Mexico Market Entry

Mexico Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

Distribution and sales channels, use of local representatives, other factors affecting sales
The Mexican market is quite tough and uncompromising when it comes to competition. Mexican companies do business primarily with partners from the US, so they have experience in establishing themselves in the North American market, including all standard business practices. Preparation for entering the local market should therefore be thorough and well thought out. As in the case of other remote territories of countries, Mexico is not a country in which one can expect to establish business contacts or to implement business cases simply by sending an offer and a company presentation to selected companies from the field. If you are interested in the Mexican market, you must expect a certain initial investment, long-term efforts and the need to be physically present on the market often. Entering the Mexican market should be supported by a detailed market mapping and business strategy. Among the most suitable ways to establish the first contacts with local partners are international fairs, or through chambers of commerce or with the help of PaulTrade. This enables not only the acquisition of basic information about the market and possible competition, but also very beneficial contact with the local business mentality and customs. Given that the costs of Czech companies entering the Mexican market are not negligible, companies have the opportunity to use a number of tools provided by state authorities as part of the support of economic diplomacy in the organization of joint Czech official participation in industry international trade fairs, etc. Czech businessmen can contact the economic department Embassy of the Czech Republic in Mexico or foreign office of the PaulTrade agency in Mexico. If Czech companies are developing their activities in different regions of Mexico, they can also consult with them on an ongoing basis or ask for assistance from the honorary consulates of the Czech Republic in the country. Check smber for agriculture and fishing facts of Mexico.

Import conditions and documents, customs system, export control, domestic market protection
Until the 1990s, the Mexican market was relatively closed, but with Mexico’s entry into the World Trade Organization (WTO) in 1994, the import and export regime was relaxed, non-tariff barriers to trade were removed (with some exceptions) and today the Mexican market is one of the most open in the world. In addition to the WTO, Mexico is a member of a number of international and regional trade groupings such as (Asia-Pacific Economic Community) APEC or the Organization for Economic Cooperation and Development (OECD), which ensures easier access to the Mexican market. Bilateral relations between the EU and Mexico are governed by the Global Agreement (effective since 2000). Part of the Global Agreement is the Free Trade Agreement, which regulates the movement of goods and services and removes most tariff barriers to imports. However, the customs procedure when goods enter Mexico is quite complex.Agente Aduanal), however, cooperation with him can be recommended. For the purpose of tax records, the importer needs to be registered in the Register of Importers (Padron de Importadores), which is maintained by the Ministry of Finance. In the case of some specific products (agricultural, textile, chemical products, etc.), it is necessary to be registered in a special register (Padrón de importadores de sectoros específicos) or apply for an import license (e.g. weapons). In the customs procedure, it is necessary to fill out an import declaration (Pedimento de Importación), which states the basic characteristics of the goods, information about the importer, and to which is attached the invoice for the goods, the transport document (bill of lading or air waybill), certificate of origin goods and, where appropriate, documents on exemption from customs duties or special permits for the import of specific goods. After approval of the import declaration, this becomes a document proving the legal entry of goods into the country and the amount of tax liability. For more information, visit the website of the Mexican Customs Administration (Dirección General de Aduanas ). In order to prove the right to preferential treatment according to the EU-Mexico Free Trade Agreement (agreement of customs preferences), it is necessary to present an accompanying certificate (form EUR.1 ), which is issued by the Customs Administration of the Czech Republic and is valid for 10 months from the date of issue. The customs tariff is published on its website by the Ministry of Economy of Mexico.

When calculating import costs, the following must be taken into account:

  • customs duties (derecho de trámite aduanero, DTA);
  • customs duty according to the Customs Tariff, with most goods originating in the EU exempt from duty;
  • value added tax, or excise duty (see also section 1.7);
  • customs agent’s fee (depends on the value of the shipment).

Forms and conditions of operation on the market

A frequently used, and almost inevitable, market entry model is in the first stage in cooperation with an agent/distributor or a partner company (e.g. on the basis of an agency agreement or joint-venture), and in the second stage, if the cooperation develops, the establishment of a Mexican legal entities. The main forms of business are governed by the Law on Commercial Companies (Ley General de Sociedades Mercantiles), the Commercial Code (Código de Comercio) and the Civil Code (Código Civil).

Mexican law allows a number of forms of business, of which the most widely used is probably our limited liability company (Sociedad de Responsabilidad Limitada, S. de RL). Other forms are a joint-stock company (Sociedad Anónima, SA) and a similar joint-stock company with tax benefits (Sociedad Anónima Promotora de Inversión, SAPI) or a foreign branch of a Czech company.

