16 May 2011
4.7 Practical Recommendations
As mentioned, given the high dependence on the US, the Mexican economy is set to be hurt by the poor performance of the US economy amid the current housing and financial crises. However, on the back of Mexico’s continuous efforts to diversify its export destinations and ongoing reduction and elimination of AD measures, Hong Kong and mainland companies, while staying vigilant, are advised to adopt a more long-sighted approach when developing the Mexican market.
To avoid the intense competition in the low-end market, especially in the sizable informal economy (i.e. estimated to account for 27% of the country’s GDP), new-to-the-market companies are advised to partner with established retailers such as hypermarkets, supermarkets, shopping centres and department stores to better leverage on their marketing efforts and strengths in intellectual property rights protection. Meanwhile, to cope with the hostile sentiment towards cheap Chinese imports, foreign companies can differentiate their products by branding, as Mexican consumers, in general, have better perception of branded imports which involve more added value.
On the other hand, many Mexican companies have recognised the substantially improving quality of Chinese imports in recent years, foreshadowing traders’ dwindling role as quality controllers and risk managers. To enhance the chance of success, Hong Kong and mainland companies need therefore to improve their products and services, for example by better quality and better design, so as to justify and maintain a comfortable profit margin.
In addition, to facilitate customs clearance and avoid unnecessary delays, foreign companies may certify their products’ country of origin with an international certification institute or the Mexican Embassy or Consulate (i.e. Apostillado) before shipment. Associating themselves with reliable forwarders and customs brokers could also be a feasible way out of the gruelling customs clearance process.
Furthermore, in order to avoid the exhaustion caused by long-haul flights and excessive travelling expenses, Hong Kong companies are advised to consider the alternative of using Hong Kong trade fairs and exhibitions as a platform to meet Mexican businesspeople. Apart from time and cost savings, this can help Hong Kong and mainland traders bypass the language barriers and possible chaotic situations that they may encounter in Mexico. As an illustration, the Hong Kong Trade Development Council received 2,525 Mexican visitors at its various trade fairs in 2007, demonstrating a CAGR of 20% over the past five years.
Yet for businesspeople who need to travel to Mexico, a number of practical tips may be of use. First of all, since traffic is very heavy in Mexico, especially in Mexico City, one should allow more time for possible delays, though Mexicans generally have greater tolerance of people turning up late in business or social situations. Besides, although Mexicans are rather straightforward in negotiations, they do not like to feel rushed in conducting business and prefer to conduct business face-to-face rather than via the phone or fax. This gives a hint to foreign companies of the importance of appointing a local sales agent/representative or partnering with a local company, when making their debut.
In addition, although most Mexicans are pleasant and accommodating to strangers, to avoid being a victim of crime, new-to-the-market businesspeople are warned to keep a low profile while moving around. Also, to avoid road crime and other problems arising from, for example, lack of parking, hiring an experienced and regular chauffeur who is familiar with the local environment and the security situation is not a bad choice for newcomers and business travellers.