| Working and Doing Business in Mexico |
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Mexico welcomes foreign investment and offers countless opportunities for new business. Bilingual - legal, accounting and business consulting expertise are available on the Lakeside and in nearby Guadalajara to help you with the process.
In the past most people looked at Mexico as a place to retire to. In more recent years there has been a significant increase in the number of people looking to either work or set up a business in Mexico. Both are possible.
Working in Mexico
Much the same as in the U.S. and Canada, there are opportunities to work in Mexico, if you have special skills. The basic rule is that you will be issued a work permit only if there is no Mexican national available to do the same job.
If you do locate a company willing to offer you a job, then the company will process all the necessary paperwork to obtain the permit and your visa.
Quite often, people move to Mexico to live and obtain either an FM3 or FM2 resident visa and then decide they want to work. This can be done by adding working papers to the existing visa. However, the same “qualifying rules” apply. This may at first glance appear very restrictive but, depending on the location you choose in Mexico and the type of work you undertake, a simple thing like the ability to travel internationally and experience in dealing in other countries or nationalities may be sufficient to get your permit.
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Doing Business in Mexico
Mexico has entered into a number of Free Trade Agreements over the past several years, most notably NAFTA. This has opened up many business opportunities that previously were restricted. Also, recent changes to the laws now allow 100% foreign ownership of Mexican companies. Though there are still some restrictions in areas considered as being in the nations best interest (oil, communications, transportation, etc) there is a wide field of opportunity from Maquiladoras (Assembly Plants) to local small business. |
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| What is a MAQUILADORA? Maquiladora comes from the Spanish word maquilar meaning "to perform a task for another." Today, maquiladora refers to a Mexican corporation, wholly or predominantly owned by foreigners, which assembles products for export to the U.S. or other foreign country or Mexico Market. Foreign corporations wishing to reduce their manufacturing costs in order to become more competitive in a global economy, may achieve this goal by setting up a Maquiladora or Shelter operations in Mexico. This means taking advantage of a special customs treatment, less expensive labor costs and lower operating expenses available in Mexico. A Maquiladora or Maquila is a plant in Mexico that retains a Maquiladora Permit from the Mexican government to import raw materials duty free into Mexico for manufacturing, assembly, repair or other processing. The Maquiladora program was created in 1965 with the Border Industrialization Program. It was designed to generate employment, foreign investment, and stimulate industry in Mexico. The program was part of a worldwide movement known as global production sharing. With the passage of the North American Free Trade Agreement (NAFTA), in 1994, U.S. companies have rushed to Mexican border towns to comply, and avoid high tariffs. |
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| The Maquila Industry has transformed the border area of Baja California, which includes the cities of Tijuana, Ciudad Juarez and Mexicali, from tourist and agricultural areas into thriving industrial centers. As of May 2002, there are over 3600 maquiladora plants employing over 1.1 million people in Mexico. |
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| How do they work A maquiladora typically performs assembly, or sub-assembly, operations. Components are imported duty free to Mexico, whereupon a maquiladora performs the assembly needed to complete the work. The finished product is then exported out of Mexico, or in some cases to other maquilas where it is used in another assembly operation. Typically, maquiladoras work best for labor-intensive manufacturers. Such businesses range from electronics manufacturers to pet products, medical equipment, sporting goods, apparel, cable assembly and toy makers. The essence of the maquiladora system is to reduce labor overhead. That’s why in the more than 30 years since maquiladoras were introduced, there are more than 3,500 companies, including but not limited to Sony, Ford, General Electric, General Motors and Zenith, that have set up Maquila Operations in Mexico. |
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The degree of difficulty in establishing a business in Mexico depends on the size and complexity of the business. Large companies will naturally elicit assistance from professional consultants to establish their business, where a small business may only use a Notario to register the business and a local accountant to handle the reporting requirements.
Mexico, as a whole, and specifically the State of Jalisco, are extremely pro-active in encouraging foreign investment. The opportunities are definitely there.
Resources:
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Mexico and Canada
Source: http://www.cancham.org.mx/economy_trade.asp
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Bilateral Trade
The trade between Mexico and Canada has increased from $4 to over $12 billion dollars in nine years. Mexico has become Canada's main trading partner in Latin America and its fourth largest partner worldwide only after the United States, Japan and the United Kingdom. Bilateral trade with Canada has tripled, reaching more than $12 billion US dollars in 2001. Between 1993 and 2001, Mexican exports to Canada grew by 170 per cent, reaching $7.8 billion US dollars in 2001.
Because of the high quality of its production, Mexico is Canada's first supplier after USA of items such as vehicles, electronic equipment and agricultural goods. In the meantime, Mexico has become one of the most important destinations for Canadian products. In fact, Mexico is ranked as Canada's fourth largest export market behind the United States, Japan and China. In 2001, Canadian exports to Mexico reached more than $4.2 billion US dollars, which is 260 percent more than those of 1993. As you can see, bilateral trade has been mutually beneficial.
Since NAFTA, Canada has become the 4th foreign investor in Mexico with $4 billion dollars, only behind the United States, the Netherlands and Spain. At the end of 2002, 1,259 companies with Canadian capital were registered in Mexico. The most important sectors for these investments are within the area of manufacturing, which represents nearly 59 percent of Canada's total investment in Mexico; financial services account for 25 percent and mining with 11 percent. |
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Mexico and the United States
Source: http://www.usmcoc.org/n5.html |
EXECUTIVE SUMMARY
"NAFTA: Five Years Linking U.S. & Mexican Markets" focused on the successes, strategies and challenges of North American companies during the trade agreement's implementation.
The successes are impossible to ignore. U.S.-Mexico trade increased 113 percent from 1993, the year before NAFTA implementation began, through the end of 1998. Mexico has become the second-largest trading partner for the United States, surpassing Japan, and Mexico is the second-largest market for U.S. goods in the world. Canada is the United States largest trading partner. The results have paid off for North American corporations, workers and consumers as companies find a dynamic market for exports, as wages increase and unemployment falls, and as the cost of goods decreases while quality increases.
Corporate strategy has varied sector by sector. The conference highlighted how Mexican companies have been able to source materials in the United States ¾ rather than Asia or Europe ¾ because NAFTA makes U.S. products more competitive. In agriculture, U.S. farmers have been able to tap Mexico's strong demand for agro-industrial products, such as corn and livestock, while Mexico has had great success selling fresh vegetables and fruits to demanding U.S. consumers. Universities explained how they are preparing a North American workforce to compete with the rest of the world. U.S. and Mexican companies have helped to clean up North America's environment and fill a gap in health care needs. NAFTA has allowed manufacturers to rationalize operations for greater efficiency. Telecommunications firms have aggressively expanded in the Mexican market, realizing the benefits of deregulations and utilizing new technology to pursue the huge potential of the North American market. Transportation experts outline logistics, security and safety issues related to moving products across international borders.
While reflecting on the success of NAFTA, this conference also outlined challenges for the future. NAFTA is only one-third of the way through its implementation process and some portions of the agreement have already been snagged by non-trade considerations. North America's relationship with the rest of the Western Hemisphere, Europe and Asia is also crucial to the future of North America's firms, workers and consumers. NAFTA does not exist in a vacuum -- business leaders must consider the next steps for trade relations with the rest of the world.
The U.S.-Mexico Chamber of Commerce presents the following proceedings, representing the insight and experience of leading industry and government officials, to explain one of the most fruitful trade relationships in the world. |
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