The advantages of individual forms of business and help in their implementation are provided by local law firms, a basic overview can also be obtained on the website of the Mexican Ministry of Economy. If necessary, the Embassy of the Czech Republic in Mexico can recommend a suitable law firm.

The establishment of a subsidiary in Mexico can be beneficial for a Czech company entering the Mexican market for various reasons. The establishment of a business company typically takes place remotely, so it is necessary for the foreign founder to grant power of attorney to the local (legal) representative. In accordance with the Notary Law (Ley del Notariado), it must be signed with an officially certified signature and, if it is granted outside of Mexico, it must be translated into Spanish and provided with an apostille. Before the partnership agreement is drawn up, permission from the Ministry of Economy (Secretaría de Economía) to use the chosen business name/name (Autorización de Denominación o Razón Social) must be obtained. Foreign individuals or legal entities can be 100% partners in a Mexican business company, so there is no need for one of the partners to be a Mexican citizen. The complete cost of setting up a company ranges from 4. 000 USD above. They mainly consist of notary fees (they differ in individual federal states) and attorney’s fees.

Marketing and communication

The basis of the success of business activities in the Mexican market lies in the preparation and understanding of the local business environment with all its specificities. Operating in the vast and highly saturated Mexican market requires intensive forms of promotion and acquisition activity. Without promotion and marketing, especially when it comes to consumer goods, it is impossible to establish yourself in the Mexican market.

In the initial phase of penetrating the Mexican market, Czech companies can be recommended to participate in some of the events supported by means of economic diplomacy support. In practice, this can be participation at the Czech stand at an international fair, company presentations in the territory, participation in a business mission, etc. Promotional materials in Spanish are an essential part. Cooperation with Mexican advertising agencies is also appropriate, taking into account their knowledge of the local mentality and the ability to choose the most appropriate advertising strategy for the given type of goods or services. Advertising on the Internet and social networks (Facebook, Instagram) is also increasingly being used.

Issues of intellectual property protection

Mexico is a member of the World Intellectual Property Organization (WIPO), a signatory to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), and its system of protection of intellectual and industrial property rights can be considered standard. The protection of intellectual property is also dealt with in the Free Trade Agreement between the EU and Mexico, now also including so-called geographical indications, which include, for example, Czech beers.

At the national level, intellectual property issues are governed by the Intellectual Property Law (Ley de Propiedad Industrial), which regulates the protection of patents, trademarks, industrial designs, trade names, etc., and the Copyright Law (Ley Federal del Derecho de Autor). The administrative authority responsible for the registration and protection of patents and trademarks is the Industrial Property Office (Instituto Mexicano de la Propiedad Industrial, IMPI ), the National Copyright Office ( Instituto Nacional del Derecho de Autor, INDAUTOR ) is responsible for copyright protection). Before a Czech company enters the Mexican market with a product, it is necessary to register a trademark. This step will create the exclusive right to use the brand in the Mexican market and guarantee that no one else will use or abuse its good reputation in the industry. The trademark registration process takes 3 to 8 months in Mexico. The trademark is valid for 10 years and can be renewed for another 10 years in the last year of validity, even repeatedly. An administrative fee must be paid together with the application for trademark registration. Every year, IMPI sets a new price list of administrative fees, as of 1/1/2021, the fee for submitting an application in one class was 2,900 MXN (approx. 135 USD). If you use the services of a legal specialist for registration, which can certainly be recommended, registering a trademark in the necessary classes will most often cost you between 800 and 1,000 USD, including administrative fees.on the website of the Embassy.

Public procurement market

The public procurement system is still very fragmented, also due to the different levels of government (federation, state, municipality). This makes it very confusing, and despite the gradual digitization, there is no single integrated information system. A number of public contracts are also carried out only by contacting selected suppliers.

The general regulation of public procurement is enshrined at the federal level in the Constitution and in detail in the Law on Public Procurement (Ley de Adquisiciones, Arrendamientos y Servicios del Sector Público, LAASSP), the Law on the Procurement of Public Works (Ley de Obras Públicas) and the Law on Public Partnership and the private sector (Ley de Asociaciones Público Privadas).

At the federal level, public contracts are published within the CompraNet online system . In particular, public contracts are announced at the federal level by two state companies – the oil company PEMEX and the energy company CFE ( Comisión Federal de Electricidad ). In addition, public contracts are announced by individual states and municipalities, e.g. the capital city publishes them in the Tiangis digital electronic system. The documentation of public contracts and tenders is in Spanish, the condition of participation is usually a fee for obtaining the complete conditions of the tender. It is advisable to be represented by a local representative in the process.

The upcoming amendment to the EU-Mexico Free Trade Agreement will make it easier for European suppliers to bid for public contracts in Mexico and will ensure that European bidders have an equal position with Mexican ones.

