Believe it or not, Mexico is one of the largest economies in the world. Being a member of the Free Trade Agreement puts Mexico at the forefront of some amazing business opportunities for organizations planning to penetrate the Mexican market.
Mexico’s Economy Presents A Lot Of Business Opportunities And Challenges
However, when there is an abundance of business opportunities prevalent, it also presents a lot of threats and challenges along the way. From security instability to cultural differences, the Mexican market is not a bed of roses when it comes to doing business.
Understanding Mexico’s Business Infrastructure
Therefore, it is imperative for investors to conceptualize the particularities of Mexico’s business infrastructure, language barriers, traditions, legal boundaries, and potential risks related to the initiation and management of doing business there.
In this article, we will highlight some of the challenges of doing business in Mexico. And how can Business translation services play their role in bridging gaps between different communities?
Challenges Of Doing Business In Mexico
The reason why it is important to understand the challenges before starting a business in Mexico is that it will assist in limiting the risks involved. But, concurrently, ensure a good start as well.
It Takes Around Two Months To Start Business
One of the biggest challenges of doing business in Mexico is that it takes almost two to three months for an organization to become completely operational. The reason for this delay is;
- One has to get a construction permit
- After that, the company needs to be registered.
- Once you have registered, you cannot begin before getting a water and sewage connection.
- Along with that, an electricity connection is fundamental as well.
Moreover, businesses that want to get these permits, need to follow certain necessary steps. For instance, they have to;
- Get their property registered in the public registry
- A certificate of good standing needs to be attained
- The Mexican Social security institutes need to have your company registered with them.
- They will be the ones that will regulate the inspections of your company.
- Meanwhile, the bureaucratic processes might elongate the duration of your business startup.
Complying with these essential factors states that the process of doing business in Mexico is not as smooth as one might think it to be.
The time and resources required, to just get your business operational, are often resistant to easy market entry. Hence, investors refrain from doing business in Mexico.
So, if you are unfamiliar with the legal obligations to do business in Mexico, then it is recommended to take assistance from the services of a renowned business consultancy agency that can guide you to initiate your business operations in the minimum period.
However, the language barrier might pose a challenge. So, availing of the services of Spanish translation services or Business translation services can help you along the way.
Mexico Has A Relationship-Centric Culture
Mexico’s relationship-centric culture transcends its business activities as well. So, if you are from the western part of society, it might annoy you how Mexicans conduct their business.
Especially Task-oriented societies have a habit of keeping relationships and business separate. They do not like to mix the two. Hence, are very straightforward and precise in their approach to business meetings.
On the contrary, relationship-oriented societies, like Mexican society, have a habit of establishing trust and robust relationships before any business agreement is done.
The actions imply that for task-based societies, business comes first. They can forgo the idea of maintaining relationships if it compromises business. Whereas, for the Mexican community, it’s customary to form relationships.
The stronger the relationship, the better the business relationship will be maintained. And most importantly, not any business could be more significant than a single individual. Hence, it’s better to refrain from forming any business than to hurt or offend a person.
Businesses Must Be Done In The Spanish Language
One other challenge of doing business in Mexico is the prevalent language barrier. There is no denying the fact that Mexico possesses some of the most hardworking labor in the world.
They are very intelligent and can speak multiple languages. But preference is always given to the Spanish language when it comes to official business meetings.
As per Law, companies have to label all of their product descriptions in the Spanish language. Moreover, all legal and official documents, for instance, documents pertaining to Tax, have to be written and submitted to the local government in the preferred Spanish Language.
This is quite a challenge for businesses that are unaware of the peculiarities of the Spanish language. Hence, experts recommend getting assistance from language service providers.
They have a team of professional human translators that are not experts in the language but also possess sound translation experience. So all of your legal, official, and non-official documents will be in good hands.
They will not only translate but localize, especially for the target market. Professional translation services or business translation services will ensure that the content or marketing material is adapted by the local audience. And most importantly, does not defy legal obligations.
Benefits Of Doing Business In Mexico
Since we have discussed the challenges of doing business in Mexico, let us discuss some benefits of doing business.
High Number Of Free Trade Agreements
Mexico is among the countries that have the highest percentage of free trade agreements. Around fifty nations are in business with the Mexican community, which shows that it welcomes participation from the rest of the world community.
The fact that Mexico is a solid member of the North free trade agreement, makes it more credible among the business community. Hence, allowing businesses to expand their operations into other foreign territories.
And also allows other countries to offer their products or services to the Mexican market without having to get hampered too much by the import-export tariffs.
Massive Business Opportunities
Mexico’s internal competitive environment is not very active. Hence, it makes a high-revenue generating market for foreign investors. The potential allows foreign businesses to come and dominate the local market by providing quality-based products or services.
The fact that there is still a large part of the population not living a high quality of life makes it a need-based market. One can pick a niche, and create a customized product that specifically caters to the specific needs and wants of the Mexicans.
And they would be readily accepted by the local people over there. The fact that they are not resistant to change makes the target market very attractive for foreign investments.
There is a famous quotation that goes, “Investors are some of the most cowardly people of the world”. The reason behind this quotation is to highlight the fact that an investor always tries to minimize risks before investing.
Hence, whenever he sees a market that is going through an economic, political, or social crisis, he tends to stay away from it.
However, Mexico’s economy has been pretty stable for the past couple of years. Hence, making it an attractive investor spot. Moreover, the exchange rate between the Mexican Peso and the American dollar has never derailed.
One dollar is equivalent to over twenty Mexican pesos. This exchange rate is quite sustainable when compared to the rest of the developing nations like China, India, and Russia.
Highly-Skilled Labor Force At A Cheap Rate
Many people assume that due to a lack of infrastructure and adequate funds, the education system of Mexico is not up to the mark. And the labor force over there is also very unskilled.
This perception couldn’t be farther from the truth. Mexico has a very high skilled labor force. Along with that, they are very hardworking, which makes them trustworthy.
The reason why Mexican labor is so skilled is that they have a strong educational base that focuses on science and technology. Moreover, engineering and math subjects are some of the highest elective subjects chosen by the students.
And this is the reason, we see that the products and services offered by the Mexican market are quality-oriented and reliable.
Meanwhile, from an outsider’s point of view, one may imagine that such high skilled labor will be very expensive. Your assumption is wrong.
Mexican labor is very cheap. Their rates are only 20% higher than what China is offering. Moreover, if you establish your business in Mexico, you will also get the chance to avail the perks of doing business in North America.
Mexico And America Share A Boundary
Mexico shares a border with America. And it was once a part of North America.
People who are doing business in Mexico, have the opportunity to enjoy some perks and advantages. For instance, if they are managing their business operations, they do not have to take any extra stress.
If they ever plan to arrive at their business location, they can just travel from the American states to Mexico in a short amount of time.
A lot of the Mexican or American workers daily commute to and fro from their locations. Meanwhile, the correlated time zones allow business owners from America to communicate with their workers in Mexico during normal business hours.
One may not see the advantage over here. But if you ever conduct business in an area with different time zones, it becomes very difficult to manage your operations.
Many people will probably try to penetrate the Mexican market, once they find out the benefits of doing business there. But the important thing to understand over here is that not many would probably succeed. And the reason behind their failure is that Mexico may be economically friendly, but one needs to take into consideration the cultural and language differences. In order to succeed, these differences must be bridged. Taking assistance from business translation services or LPS or consultancy firms can help you do that. Therefore, do take advantage of the opportunities that the Mexican market presents. But plan before taking any measures.
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