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Considerations for US companies selling in Mexico

Considerations for US companies selling in Mexico

Selling US products or services in a foreign country poses unique challenges and questions. In the interest of assisting the process for US companies selling in Mexico, the following road map is provided as a concise overview, with tips and information drawn from the Export.gov website.

Agent vs. Distributor

Distributors are a very effective mechanism for US companies selling in Mexico to utilize. Such individuals or groups are capable of providing product across large regions efficiently and thoroughly to a variety of businesses. On the other hand, sales agents are typically individuals and can reach more remote businesses and focusing on smaller cities.

Office Considerations

In Mexico, there are several different forms of business entities you may register your operation as, in order to be among the US companies selling in Mexico. The route that each individual firm chooses to travel depends on its particular situation. Among the most common are the Sociedad Anonima (Corporation); the Sociedad Anonima de Capital Variable (Corporation with Variable Capital), which allows the fixed capital to be changed after initial formation; the Sociedad de Responsabilidad Limitada (limited liability partnership), which has similar characteristics to a partnership; and the Asociación Civil (Civil Association) for charitable or non-profit organizations.

Franchises

Franchises in Mexico are regulated by Article 142 of the Industrial Property Law and Article 65 of its Regulations. Their agreements must be registered before the Mexican Institute of Industrial Property to be effective.

Joint Ventures and Licensing

This is a common option that is chosen by many US companies selling in Mexico. It is advised to have a clear written agreement with your Mexican partner, though many Mexicans business partners may be comfortable with verbal agreements. Note that Mexican law considers JVs separate entities from the parent companies for all purposes, including taxes.

Sales and Distribution Channels

Mexico has a modern highway system, numerous intermodal ports, and is aggressively working to modernize its transportation infrastructure further. However, Transportation-logistic services are still somewhat expensive in Mexico, but predictions for the near future are promising.

Local Sales Techniques

It is highly recommended that the Spanish language be used in all sales literature and communications used by US companies selling in Mexico, and that merchants speak Spanish whenever conducting business. Additionally, strong partnerships with Mexican businesses and hiring locally are encouraged.

Ecommerce

B2B and G2B (government to business) ecommerce has developed much faster than for B2C ecommerce. There is ongoing, heavy investment in IT related infrastructure in the country, providing a significant opportunity for companies in this field. Mexico has over 45 million internet users, most of whom are under 35, and over half of whom are in the areas of Mexico City, Guadalajara, and Monterrey.

Customer Service

Customer service is very important in Mexico. Uniform quality control is a must for businesses in the country, as are compliance with international standards, productivity, swift deliveries, and especially reliable local service and maintenance programs.

Due Diligence

Due diligence is highly advised for any potential partner to a US company selling in Mexico. Most larger cities have consulting or law firms to assist in this endeavor, and chambers or associations can provide economic reports for specific firms.

US-Mexico Border Trade Initiative

The maquiladora/manufacturing-export industry along the US-Mexico border is Mexico’s largest source of foreign currency, sourcing much from the US. The area offers a cost-effective market entry opportunity for many companies needing proximity and access to Mexican labor and the US consumer market. To assist, the Commercial Service created the Border Trade Initiative (BTI) which extends strong trade promotion programs throughout the country’s significant industrial centers.

Remember, relevant and useful Mexico manufacturing content is available at one’s finger tips by downloading the Tecma Group mobile app from the Google Play Store, interested parties can also receive Mexico manufacturing information on a weekly basis by SMS Texting the word Tecma to 96000.

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This quarterly publication will be populated with content that is useful and relevant to readers that are contemplating Mexico investments, have operations already within the Republic, as well as to other individuals that have an interest in Mexico and its manufacturing sector.