The Realities Of Conducting Business In Mexico

Over the past few years, Mexico has become an increasingly appealing place to do business. Whether that’s because of its direct link to consumer economies in North and South America, its reputation for providing a skilled workforce, or its long list of free-trade agreements, few countries can match the potential of a collaboration with a Mexican business.

Many who have worked with businesses in Mexico will tell you only good things about their experience. Still, any business venture comes with risk, and there are some crucial things to be aware of when working alongside Mexico-based companies.

So, from general watch-outs to outright necessary precautions, this article will take you through all you need to know to make sure your international collaboration is as secure as possible.

Mexico and corruption

Starting with the data, on the Corruption Perception Index (2020), Mexico is ranked 124 out of 179. This points to a relatively high level of corruption in the country’s public sector, which is somewhat surprising given the integration of Mexico into the North American economy through NAFTA and its successor agreement. Based on experience, this kind of corruption can manifest itself in a few different ways. Some are as simple as an unsound reliance on a verbal agreement, all the way up to the judicial system where there is occasionally evidence of judges resigning mid-case after accepting bribes.

So, how do you spot corruption and prevent potential disaster?

Be vigilant

First of all, throughout your initial negotiations and proposals, keep an eye out for red flags such as nominated third parties and irregular bidding processes. As well as this, we advise that you make yourself familiar with anti-corruption laws in your own country, and take proactive steps including setting out your company’s ethical policies and procedures upfront.

Investigate and ask for assistance

Because the devil’s in the details, we’re going to go a little deeper with our investigation. Before doing business with any Mexican company, make sure to learn about its creditworthiness, its financial record, the quality of its management, its history, facilities, and overall reputation in the local and international marketplace. This is necessary because there are some instances of corruption in these areas, and when it comes to collaborating with new business partners, it’s better to be safe than sorry.

For example, some companies in Mexico have been known to present different versions of their financial statements to government departments or bureaus. You need to realise that this is a market where you need to draw on various sources and verify information. Granted, this level of research can be quite a daunting task, so we recommend contacting local legal or consulting firms for help. They can assist you in making sure that there are no misunderstandings with aspects such as contract clauses and so forth. Alternatively, you may also be able to obtain assistance from your own country’s diplomatic services.

Get it in writing

And lastly, it’s important to note that verbal agreements are generally adhered to, and that breaking a verbal agreement can have quite drastic consequences on a working relationship. Nevertheless, you should seek written confirmation of any agreement or commitment to ensure that major promises are followed through. This is another point where having local and international lawyers is beneficial.

if you’d like to learn more, Global Business Culture runs Mexico cultural awareness training programmes for clients from a wide range of sectors at all levels within organisations and in multiple global locations.