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Tactics and Strategies for Success in Mexico – Part 2

Compiled from our research, experience on the ground in Mexico and interviews with both Western and Mexican business executives, the following represents a roundup of recommended tactics and strategies that will help you better navigate business culture in Mexico and help achieve business success.

Greetings

When it comes to business greetings, the proper practice is a handshake, regardless of gender. If a relationship is already developed or among business associates of the opposite sex, a kiss on the cheek is acceptable or a hug is common between close male friends. Mexican men and women are warm and friendly and make a lot of physical contact. They often touch shoulders or hold another’s arm. To withdraw from this touching will not position you well for building relationships.

Mexicans are generally more formal with names than are most Westerners. Mexicans have three names – their first name, their father’s last name and their mother’s last name. Use the father’s name when addressing your counterpart. Also note that titles are a big status symbol which should be used where appropriate before the name Lic. (Licenciado), Ing. (Ingeniero) Dr. (Doctor) etc.

Business cards are still readily exchanged so keep them handy to blend into the business culture in Mexico. It is also important to have your cellphone number on your card and don’t hesitate to ask for potential client’s cellphone numbers as well.

 

Our-Lady-of-Guadalupe

Holidays

Remember that long delays can occur due to lengthy holiday periods which Mexico is accustomed to, especially during numerous religious off work periods like Christmas, Semana Santa (Holy Week or the week before Easter), Our Lady of Guadalupe (Dec 12), Mother’s Day (May 10th or Dia de las Madres), Day of the Dead (Nov 2) Kings Day (January 6).

In Mexico long weekends or long off work periods are called “Puentes” (bridges) and there is a joke that the longest bridge in Mexico is the “Puente Guadalupe Reyes”. This is because it runs from December 12, the Day of our Lady of Guadalupe, to King’s Day on January 6. The fact is almost everything slows down over this holiday span, and I can recall the challenges one faces to conclude business before the end of the calendar year – most often if a transaction is not signed before December 12, it will have to wait till January.

Local Partner

Almost all international companies intending to do business and understanding the business culture in Mexico will need a local partner. This could be an agent, distributor, joint venture partner or other form of alliance. You may also need to rely on a suitable legal firm for support.

According to Lorena Patterson of TransCanada, drawing on a key local partner when entering the market can make a huge difference. “It is fundamental for the international executive going to Mexico to understand the local processes for government approvals and in this context a local player who understands the system can be indispensable” she stated.

Western companies will find that in some bidding processes there are specific local content requirements and therefore a local partner is mandatory. Selection of your partner or representative is one of the most important decisions to be made and full due diligence is required. Draw on multiple sources, verify information provided and test your proposed partner’s capabilities before committing. Make sure you visit your proposed partner’s facilities and installations and the infrastructure available before committing.

 

Business-Success-in-Mexico-Global-Business-Culture

Meals and Networking

A typical business lunch with a client in some cities in Mexico may start at 2 pm, last two to three hours and includes a lot of casual talk, several glasses of wine with discussions on business rolled in. This is the case in Mexico City but not necessarily the case in Monterrey where the business culture is more aligned with US practices. I recall meeting with senior business officials in Monterrey who advised that they try to avoid going to Mexico City as the time commitment for breakfast and luncheon meetings was onerous.

Breakfasts tend to be more productive when conducting business which is a big part of the business culture in Mexico. Supper, which usually starts at 8-9pm, is a light, minor affair and not a good time for business. If you are the guest, most Mexican businesspeople will insist on paying. Meals are often hearty affairs (even breakfast) with large amounts of food being served at each meal. Alcohol will likely be offered with both lunch and dinner. Follow the lead of your Mexican host if possible. Tips of 10% to 15% are common at restaurants.

Mexicans are generally very gregarious and genuinely enjoy cocktail receptions with international counterparts. They have a real affinity for networking and their chatter, enthusiasm and energy for receptions and social gatherings generally surpasses their international counterparts. Mexicans often arrive late and stay on past the usual departure time. They may, in fact, invite you to continue discussions at a restaurant or bar following the reception. Going late is part of the process in Mexico and you need to find a balance of keeping your energy up and enjoying the fun and discussions.

Also, be aware that at receptions your Mexican counterpart will take pleasure in inviting you for lunches, dinners or meetings which sometimes do not materialize. Mexicans constantly extend invitations and give themselves options depending on the priorities of the day. Be prepared for changes and adopt some flexibility in your plans.

Meetings and Scheduling

It is normal for you to arrive on time for any meeting, but do not be surprised if your Mexican counterpart is 30 minutes late. Its common in a lot of Latino cultures, so just be patient. Mexican punctuality is not rigid because of the cultural emphasis on personal life. Checking in with your counterpart’s executive assistant can be very important as traffic and other distractions can impact timing and you need to have built-in flexibility in your schedule.

It is not uncommon for Mexican businesspeople to cancel meetings, and many consider meetings with foreigners as tentative until they receive confirmation that the person is in Mexico. Therefore, it is a good idea to confirm meetings scheduled weeks or months ahead several times as the date approaches, including the night before.

During meetings, open signs of emotion from your Mexican counterpart including interruptions and speaking loudly, are quite common and are seen as a sign of active engagement. It is not uncommon for small side-meetings to occur during a larger meeting or for people to interrupt colleagues in mid-sentence. You need to go with the flow while keeping your focus and patience.

