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Tips for doing business

MARKET REPORT: MEXICO

Get yourself a Mexican business partner. Set up shop in Mexico. Hire Mexican staff. Doing business in Mexico is difficult, verging on impossible, if you are not involved at grass roots level, warns director of Mexico City-based business development consultant Search & Results International Michael Putter.

'Mexico is very much about networking, ' Putter explains. It is fairly common, he says, to be invited to supper at a prospective client's home several times before a deal is struck.

Mexico also has a 'very boss-centred business hierarchy'. Decision taking is done by company chiefs and personal rapport is crucial for success. The client also wants to know the person to who he can turn if problems arise during a contract or if after-sales service is needed.

There are other sound commercial reasons for integrating: At an elementary level, Mexican Spanish is subtly, but importantly, different to classical Spanish. Conversational hiccups may amuse. Contractual errors will not. More importantly, Mexican law is a minefield for the uninitiated. Nationally, the legal system is Napoleonic. But different legal procedures apply at national, regional and municipal levels. Moreover, 'there are eight cultural regions, each with different rules and regulations', warns Putter. And contractual legislation varies across different industrial sectors.

Knowledge of Mexico's convoluted public sector tendering system is invaluable. Mexico watchers advise that, even though the value of the Mexican peso is holding steady, foreign firms should do only 'dollar business' if they cannot get financial guarantees from export credit agencies at home that will protect them from currency exchange rate fluctuations. In the engineering sector, this means energy, oil and gas, petrochemicals, and some areas of transportation.

However, UK firms establishing themselves in Mexico's expanding private sector are protected against political risk: Foreign-owned businesses were nationalised during Mexico's revolution half a century ago.

The UK and Mexican governments this year signed a concordat that ensures the same won't happen again.

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