Payment terms, payment ethics and resolution of commercial disputes

Just as in the Czech Republic, commercial disputes are decided by independent courts in Mexico, and the stages of the proceedings are similar. However, the process can be quite lengthy, especially for Czech entrepreneurs in an unfamiliar, Spanish-speaking environment. Therefore, it is recommended to include in business contracts a prorogation clause, i.e. the agreement of the contracting parties on the local jurisdiction of the Czech court, or an arbitration clause according to which any dispute will be resolved by a selected arbitration court.

In addition to the usual business risks in Mexico, one must take into account possible corrupt practices, which can be encountered especially in the state sector.

The payment conditions do not differ from the usual conditions in the EU. Standard payment terms are letter of credit, documentary collection and deferred payment in various forms. In the case of state contracts, it is good to count on the minimal possibility of changes to business terms (advances, delivery dates, etc.) and the possibility of longer payment terms. Unless otherwise specified, the due date for invoices is 60 days.

Visas, fees, specific conditions for traveling to the territory

Visas, customs regulations:
On January 25, 2000, the visa requirement was abolished for all types of passports of both countries. A citizen of the Czech Republic and a holder of a valid passport or travel card may enter the territory of the United States of Mexico without a visa and stay there for a period not exceeding 180 days from the date of entry, as long as it is not a gainful activity. Citizens of the Czech Republic who intend to stay in the territory of the United States of Mexico for a period longer than 180 days or enter there for the purpose of gainful employment or full-time study must obtain the appropriate permit and visa in advance at the Embassy of Mexico in Prague.

When entering the territory of Mexico, it is necessary to present a passport of the Czech Republic, valid for at least 6 months after the date of planned departure from Mexico, as well as a completed FMT border pass distributed on the plane or provided directly at the relevant border crossing. The first part of the passport remains for the entry migration control, the second part of the passport is kept by the traveler and is handed in when leaving the country, when the migration authorities also check whether the period of authorized stay has not been exceeded from the date of entry to the date of departure. If exceeded, a fine is required. Customs and foreign exchange regulations must be observed for the import and export of goods.

Vaccination:
According to the instructions of the hygiene station in the Czech Republic (for visiting some areas, e.g. inner Yucatán, Chiapas), vaccination against hepatitis (A/B) or against yellow fever is recommended. When traveling in Mexico, it is advisable to pack anti-diarrheal medicines, vitamins, or insect repellants.

Safety and Security Alert:
The security situation in some states of Mexico is currently negatively affected by violence between drug cartels, including the Estado de México (the state surrounding Mexico City). Due to the poor security situation, the Ministry of Foreign Affairs of the Czech Republic recommends maximum caution when traveling to states bordering the USA (Durango, Coahuila, Tamaulipas, Nuevo León, Sonora, Baja California Norte and Chihuahua) and to the state of Michoacán. Current information and safety warnings can be found on the website of the Embassy of the Czech Republic in Mexico.

Additional Warning:
Considerable caution is advised when driving motor vehicles. Traveling at night on some roads is not recommended. In Mexico, it is possible to get into a situation where a bribe is required. In Mexico, there is a very dense and cheap network of high-quality bus lines, due to the vastness of the country, you can also use air transportation to travel around Mexico.

In connection with local hygiene conditions, it is recommended to drink only bottled water and to be more careful when eating at street stalls.

The mains voltage in Mexico is 110V (same as in Canada and the US). It is therefore advisable to use electrical appliances with 110 – 230 V/50 – 60 Hz switching.

Mexican time is 7 hours behind Central European time (similar to the Czech Republic, the time in Mexico changes twice a year). Some areas in the north and west have a local offset (called California time by 1 to 2 hours). When staying in the capital, the high altitude (2240 ​​m above sea level) affects the human organism, especially during the acclimatization period.

Mexico is located in a seismically active area. In the event of an earthquake, it is necessary to follow the instructions and leave the building. The seismological alarm, which can be triggered up to 1 min before the start of an earthquake, is located in the capital of Mexico and in the states of Guerrero, Oaxaca, Michoacán, Colima, Jalisco and Puebla.

Working Hours:
Working hours vary by region and type of organization. In the capital of Mexico and south of it, the authorities have working hours from 9.00 or 9.30 a.m. to approximately 7.00 p.m. with a two-hour lunch break between 2.00 p.m. and 4.00 p.m. In the north of the country the working day usually starts earlier and lunch is around 1:00 p.m. Offices are often only open to the public in the morning. Banks are mostly open from 9:00 a.m. to 4:00 p.m., some branches of large banks are open until 6:00 p.m. and on Saturdays from 10:00 a.m. to 2:00 p.m.