 

Foreign-Businesses-in-Mexico

Negotiating

You should prepare thoroughly for negotiations drawing on all available facts and data but also realize that your Mexican counterpart will place considerable weight on personal relationship factors and the long-term benefits of working together.

Realize that your Mexican counterpart will not be inclined to progress in a straight line through the issues and that even previously agreed items may be opened for further discussion.

Patience is extremely important. In Mexico, time is not money; money is for enjoying life. There is a saying that Americans live to work, but Mexicans work to live.

As noted below, the perspectives of typical Mexican and US counterparts in negotiation can be quite divergent and careful consideration of these factors should be undertaken as you engage in negotiations. Keep in mind that these are general characteristics, and you should not assume that all Mexicans will follow the pattern.

 

Negotiation Variable Mexican American
  • Basis of Trust
Friendship, then legal contract Legal contract, then experience
  • Negotiator Selection Criteria
Title, family, social ties Technical expertise, function
  • Role of Personal Involvement
Primary Generally, this is to be avoided
  • Role of face-saving in making decisions
Great. Preserving personal dignity is paramount Less impact – Decisions are primarily based on cost- benefit analysis
  • Decision – making process
More spontaneous, impulsive More systematic
  • Negotiation agenda
Generally slower paced Efficiency is desired
  • Interpretation of “manana”
Not today Tomorrow
  • Extent, type of pre- negotiation preparation
Generally given less emphasis Medium to high attention – including financial and technical analyses
  • Time perspective for deal under negotiation
Short Term Medium Term
  • Time perspective for business relationship
Long Term Medium Term
  • Adherence to agenda and timelines
Casual Strict
  • View of Opposite Party
Friend, social equal Neutral
  • Emotional sensitivity
Highly valued Not highly valued
  • Emotional display
May be passionate Rather impersonal
  • Protocol
Formal Informal
  • Risk Tolerance
Low Medium-high if justified
  • Opening Bid
May be quite extreme Reasonable
  • Types of arguments to defend position
Vague, emotional Concrete, rational
  • Power tactics
Threat of withdrawal Legal enforcement
  • Taking a settlement position
Re-opening previously closed issues Making a final offer
  • Form of final agreement
Word of honor supplemented by written agreement Formal legal contract

Personal-Relationships-in-MexicoPersonal Relationships

Business decisions may often be based more on the Mexican participant’s degree of comfort with the relationship than on purely objective criteria. International companies making a serious commitment to Mexico need to invest their time, energy, and money in making sure they have a strong and trusted relationship with their partner or collaborator. As indicated by Lorena Patterson, who spent twelve years with TransCanada Pipelines in Mexico, the relationship with your local partner or collaborator can be a crucial factor and, in some cases, it may be more important than relying on the law given the lack of reliability and consistency and the slow-moving nature of legal proceedings.

Western businesspeople need to be willing to commit to the time needed to develop these personal relationships and to listening to their Mexican counterpart’s personal interests and aspirations. Your attention to these factors and any support that you can offer will be fundamental in building the relationship.

 

Regional Cultural Differences within Mexico

As noted earlier, the business culture within Mexico is not homogeneous and one can expect a scenario in Monterrey to be much closer to US business culture than those of Mexico City and Guadalajara. You need to do your homework on the local or regional business culture as well as that of your counterpart and local partners.

 

Religion

Western businesspeople should recognize the central role that religion occupies in Mexican society, and not be shocked to see open religious practice in work or public spaces. Accommodate this in stride and realize the importance of religious holidays and family to your Mexican counterparts.

 

Spanish

Spanish is Mexico’s official language. English is widely spoken in business circles, but business meetings are normally conducted in Spanish. If you can’t speak the language at all, your hosts may be willing to conduct meetings in English. You should ask beforehand to make sure this is possible. If not, consider hiring an interpreter.

It will certainly pay off if you try to learn some Spanish as your Mexican business develops, since even a rudimentary command of the language will be seen as a sign of sincerity and respect.

 

Written Agreements

Verbal agreements are generally adhered to based on trust and breaking verbal commitments can jeopardise business relationships. Nevertheless, you should seek to get a written confirmation of any agreement or commitment to ensure the promise is followed through. Work with both international lawyers and local lawyers on contracts and make sure you fully understand all clauses including arbitration.

 

Verification

While your approach in Mexico should revolve around relationship building and trust, at the same time you should find ways of checking key factors and progress on performance without causing the other party to lose face.

 

Author

This guide has been produced by Marvin Hough, a Canadian business executive and university professor with extensive experience in international markets. During his career, he has facilitated Canadian exports and investments to global markets while working for 30 years with Canada’s official export agency, Export Development Canada (EDC). His career included overseas assignments in India, China, and Mexico where he faced and observed business culture issues on a day-to-day basis.

Since completing his EDC career, Mr. Hough has continued to be actively involved in international business through teaching at the University of Ottawa’s Telfer School of Management where he has led MBA consulting trips to markets such as China, Brazil, South Africa, and Vietnam.

Mr. Hough also runs his own firm, Marvin Hough International Research and Analysis Limited (MIRA) (www.miraservices.ca) which supports Canadian and international companies, educational institutions, and governments in entering and operating in diverse international markets.

Throughout his career, Mr. Hough has felt that Western firms should place more attention on understanding and adapting to business culture as they conduct business in global markets. He is pleased to collaborate with Global Business Culture to support greater understanding on the business culture file by producing these guides.