# Business in Mexico



## amerikiwi2 (Jul 12, 2013)

We are a small fashion manufacturing business seriously considering relocating to Mexico - preferably Yucatan. Since we are in exploratory mode - any advice or resource info would really be appreciated!


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## ElPaso2012 (Dec 16, 2012)

I have personally known five Americans who tried to operate a business in Ciudad Juarez. Three of them failed by falling afoul of local regulations of which they were unaware. One opened a restaurant within 1000 feet of a day care center and got shut down. Another opened a bar and got set up selling alcohol to a minor, set up by the previous owner who got his bar back because all of the papers for the sale were notarized in El Paso, not Juarez, and were not even legal in Mexico. The third was coerced into paying outrageous fees for "bookkeeping" and actually feared for his life if he refused. These were probably all problems that could have been solved by having a Mexican business partner. The two who succeeded were also hit up by corrupt city officials and people who tried to intimidate them, but they had experienced Mexican business partners who knew who had to be paid off, who could be told to flip off --- in other words, they knew the ropes, whereas you will not. It's a Casa Blanca kind of world south of the border, but if you do have a good partner, yes, it's definitely doable.


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## ElPaso2012 (Dec 16, 2012)

You should also get a couple of books about doing business in Mexico. I can't find the one I read back in 2002 on Amazon.com, but it was enormously helpful for me in my business to better understand Mexican business protocol, which is more personal and quite different from protocol in the US. But it does have rules and they are not difficult to understand.


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## mes1952 (Dec 11, 2012)

I've know several people who took in "partners" and the partners stole everything from them. So don't think that partners is the answer unless you really know and trust someone otherwise you will have the same problems as those without partners. A continuing problem is mordida; several people I know decide not to do business solely because of that and it is still the norm for doing business in Mexico.


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## ElPaso2012 (Dec 16, 2012)

mes1952 said:


> I've know several people who took in "partners" and the partners stole everything from them. So don't think that partners is the answer unless you really know and trust someone otherwise you will have the same problems as those without partners. A continuing problem is mordida; several people I know decide not to do business solely because of that and it is still the norm for doing business in Mexico.


Well, that's quite true, which in mind makes the whole idea of doing business in Mexico very problematic, at least for an individual or small company.


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## AlanMexicali (Jun 1, 2011)

ElPaso2012 said:


> Well, that's quite true, which in mind makes the whole idea of doing business in Mexico very problematic, at least for an individual or small company.


From what I hear, at least here, is extortion is usually a problem for medium sized businesses that are very profitable and not at all for 95% of businesses, usually clubs and bars but even others if the owner lets it happen to them. 

On the other hand it is something most business owners would not talk about. These rumors sometimes are simply rumors and nothing more. It also depends on where you are located.

If someone states all the businesses here are being extorted I presume this is simply lower class gossip and should be regarded as such. They seem to put no thought into what negative gossip they spread around and sometimes like to mess with people for fun and have no factual information to base it on. Something like Jose pays someone/police/gang every month so everyone pays them also. Jose might have a bar and running girls there etc..

Video surveillance systems and large central alarm companies involvement tend to help here.

Armed guards are always seen in the more successful businesses and there might be a reason. Also having armored truck companies involved is seen as a deterrent.

Good accountants and lawyers are usually connected to local systems of protection in the municipality or state and extortionist find these things out as they pay for information.

Small petty businesses are not usually targeted except maybe by local youth gangs but they also have to be careful of organized crime gangs working the area. It appears in these cases they are not allowed to harass the locals.

Mordida is definitely NOT the norm for doing business in Mexico. Free market trade is. Don´t believe what everyone tells you if they do not own businesses, it tends to be old school 20 year ago low class gossip. IMO


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## Longford (May 25, 2012)

mes1952 said:


> A continuing problem is mordida; several people I know decide not to do business solely because of that and it is still the norm for doing business in Mexico.


Corruption? Yes.


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## abscissa (Apr 5, 2010)

There are some large textile (clothing) manufacturing plants in Motul, just outside of Merida on the Yucatan ... One plant manufactures jeans for GWG and Levi's. So I'd say there is lots of trained labor for fashion manufacturing in the area


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## RVGRINGO (May 16, 2007)

Plan to lose your entire investment. Then, consider how to start again. If you can do that, you might stand a chance with the very complicated, corrupt and sometimes even violent situations you might encounter. So, with that caveat; please consult with the Mexican consulate or embassy closest to you. They have business attachés who can advise you and give you the requirements for such an adventure, as well as possible insight into the competition you will face, unique labor laws, employee insurance requirements (IMSS), need to hire an accountant, tax structure, etc., etc. You have a lot of homework to do. By the way; are you fluent in Spanish? You can be out of the loop, if not, and be taken advantage of with ease. Previous posters have alluded to partnership situations where that can/will happen.


