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Has the Violence in Northern Mexico Hampered Business?

February 23, 2011 By Leave a Comment

Everyone has heard about the violence which has rent Northern Mexico in the last year. A war between the rival drug cartels has spilled over into thousands of killings, kidnappings, extortion, and general violence. Mexican people are fleeing their homes and towns in the thousands. Many people, who previously traveled extensively in Mexico, are afraid to cross the border.

How is all this affecting Mexican businesses and cross-border trade with Mexico? What is happening to the factories along the border? Is it still possible to do business in Mexico?

You have to realize that the news media concentrates on the sensational. While the violence that you see reported is real, it isn’t everywhere, and it especially isn’t everywhere at once. You can go in and out of Mexico a number of times, without seeing a single sign of all this violence. On the other hand, there are those who see it on their first trip across.

The Mexican economy has suffered from this violence. Most specifically, the tourist industry has suffered; not bringing much needed American dollars into Mexico. But Mexican manufacturing has suffered as well. Factories along the border, which produce a myriad of products for offshore companies, are suffering due to loss of contracts.

It is actually a good time to approach a maquiladora and start doing business in Mexico. The loss of business has made them hungry. They are more open to negotiations than ever before. Not only that, but they can probably start manufacturing your products almost immediately, as many have capacity that is currently going unused.

Yes, there is risk in working in Northern Mexico in these days; but that doesn’t mean that there is risk in doing business with their companies. Many have offices on the U.S. side of the border and will gladly meet with you in that comfort and security.

Filed Under: Business, Commodities Tagged With: , ,

Food and Business, a Great Combination

February 16, 2011 By Leave a Comment

One of the customs that affects business throughout the world is the act of eating together. There are countries where eating together is one of the greatest displays of affection that they have. By feeding you, they are telling you that you are important to them.

Here in the United States, we’re not all that big on hospitality; at least, not if you compare us to other countries. While I know there are countries that don’t make a big deal of the act of eating together, I also know that there are many countries where you can just about forget about doing business with someone, unless you sit down and eat together.

Take Mexico for example. Mexican’s are famous for their hospitality. If you visit three different Mexican businessmen in one day, you had better count on eating lunch three times. Or, to take it out of a purely business context, if you visit three Mexican families in one evening, you’d better count on eating dinner three times. Each one will feed you, and expect you to eat with them.

Not accepting the offer of food is a great insult in many cultures. In a sense, it is considered the epitome of arrogance; essentially saying that you think you’re too good to eat with them. You may as well forget about any business relationship with someone who you have insulted in that way. The same thing happens if you don’t eat what they offer you. So, if you have a squeamish stomach, you’d be better off sending someone else to do your overseas contacts.

On the other hand, eating together becomes a great ice breaker. Once you’ve sat across the dining table from each other, you can much more effectively sit across the conference table.

Filed Under: Business, Commodities Tagged With: , ,

Selling Overseas – Get to Know Them First

February 8, 2011 By Leave a Comment

Many American companies have reported running into a brick wall when trying to sell their products overseas. Even in cases where the American product is clearly superior, or available at a better price, the foreign wholesaler may not wish to buy the American product. The problem isn’t with the consumer, generally speaking, the world likes American made products. No, the problem is with the wholesaler.

Actually, the problem isn’t the wholesaler; it’s the American who’s trying to do business with the wholesaler. We have a tendency to expect the rest of the world to work like it does here in the good old U.S.A. But, you know something? The world doesn’t work that way. Each country and people group has their own way of doing things.

In most of the world, business is based upon first forming a personal relationship. That’s drastically different than here in the United States, where corporate policies and ethics laws prevent people from accepting gifts and expensive entertainment from their vendors. Here, business decisions are supposed to be cold, calculated, and a little bit contentious.

Have you ever heard the saying, “When in Rome, do as the Romans do.” Well, if we’re going to do business overseas, we need to learn how to do it the way that they understand business, not just the way we understand it.

That means that we need to start every business relationship by forming a personal relationship. Get to know the person you are trying to do business with. Go out to eat together, go to the ball game or the opera, whichever might be more appropriate. Find out about their family and let them know about yours. Basically, you need to form a friendship with that person you want to form a business relationship with.

The funny thing is that once you form the friendship, the business relationship is really easy to form. In most of the world, they’ll be open to just about any mutually beneficial proposal. Not only will they sell you their products, but they’ll be ready to buy yours.

