corporations or citizens only. These include activities involving the production and sale of petroleum and other hydrocarbon products, basic petrochemicals, electricity (including the generation of nuclear energy), telegraph communications, mail processing and delivery, and similar public services. These are all services which the Mexican government have a monopoly on.

Economic activities reserved for Mexicans include the operation of credit unions, retail trade in gasoline and liquid petroleum gas, national surface transportation of passengers, tourism and transportation of freight.

Foreign investment in cooperative companies or production is limited to 10%. Investment in domestic air transportation, air taxi transportation and specialized air transportation generally is limited to 25%. Since the changes made to the Foreign Investment Law, foreign ownership interest is not taken into account if the foreign investment is made in a Mexican corporation and if 51% of the capital of such corporation is held by Mexicans.

Foreign investors may now hold up to 49% in companies in almost all aspects of the Mexican financial system, including commercial banks, credit institutions and securities market specialists.

Rights for foreigners in Mexico

As well as restrictions in terms of foreigners purchasing real estate, which has already been explained, foreigners are forbidden to take part in political activities, including voting. In terms of public education and healthcare, foreigners basically have the same rights as Mexican citizens.

The Public Health Ministry and the Mexican Social Security Institute both provide healthcare services to foreigners. The system of hospitals and clinics is governmental-run. Foreigners, like Mexican citizens have the right to free emergency medical attention, but it is important to know that even though many medical facilities are excellent in Mexico, the overall health system is certainly not as comprehensive as that of the U.S. for instance.

Etiquette

Mexican business people tend to wear suits. Dress code in Mexico is generally smart.

Business Breakfasts and Business Lunches - Business in Mexico is commonly carried out at breakfast and/or lunch. Breakfasts are also the preferred choice to meet and exchange information about potential business deals.

In Mexico, it is considered impolite to split the bill. The person who is making the sale is traditionally expected to pay, or alternatively, the person who suggested or "invited'' other parties to join him/her for a meal is understood to be offering to pay for that meal. Tips, which are not included in the bill, are generally around 10%.

Status - Mexicans are very status conscious. Professional titles are also very important. It is customary to address your Mexican business partner as licenciado, which is the equivalent of a bachelors' degree. Do this even if you know that your business partner is not a licenciado. Ingeniero (engineer) and doctor (either medical doctor or PhD) are also quite common.

Bureaucracy is big in Mexico. Always take copies of the most relevant files and legal documents that may be required to meetings. It is also necessary to take your original passport or photocopies as proof of identification when you're closing a deal.

Using the Telephone - The telephone is considered an informal means of communication. It is also the method used to make sure you are not stood up: confirm all meetings the day of the meeting, or the afternoon before if it is a breakfast meeting.

It is important to remember that a spoken commitment in Mexican business culture is not necessarily binding.

Business Hours - In Mexico City, most offices are open from 9:00am to 5:00pm, but sometimes will be open until 7:00pm from Monday to Friday. Lunch is generally taken at 2:00pm and lasts 1-2 hours. The federal branch of the Mexican government has attempted to change this to 9:00am-6:00p, but they tend to stay later. The local government is going by the old rules of being in by 10:00am and leaving very late at night after a long lunch break.

Negotiations - In Mexico it is impolite to turn people down. It is essential that you learn to distinguish between cases where your business partner may need a bit more motivation and those cases where there is no chance of proceeding with the deal. Always have realistic expectations.

Closing a deal - Mexican firms are often underfunded and can run into serious supply problems. If a Mexican company is going to need a little money up-front to get the raw materials to produce what you want, then you should ensure that they will dedicate their company to working on your order.

Always record your transactions. The exchange of money and merchandise should happen at once. Payment should be by certified check, approved credit card transaction or with a transfer of funds in a bank. If you're supplying a Mexican company, the perennial letter of credit is the best idea.

 

British Chamber of Commerce Mexico

The British Chamber of commerce of Mexico is an organisation that represents, promotes and develops British business interests in Mexico, serving the business community in trade and investment between the UK and Mexico.

British Chamber of Commerce (BritCham)
Rio de la Plata 30, Colonia Cuauhtemoc
06500 Mexico D.F.
Tel: 5286-2526/2705, 5533-2453

Click here to Ask an Expert about Starting a Business in Mexico

Organisations that can assist with Starting a Business

  • > Blue Marble Global Payroll

    Simplified Global Payroll Managing payroll across multiple countries is complicated – with unique requirements, systems, and deadlines in each country, it can be difficult to ensure compliance. Using manual processes or spreadsheets to manage payroll can lead to errors, data security issues, and penalties. Blue Marble solves your challenges with secure, cloud-based global payroll technology, aggregated monthly reporting, and in-country experts in 100+ countries.

    More Details Visit Website
  • > Agility PEO

    Your trusted Global PEO provider. We’re Agility PEO. And we pride ourselves on our people-focused approach to business. We’re headed by an experienced management team that helped create one of the very first successful Global Providers. Today, that same knowledge and experience mean that we can provide the PEO services you want, when you want it. Approachably, ethically and efficiently.

    More Details Visit Website
  • > Nominus.com

    When expanding your business to Mexico, don’t forget to protect your brand. We provide Trademark Registration Services in Mexico.

    More Details Visit Website
  • > Zaldivar Consulting

    ZALDIVAR CONSULTING, S.C., is a Consulting & Accounting Firm incorporated in January 2003, with the main objective of giving tax and accounting solutions. At the same time, we help foreign companies to set-up a Mexican Corporation and start running its operations. A new division on the Firm is training for business where we teach the way to do business in Mexico.We have offices in Mexico City and Morelia.

    More Details Visit Website
  • > Human Resources Mexico, S de RL

    The Most Trusted PEO in Mexico - The PEO used by the Global PEO Foreign companies who desire to hire employees in Mexico can place the employees under our employment umbrella (PEO Mexico.)

    More Details Visit Website

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