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## PanamaJack (Apr 1, 2013)

RVGRINGO said:


> Plan to lose your entire investment. Then, consider how to start again. If you can do that, you might stand a chance with the very complicated, corrupt and sometimes even violent situations you might encounter. So, with that caveat; please consult with the Mexican consulate or embassy closest to you. They have business attachés who can advise you and give you the requirements for such an adventure, as well as possible insight into the competition you will face, unique labor laws, employee insurance requirements (IMSS), need to hire an accountant, tax structure, etc., etc. You have a lot of homework to do. By the way; are you fluent in Spanish? You can be out of the loop, if not, and be taken advantage of with ease. Previous posters have alluded to partnership situations where that can/will happen.


I owned a business in Mexico for 19 years that consulted foreigners on doing business in Mexico. Since the start of the Calderon presidency my business gradually went down hill and down hill fast. The biggest reason is fewer and fewer foreign business people are investing in Mexico. Many of those already here are leaving. See story.
- One-third of foreign businesses in Mexico have fallen victim to extortion - National drug cartel | Examiner.com

I worked with the U.S. Embassy in my business for the 19 years. However, last month I closed my office. I cannot in good conscious tell potential clients that their business will be safe or that they will not be robbed by criminals or their own employees. Something has taken a turn for the worse in mi Mexico Lindo to made it mi Mexico Feo. 

My brother in law and I opened I security business 10 years ago offering personal security for businesses, bodyguards, alarm systems, camera systems etc etc. Over the past 5 years we have done more business in the security firm than the past 11 years in the consulting business. Go figure!

Until the government of Mexico buckles down on corruption at every level and I do not mean bribing a cop. I mean hiring family to work as aides and ministers and what have you at the government level. I mean opening fake companies and giving government contracts to those companies and the work is not even performed.

The police and military if needed must stop extortion and other crime at every level. Those things are causing businesses to leave and others to relocate and that means loss of jobs and will eventually mean more Mexicans heading north of the border to find work.

I hate to be so negative, but I would think twice about opening shop in Mexico unless you did an incredible amount of due diligence beforehand. In this is coming from someone who has been trying to convince foreigners to come to this wonderful country for the past 20 years.


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## GARYJ65 (Feb 9, 2013)

I don't know about all places in Mexican territory, but Queretaro is growing with foreign investment, same as Mexico City


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## Longford (May 25, 2012)

PanamaJack said:


> I hate to be so negative, but I would think twice about opening shop in Mexico unless you did an incredible amount of due diligence beforehand. In this is coming from someone who has been trying to convince foreigners to come to this wonderful country for the past 20 years.


Yes.


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## Longford (May 25, 2012)

RVGRINGO said:


> Plan to lose your entire investment. Then, consider how to start again. If you can do that, you might stand a chance with the very complicated, corrupt and sometimes even violent situations you might encounter. So, with that caveat; please consult with the Mexican consulate or embassy closest to you. They have business attachés who can advise you and give you the requirements for such an adventure, as well as possible insight into the competition you will face, unique labor laws, employee insurance requirements (IMSS), need to hire an accountant, tax structure, etc., etc. You have a lot of homework to do. By the way; are you fluent in Spanish? You can be out of the loop, if not, and be taken advantage of with ease. Previous posters have alluded to partnership situations where that can/will happen.


_Management in Two Cultures_, by Eva Kras is a must read for any expat intending to or investigating the possibility of doing business in Mexico ... IMHO.


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## PanamaJack (Apr 1, 2013)

GARYJ65 said:


> I don't know about all places in Mexican territory, but Queretaro is growing with foreign investment, same as Mexico City


You might be right Gary, but I am talking about small to medium size businesses. I would love to see the data you have on foreign investment increasing in both Queretaro and D.F. I am sure if it is then its VERY LARGE corporations.


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## GARYJ65 (Feb 9, 2013)

PanamaJack said:


> You might be right Gary, but I am talking about small to medium size businesses. I would love to see the data you have on foreign investment increasing in both Queretaro and D.F. I am sure if it is then its VERY LARGE corporations.