Filed Under: Commodities, Foreign Relations Tagged With: , ,

Manufacturing in Mexican Maquiladores

February 3, 2011 By Leave a Comment

Everyone seems to know something about offshore manufacturing. Depending on which side you are on, it’s a sound business decision, or greedy corporate management stealing from the consumer. While I don’t want to get into any political or moral discussions about the rightness of manufacturing overseas, I do want to talk about it.

Typically, offshore manufacturing has been limited to large corporations, who could build their own factories, train the native population and maintain the infrastructure necessary to move large amounts of product from the Far East to the United States. As with most things, there are a few exceptions; where foreign factories produce similar products for a number of American owned companies. Although this doesn’t requiring building your own factory, it still requires the infrastructure to work with a manufacturing plant half a world away.

A number of years ago, the Mexican government passed a law making offshore manufacturing much easier for smaller companies. With this law, they created the Maquiladores. These factories are specifically designed to manufacture goods in Mexico, taking advantage of the low government controlled work force wages, for shipment and sale outside of Mexico.

Seventy-five percent of the products produced in any maquiladora have to be exported from Mexico for sale in other countries. Since the finished products are to be sold outside of Mexico, there are no import/export duties to pay on materials and components sent into Mexico for their manufacture. However, for the finished products that stay (a maximum of 25%), duties are charged on the materials and components.

The great thing about these maquiladores is that small to medium sized companies can contract the manufacturing of their products in Mexico, without building their own factory. While many of these factories are foreign owned, there are a number of maquiladores which are contractors, fabricating just about anything imaginable. This could give your company the competitive edge it needs to take the next step in the ever-growing global marketplace.

Filed Under: Business, Commodities Tagged With: , ,

Dot all the “I”s and Cross all the “T”s

February 1, 2011 By Leave a Comment

One of the things that can take a little getting used to when doing business overseas is the amount of officials you run into who expect to have their palm greased before doing anything. Technically, American law doesn’t allow businesses to practice the fine art of palm greasing, although I’m sure that there are some companies who do.

Personally, I don’t believe in paying bribes. So, I’ve had to come up with other strategies when dealing with foreign officialdom. Let me share a few of them with you:

  • Be sure to have your paperwork in order – The one thing that best gives these guys the opportunity to try and get a little bribe money from you is when your paperwork is not in order. They’ll try and stall, waiting for you to offer them, or hint at offering them money to take care of it. If all your Is are dotted and your Ts are crossed, they can’t use this leverage.
  • Give yourself extra time – Most of the world doesn’t move at the same high-velocity that we do here in the United States. This is another trick that these officials use to get into your pocket. They know that if you’re in a rush, all they have to do is stall. But, they can only stall so long; giving yourself a few extra days can prevent this tactic.
  • Develop a relationship with the officials you see regularly – Officials are much less likely to hold you up if you’re a friend. Talk and joke with them; buy them a lunch or a cup of coffee; talk about their family and yours. Being known as a good guy goes a long way.
  • Stand your ground – While bribery is the norm throughout much of the world, it’s also illegal in most countries. A transit cop who’s threatening to ticket you for improper turn-signal usage, is much less likely to play his game if you ask to see his credentials.

While I can’t guarantee that these steps will totally solve the problem, they’ve worked pretty well for me. Give it a try.

Filed Under: Business, Commodities Tagged With: , ,

Cost Effective Techniques for Shipping Goods Overseas

January 15, 2011 By Leave a Comment

When you enter the world of international business, chances are you will eventually need to ship goods overseas. There are a number of ways to ship items, including ground transportation, air freight and cargo ships, and each one has its own advantages. However, without the proper education and experience shipping can be expensive and take away from the profits of your business. The next time you need to send an item overseas, consider these tips.

1. Size Matters. Many shipping companies calculate the cost of sending your package based on size. Therefore, choose the box or container that is the closest size to your actual product to help reduce costs. However, if your item is fragile or breakable, make sure that you leave enough room for the proper packaging materials to ensure your items reach their destination safely and without damage.

2. Think Inside the Box. Shipping companies would prefer to ship square boxes because they are easier to stack, allowing for more shipments in one delivery. Avoid circular packages or anything else with an unusual shape.

2. Minimize the Weight. The weight of your package is another factor that shipping companies use to determine the cost. You can not adjust the weight of your actual product, but you can lower the weight of the overall package by choosing light boxes and materials.

3. Buy in Bulk. Try to purchase your shipping at a wholesale rate, which is usually offered to customers who buy the same amount of space for a set period of time or who a large amount of space.

4. Shop Smart. If you buy cargo space in advance you are more likely to see a discount. It also is good business practice to compare rates from a variety of shipping companies to get the most for your dollar.

Filed Under: Commodities, Import/Export Tagged With: ,