Public transport and movement within the country:

Accommodation: In large Mexican cities, we can find hotels of all price categories, including a number of well-known international hotel chains. Accommodation can be reliably arranged via regular accommodation websites or applications (e.g. Booking). The accommodation platform Airbnb is also relatively widespread.

Car: You can rent a car very easily at any Mexican airport, or at the offices of individual car rental companies often located in the city center (e.g. Reforma street in the capital of Mexico). In large cities, it is necessary to expect very dense traffic jams almost all day and a slightly sharper driving style, especially in the case of the capital. cities of Mexico.

Taxi: There are several types of taxi service in Mexico. At the airport, you can order the Taxis de Aeropuerto service at the stand, where the price is determined according to zones/distance from the airport and the service is paid in advance. These taxis are very safe but have a higher service charge by statute. Furthermore, in the cities you can use Radio Taxis, which are again safe and also a little more expensive than regular taxis. These taxis can often be found in front of larger shopping centers. Classic taxis that can be taken on the street work on the basis of a taximeter and the drivers do not use commonly available GPS navigation. UBER, Didi, Beat and Cabify applications are a relatively widespread service, especially in larger cities.

Long-distance buses: Modern regular buses can be used for transportation between Mexican cities (e.g. companies ADO, Estrella de Oro, Futura, Primera Plus, etc.). When buying a ticket, some bus companies require an identification document. Before boarding the bus, there is a check similar to that at airports – you must go through the security scanner and have your personal luggage scanned. After boarding on some lines, all passengers are recorded on a video camera for security reasons.

Employment of citizens from the Czech Republic

Conditions for employment of citizens from the Czech Republic
If a Czech citizen wants to work in Mexico, his Mexican employer (natural or legal person) must first apply to the National Migration Office ( Instituto Nacional de Migración, INM ) for a work permit (permiso para trabajar), which will allow foreigners to receive wages in Mexico. A foreigner can work as a temporary resident (residencia temporal) or a permanent resident (residencia permanente).

Once the INM has issued a work permit, it is necessary to visit the nearest Mexican embassy abroad (for example in Prague) and request the issuance of the relevant visa. A consular interview must be completed and the requirements set forth in the Migration Law ( Ley de Migración ) must be met. The current legal framework does not allow changing the residence regime directly in the country, which means that if a Czech citizen is already in the territory of Mexico (e.g. as a tourist), he must travel and visit the Mexican embassy abroad in order to change his status. After arriving in Mexico, he is required to go to the National Office of Migration within 30 days of entering the country and apply for a “Resident Card”. A work permit can be obtained for the first time for one year, then an extension of up to 3 years is possible. The minimum wage is 141.70 MXN/day.

Conditions for the use of local health care by Czech and EU citizens
In the event that a Czech citizen is employed by a Mexican private entity, the employer pays social insurance in the amount of 9.23%, as well as health and pension insurance, which is mostly paid by the employer, with a smaller employee. Health insurance (public health insurance, so-called IMSS) covers outpatient and hospital care and medicines and covers not only illness, but also preventive care or maternity. This care is provided only within IMSS medical facilities and hospitals.

In the event that a Czech citizen prefers treatment at private entities, it is advisable to have private additional health insurance that would cover the costs of private health services.

Fairs and events

Currently, due to the measures resulting from the COVID-19 pandemic, events are still canceled, postponed, or held online. Some trade fairs and events have begun to be organized in a combination of face-to-face and electronic form. Below are the most important trade fairs by field within the region.

Mexico’s Auto Industry
Summit – León, Guanajuato, Mexico

Aviation industry
Feria Aerospacial México (FAMEX) – Mexico City, Mexico
FAMEX is an international trade fair organized by the Mexican Ministry of Defense. It focuses on civil and military aviation, the space industry, and the security and defense sectors . This event takes place in Mexico once every 2 years and alternates with the Chilean FIDAE air show. These two are among the largest fairs of this kind in all of Latin America.
Mexico’s Aerospace Summit – Querétaro, Mexico

Engineering Industry
Expo CIHAC – Mexico City, Mexico
EXPOMAQ – León, Guanajuato, Mexico

Energy Industry
The Green Expo – Mexico City, Mexico
Expo Eléctrica Internacional – Mexico City, Mexico
PECOM – Villahermosa, Tabasco, Mexico
Aquatech – Mexico City, Mexico

Food Industry
EXPO ANTAD & AlimentariaMéxico – Guadalajara, Mexico
Expo AgroAlimentaria – Guanajuato, Mexico

Healthcare Industry
ExpoMed – Mexico City, Mexico
Vector Pharma – Mexico City, Mexico
Expofarma – Mexico City, Mexico

Other
EXPO SEGURIDAD – Mexico City, Mexico

Mexico Market Entry