Many of our clients have already expanded into other countries, or even entered Mexico already, before they come to us, but a large share are also completely new to exporting. Some have conducted analysis about how to prioritize international marketing, and different international markets, as well as the resources they need to and are willing to invest. For those who would like more information, the US Department of Commerce has an Exporting 101 guidebook and other resources for new exporters, which lay out points to evaluate.
US companies are also wise, when looking at Mexico, to remember some general points about where they’re coming from and where they’re going. It can help manage expectations about the practicalities of closing deals or even travel and opening communication with new partners in Mexico. Here are three key concepts I’ve run across as important to bear in mind:
1. The United States is The Most Developed Economy in the world. Mexico is classified as an emerging economy. The banking and financial services sector, interest rates and credit availability, the markets and availability and oversight of investors, secondary services such as insurance, all the things we take for granted about the US’s developed economy, are not benefits clients and partners in Mexico necessarily use or have access to, at least not to the same degree or with the same ease that businesses in the US do.
2. The above refers to the macro economy. Just because the credit system isn’t as developed in Mexico as it is in the US does not mean your Mexican partners are not extremely credit-worthy. In fact, perhaps precisely because of the less developed banking and financial services sector in Mexico, many Mexicans and Mexican companies do not carry any debt, and they own their assets outright.
3. When doing business in economies like this, personal trustworthiness (creditworthiness) becomes more important, again, because the macroeconomy lacks mechanisms to offer guarantees like those we take as given in the US. Economist James Surowiecki has pointed this out in discussing the business success of the Quakers within the early US economy. You see it pretty clearly when you look at Mexican businessfolks’ interest in developing social relationships– the famous long lunches and tequilas, the preference for phone calls over emails, a «getting to know you» period that may seem long, or even unnecessary, by standards north of the border. Social relationships serve a concrete function in business in Mexico, which is that they provide an additional, and very deeply-rooted mechanism for guarantee.
I mention this last point not only so that you understand that socializing in business in Mexico absolutely is important to engage in, but also so that you might stop to think about the benefits of doing so. If you become a friend to your client or partner here, as they are more often than not inviting you to do through socializing with you as a business partner, you will have a much better opportunity to earn their trust (and for them to earn yours). In the long run, you may find a trusting business relationship dovetailed with friendship offers richer returns and operates more efficiently than a less personal one that is backed solely by legal and financial guarantees.
These three points underscore something investors already know about emerging economies: investments are generally more volatile, but with some patience and due diligence you should realize higher gains over the longer term.