Four Lines of Attack for doing business in Mexico:
Let’s plunge deeper into the four lines of attack I promised you. Here are four ways you can attack this trillion dollar market:
- Export to Mexico
- Import from Mexico
- Form strategic alliances with Mexican companies
- Set up a business directly in Mexico
Let’s take a look at how you can prosper in each of these four fields.
Line of attack #1: Export
Are you looking for a way to expand your markets for your products? Are you well established in the United States market and seeking ways to grow exponentially? We are talking about spectacular growth! If you want dramatic growth, come to Mexico. Export your products to this trillion dollar market.
You have picked the right time. NAFTA has eliminated most trade barriers. You can ship most products without paying any duties.
Mexicans generally like United States products. If you have a product that is attractive, useful and reasonably priced, you can sell it in Mexico.
If you operate in international markets, your business is linked to international trade. This is an advantage, because economic indicators such as export growth usually grow faster than GDP. Export-oriented businesses experienced double-digit rates of growth during the past decade. This will continue to happen as further liberalization increases world trade. As trade increases, each nation will have further prosperity. As each nation prospers, there will be links along economies, ideas and people. Your focus will go way beyond your back yard. You will be a player on the world stage.
Line of Attack #2: Import
The second way to attack this trillion dollar market is to import. You will be a hero in Mexico if you buy Mexican products and sell them in the USA.
Imports to the United States from Mexico under NAFTA have been a powerful engine for economic growth and job creation in Mexico. Exports account for 33% of Mexico’s GDP. If you purchase Mexican products and import them into the United States, you will find many enthusiastic suppliers ready to work with you. You will create jobs in Mexico and will be deeply appreciated.
In 2000, Mexico became the 7th largest exporter in the world and the first in Latin America. Since 1993, Mexico’s total trade has swelled from $117 billion to $340 billion, growing at an average of 18%.
In 2000, Mexico was the main supplier of 8,701 of the 16,413 products that the United States classifies in its import tariff codes. These products cover a wide range of industries including coffee, trousers, silver, trucks, ovens and lamps. Mexico is the main supplier of textile and apparel products to the United States. Mexico is also the main supplier of TV sets, with an annual production of 25 million sets. And Mexico also supplies most of the gas ranges and stoves in the United States.
Small and medium-sized businesses flourish in this environment. NAFTA is not only for the large multinationals. It is especially good for the typical small firm. The number of small and medium-sized export firms is increasing in Mexico. Out of 37,360 firms that exported to the USA, 35,090 sold less than $5 million per year. These firms are eager for you to help them move their products to the United States and Canada.
Line of Attack #3: Strategic Alliances
The third way to attack this trillion dollar market is to form strategic alliances. This is a tactic that works very well in Mexico. Under NAFTA, strategic alliances have been a huge success. Strategic alliances and joint production (production-sharing) enable companies to work together to increase expansion. They help you become more competitive so you can produce more goods for world markets. Mexico’s Free Trade Agreements with Europe and other countries give you privileged right of entry to markets in three continents.
The advantages of production sharing are many. First, you can reduce your manufacturing costs. Second, you will find it easier to meet delivery schedules. You can take advantage of our largest and permanent relative asset – a 2,000-mile common border. With strategic alliances, you can minimize delays in both the exit and entry of your goods and services. You can set up “just-in-time” manufacturing systems. You can take advantage of a transparent and permanent legal framework that promotes business such as yours.
Line of Attack #4: Set up a business in Mexico
Finally, the fourth way to attack this trillion dollar market is to set up a business in Mexico – a branch, a subsidiary or a separate company. NAFTA not only made it easier for you to export and import, but also made it easier for you to invest. From 1994 through 2000, Canada and the United States invested $85 billion in Mexico.
There is a network of about 5000 “Maquiladoras” (plants set up in Mexico specifically for the purpose of importing into the United States). Most of these plants used to be along the United States-Mexican border. However, that pattern is changing. Labor costs that used to be inexpensive are now rising along the border. Thus, you may want to follow a lot of other United States companies and press deeper into Mexico. Go into Southern Mexico where labor is still relatively inexpensive and you will be welcomed with open arms.
Most of Mexico’s trade with the United States derives from manufacturing. 87% of all exports to the United States came from manufacturing. 10% came from oil and minerals. Only 3% came from agriculture.
In Mexico, you can develop a new business model. You gain entrée to a low-cost, spirited and young labor force. They are skilled and increasingly educated. Mexican workers give you high levels of productivity at reasonable outlays.
Call us at (802) 355 8533 or contact us and let's talk about how we can promote your business with creativity and intelligence.