"Mexico Business Opportunities
And Legal Framework"



The Country At A Glance

INTRODUCTION

As the twentieth century comes to a close, the world is lead decreasingly by a dominant state or states and increasingly by the business world and the developing, dynamic economic global interdependence. The end of the Cold War and the military disarmament of super powers, coupled with the globalization of markets means "might" is measured, not in the historical terms of military power, but by a country's strength in international markets. Because markets are the domain of business, economic strength depends on the ability of a country's companies and industries to do business internationally. To this end, countries around the world are forming international trade relationships to facilitate their competitiveness.

Mexican leaders recognized this world trend and the necessity of creating the conditions under which business and industry could flourish, by membership in the General Agreement on Tariffs and Trade (GATT, 1986, now the World Trade Organization), the Asia-Pacific Economic Cooperation Mechanism (APEC, 1993) and the Organization for Economic Cooperation and Development (OECD, 1994). It also opened trade negotiations with the United States and Canada that culminated in the North American Free Trade Agreement (NAFTA) in effect on January 1, 1994, establishing the largest free trade area in the world, a US$6.5 trillion market of over 360 million consumers, creating opportunities for Canadian, Mexican and United States companies by removing barriers to commerce.

Trade treaties with Chile, Colombia, Venezuela, Costa Rica and Bolivia have been recently entered into and are in effect. A preliminary agreement with the European Union has been signed to enter into negotiations which are expected to terminate in a free trade agreement in approximately three years.

Tax treaties with Canada, France, Germany, the Netherlands, Spain, Sweden, Switzerland, the United Kingdom and the United States have been entered into and various others are under negotiation.

In addition to economic reform over the past decade, Mexico has also undertaken massive reform of its political, legal and regulatory systems. The reform process is not yet complete, but the Mexican government is committed to it, and reform continues to proceed regardless of economic changes. Not only does reform proceed, but the changes that have been made to date are irrevocable and Mexico will not return to a closed economy.

Notwithstanding Mexico's current problems triggered by the sudden outflow of short-term capital in December 20, 1994, many of the conditions that make Mexico a good business and investment opportunity before the devaluation still hold:

  • a strategic geographical location including a 3,107 kilometer
    border with the United States, coastlines facing Europe and Asia, and a gateway to Latin America;

  • access to the United States, the world's largest consumer market;

  • a relatively young workforce of 34 million people that has proven capable of delivering quality at a fraction of the labor costs common in the advanced industrialized economies;

  • plentiful natural resources;

  • a rapidly growing and increasingly affluent domestic market of 91 million people; and

  • a liberalized public policy climate which becomes increasingly supportive of private business activity and investment.




GEOGRAPHY

Mexico (officially "the United Mexican States"), is bounded by the United States on the north, Guatemala, Belize, and the Caribbean Sea on the southeast, the Pacific Ocean on the west and south, and the Gulf of Mexico on the east. The country has an area of 1,970,000 square kilometers (760,000 square miles) and shares 3,107 kilometers of common border with the United States, with 11,592 kilometers of coastline. Mexico is the third largest country in Latin America, after Brazil and Argentina and the thirteenth largest country in the world.




POPULATION

Mexico's population is approximately 91 million, with an annual estimated growth rate of 2.1%. Mexico has roughly one-half the population of Brazil, and well over twice that of Argentina, the Latin American country with the next-largest population after Mexico. Eighty percent of the population is under 40 years of age, and 48% of the population is under 20 years, and the average age is 26.

Because of the growth of the population and its composition, it is foreseen that 800,000 to 1,000,000 jobs must be created each year, which in turn requires substantial investment.

Mexico City, among the largest cities of the world, is the capital and largest metropolitan area, including certain municipalities of the neighboring State of Mexico and has over 20 million inhabitants. The capital city is the commercial, industrial and cultural center of the country. However, the government is engaged in efforts to decentralize industry and commerce to foster the growth of regional, industrial and commercial centers. The second largest city in Mexico is Guadalajara, northwest of Mexico City, with a population of 3.5 million. Mexico's third largest city, Monterrey, located in northern Mexico close to the U.S. border, just south of Laredo, is the second most important industrial city and has a population of 3 million.




LANGUAGE

Spanish is the national language of Mexico; however many indigenous groups speak their own dialects in their own towns and villages. English is understood and spoken by many in Mexico City and other large cities, as well as in the northern border region. Many of the younger generation have been educated abroad, including in the United States, and are fluent in English and other languages. Many of them occupy high positions in business and government.




TIME ZONES

Most of Mexico is on Greenwich Mean Time minus six hours (U.S. Central Standard Time). The far northwest of Mexico is on U.S. Mountain Time (minus seven hours Greenwich Time) and the peninsula of Baja California is on U.S. Pacific Time.

Mexico does not follow a daylight saving system, except the peninsula of Baja California.




CULTURE

Mexico has a unique national character and a distinctive culture built on centuries of dynamic history.

It has long been recognized that culture plays a distinct role in defining ways of living which vary from culture to culture. Although the use of generalizations may appear to stereotype people, they are useful as a tool for developing an awareness of the differences existing between people of diverse cultures, and for reducing misunderstandings between them. In the Mexican culture, the importance of the family, the deeply rooted Roman Catholic religion, the nationalistic pride, and the high degree of personal sensitivity of Mexicans, the importance given to time, all have implications in communication styles, decision-making, negotiating, contracting and in planning and business etiquette.