This change in national politics has resulted in a much improved standard of living throughout Mexico and the growth of the middle class. The business climate inside Mexico is much improved and this trend should continue, however, the country is only a few years removed from being a totalitarian regime.
The illegal drug business remains a serious problem for the Mexican Government. It is a high priority for the Government as substantial portion of the national budget and military manpower is dedicated toward Mexico's war on drugs. This war often affects the operation of business within Mexico and must be considered (Gonzalez).
The taxing structure within Mexico is highly transitory (Stewart). The system is in a continual state of flux and anyone contemplating doing business in Mexico should be careful to be diligent and avail themselves of a qualified tax accountant well-versed in Mexican tax laws. The national government has identified tax reform as a priority and there is every hope that the tax laws will be stabilized in the near future.
Banking inside Mexico is much different than in most developed nations. Paying by mail is virtually unknown, electronic payments and deposits are beginning to become more popular but there remains large spread suspicion among many Mexican businessmen, and these suspicions spread into other areas of the banking process (Nelson). This generalized suspicion requires that anyone doing business in Mexico develop a strong, personal relationship with a banker so as to expedite the entire banking process between the business and the bank.
IV. Potential Rewards
For North American companies wanting to do business with Mexico the advantages are considerable. Although competition from China and India remains intense, as long as the Mexican peso remains relatively stable, the faster delivery times and lower transportation costs make importing goods from Mexico an attractive option. As an exporting market, the growing Mexican middle class provides a ready source of business. Products such as cell phones, electronic devices, and appliances have a ready market in Mexico and Mexico's proximity translates into a faster turnaround on sales and distribution. Because of its proximity to the United States, for instance, Mexico offers a wonderful opportunity for companies seeking to test new products.
For companies planning to locate their business within Mexican borders, the relative low wages, the near absence of union considerations, and the availability of a large labor pool make Mexico an attractive choice. For the production of most products, labor costs remain the most significant percentage of bringing the product to market so any reduction in such costs translates to increased profits. Although there are nations that can promise even greater savings in labor costs, Mexico's proximity reduces the marginal difference caused by transportation and distribution factors.
Finally, one must consider the fact that there is a consumer excitement present in Mexico that makes it an exciting place to do business. Whereas business in the United States and Western Europe has become stagnated, there is an eagerness present in Mexico that was once present in the areas already mentioned. This eagerness brings with it an economy that is consumer driven and a population looking to share in the western life-style that has been previously denied them.
The prospects for businesses looking to expand into Mexico are good. Mexico offers low wages, a large labor pool, and a sympathetic government. This combination of factors makes Mexico an attractive location for not only operating a business but also as source for marketing a business' products. Although no new location is without risks, Mexico presents fewer risks than entry into many other markets.
DeMente, Boye Lafayette. Why Mexicans Think and Behave the Way They Do!: The Cultural Factors that Created the Character & Personality of the Mexican People. (2d Edition). Beverly Hills, CA: Phoenix Books, 2009.
Gilbreth, Chris. "Democratization in Mexico: The Zapatista Uprising and Civil Society." Latin American Perspectives (2001): 7-29.
Gonzalez, Francisco E. "Mexico's Drug Wars Get Brutal." Current History (2009): 72-76.
Nelson, Mexico Mike. Live Better South of the Border: Practical Advice for Living and Working (Live Better South of the Border in Mexico) 3rd Edition. Golden, CO: Fulcrum Publishing, 2000.
Stephens, Gregory K. "Doing business in Mexico: Understanding cultural differences." Organizational Dynamics (1995): 39-55.
Stewart, Miranda. "Global Trajectories of Tax Reform:…