I don't have data, just out of my mind: bombardier, fuchs, ericsson, alestra and there are like 120 more projects for 2013 in Queretaro
About medium or small sized business, I have quite a few foreign friends who opened theirs, from restaurants to auto repair shops

DF, I don't even want to go to that subject, It's a huge city and there are many many new business from abroad


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## chicois8 (Aug 8, 2009)

GARYJ65 said:


> I don't have data, just out of my mind:


Gary, do not knock yourself, you give many good answers on this forum........I
I don't think your out of your mind............LOL


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## sunnyvmx (Mar 14, 2010)

I had a good friend who traveled to the border from a small city in Veracruz, San Andres. She bought huge bundles of clothes from a warehouse and brought them back on the bus. On a street lined with vendors, she set up a stall and did very well selling her clothes. She worked very hard until one day a thug walked up and told her that she needed his protection for so much money. She closed her stall that day and began selling from her home as she had a good following of customers. Soon a policeman was at her door offering his protection for a goodly sum. Her business ended with his visit and demand.


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## Longford (May 25, 2012)

sunnyvmx said:


> I had a good friend who traveled to the border from a small city in Veracruz, San Andres. She bought huge bundles of clothes from a warehouse and brought them back on the bus. On a street lined with vendors, she set up a stall and did very well selling her clothes. She worked very hard until one day a thug walked up and told her that she needed his protection for so much money. She closed her stall that day and began selling from her home as she had a good following of customers. Soon a policeman was at her door offering his protection for a goodly sum. Her business ended with his visit and demand.


Unfortunately, corruption is endemic in Mexico; part of the nation's DNA.


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## GARYJ65 (Feb 9, 2013)

Longford said:


> Unfortunately, corruption is endemic in Mexico; part of the nation's DNA.


Indeed there is curruption in Mexico, lots of it
But as far as to state it is in the Nation's DNA?
We better not start talking about Nations DNA's


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## Guategringo (Nov 9, 2012)

GARYJ65 said:


> Indeed there is curruption in Mexico, lots of it
> But as far as to state it is in the Nation's DNA?
> We better not start talking about Nations DNA's


I disagree Gary. If you compare DNA between the U.S. and Mexico, then you have lost before beginning. I would not even go there, but if you choose to, tell me what you think is so bad about the DNA of the U.S. and then will can see how it rates with that of Mexico.


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## ElPaso2012 (Dec 16, 2012)

AlanMexicali said:


> From what I hear, at least here, is extortion is usually a problem for medium sized businesses that are very profitable and not at all for 95% of businesses, usually clubs and bars but even others if the owner lets it happen to them.
> 
> On the other hand it is something most business owners would not talk about. These rumors sometimes are simply rumors and nothing more. It also depends on where you are located.
> 
> ...


None of the situations I cited come from gossip. I knew the people involved personally. 

As to how prevalent the situation is, well, no, I can't say.

Are you speaking from experience?


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## GARYJ65 (Feb 9, 2013)

Guategringo said:


> I disagree Gary. If you compare DNA between the U.S. and Mexico, then you have lost before beginning. I would not even go there, but if you choose to, tell me what you think is so bad about the DNA of the U.S. and then will can see how it rates with that of Mexico.


Let's do that, let's not go to those dark places 
Every nation has things to be ashamed about


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## AlanMexicali (Jun 1, 2011)

GARYJ65 said:


> Let's do that, let's not go to those dark places
> Every nation has things to be ashamed about


This is a good one. I was standing at the bus stop yesterday by my house where I stand in the shade of a sign and a Transito pulls over this semi. I have seen him on his motorcycle do this many times. The street has Sam´s Club, Costco and Walmart down by the freeway and this is the periferico exit, the freeway is about a mile away and does not allow busses. trucks or motorcycles on it at all except police motorcycles but was laterals all the way along both sides. This street has many clubs, bars, restaurants and entrances to privadas. 

The Transito is reading the truckers papers probably to see if he should be on this restricted weight street.

He says to the trucker your papers are all disarranged but I see your are going to Sam´s. The trucker says the new girl does this too often. The Tranisito says call your dispatcher for me please. He talks to him/her and hands back the phone. Him and the trucker start joking about the new girl and finally hands back his papers and says have a nice trip buddy. See you again.

No mordida or hassle for the trucker.


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## amerikiwi2 (Jul 12, 2013)

Thanks for all the invaluable input - will definitely be taken on board in our decision process!


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