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The small big mistakes done by foreign investors

March 21, 2009. 00:34

When a foreign investor comes to Mexico, he/she believes that deserves a special treatment. Sometimes, a foreign investor does not pay attention to that small detail, assuming that locals will give a preferential treatment; different from the national investor. Since he/she is in Mexico he/she is considered like any other Mexican company, a foreign investment company has to fulfil all the requirements, procedures and paper work as equal. To invest in Mexico is no longer an adventure; most of the dealings are well controlled by government bureaucracy.

Many times the foreign investors have misconceptions about what to expect in Mexico as a destination for their investment. Here are some of the most common mistakes:

Even that sometimes the Minister or Deputy Minister at Federal o Municipal level was his/her first contact at the beginning of the project, it is very important to identify who is going to be the local contact or liaison, in order to start to work with him/her an empathy approach that will help with the local operation. It is important to recognise his/her local authority in order to speed up government proceedings.

If a certification or approval is needed, for instance, the Health Authority or the Agriculture Ministry, these are going to be very similar as the ones in the investor´s home country; therefore, it is very important to verify the possibility of working with the foreign certification in Mexico, or if it needs to be approved or issue a new one by the Mexican authority.

Environment Issues
Thanks to International treaties signed by Mexico, the environmental rules and regulations are the same or higher than those in developed countries. So if the investment is related in a certain level to pollution or needs environmental control, the new company will have to follow the same practices as in the country of origin.

Employees and Executives
Mexico has one of the best labour forces in emerging countries. It is very important not to underestimate the capability, creativity and ability of the local employees and executives. They know the customs, they have the know-how and know-who, in order to make the Mexican operation smoothly. They should be seen as an asset for the new venture.

In order to have VAT (Value Added Tax) refunded in Mexico, all the invoices need to have the company registration and tax ID heading and fulfil with the rules and regulations dictated by the Tax Office in Mexico Servicio de Administración Tributaria (SAT). Companies cannot avoid it; even if this ruling does not apply in the investment home country. It is important to mention that only authorized printers are allowed to produce invoices fro companies.
A good example of the proper invoice format can be found in the following official link:
Invoice Format

Labour Law
This is one of the strictest laws, as in many countries, and any company operating in Mexico has to follow it in order to avoid legal issues. Special attention needs to be laid on people, Christmas bonuses, bank holidays, labour unions, and contract conditions.

All the government offices have their own procedures. Sometimes the proceedings can be done at the local offices (State or Municipality), some other times they have to be done at the federal government headquarters, which most of the times are located in Mexico City. It is important to ask for advice before starting the proceedings so as to avoid disappointments or delays.

In Mexico as a Latin country it is indispensable to create, nourish and grow your social network (official and not official), because you never know when are you going to need it, or how these connections can help the investor to speed up processes. Money will not solve everything and it is not recommended to can create this vicious circle.

Timing in Mexico is different, even that some government offices have established times for paper work, proceedings or approval procedures, it important to consider that not always it is as accurate as in other countries, and some proceedings do not get a written response. Delays may result from inconsistencies on the papers submitted or the accuracy on the content.

Finally, having the right assistance from local professionals is worth and strongly recommended.

DoingBusinessInMexico Staff
Published: March 21, 2009. 00:34 | Last updated: March 21, 2009. 00:34
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