Monday, May 31, 2010

Wal Mart Mexico going green

Recently Wal Mart Mexico (WALMEX) announced that it would be switching all of its stores to wind power by 2025.  This includes all of the units of the Wal Mart group including Superama grocery stores, Wal Mart, Suburbia, Bodegas, Sam's Club, Vips, El Porton.

The stores and restaurants will be powered by the Wind Farm 'I Lamatalaventosa Oaxaca, in the state of Oaxaca.  The farm has 27 2.5 MW turbines and will reduce CO2 emissions by 137 tons, which is the equivalent of removing 21,000 vehicles from the roads.

Friday, May 28, 2010

Weekly Currency Update: Peso

Today the Mexican Peso is trading at $12.77 MXN = $1 USD.  This has been the worst month since February 2010 for the peso.   
The events that have affected the peso's value this week include:

  • Weaker than expected US economic data (as they say, when the US gets a cold, Mexico gets pneumonia!)
  • The report that China is reviewing its Euro bond holdings
  • The European debt crisis
In a related note, Hacienda (Mexico's IRS) has placed a restriction on dollar cash deposits in Mexico.  This has created a parallel black market for dollars, which can pose a huge threat to the economy.  The restriction was put in place in an effort to curb money laundering.

Thursday, May 27, 2010

The Importance of Learning the Language

When people are considering making the move to Mexico from a foreign country, one of the first questions they ask me is "Do I need to learn the language?"  My answer is always the same - a resounding "YES!"  While it is possible to live in Mexico and speak only English (especially if you live in an expat hotspot like Los Cabos or San Miguel de Allende), I don't recommend it. 

Learning the language increases your ability to connect with a whole new set of people, understand what's going on around you, and gain a deeper understanding of the culture.  It is especially important in business - when people see that you are trying to learn their language they tend to be more helpful and appreciative. 

If you are interested in learning Spanish, I highly recommend checking out the Rocket Language online course series.  They even offer a sample 6 day course for free - so you've got nothing to lose and everything to gain!!!

Wednesday, May 26, 2010

Setting Up a Business in Mexico: What is a FIEL?

Part of the process of setting up your business in Mexico involves getting yourself registered with Hacienda (Mexico's version of the Internal Revenue Service).  Once you obtain your RFC and your CURP, you will need to get a FIEL. 

What is a FIEL?

FIEL stands for Firma Electronica Advanzada.  The Firma Electronica is a fairly recent addition to the Hacienda requirements. 

The FIEL is based on PKI (Public Key Infrastructure) which means that 2 codes or keys are used for transmitting encrypted messages:

1.  Public key- available to all users via Internet
2.  Private key- only known by the user

The purpose of the FIEL is to allow taxpayers to access their information  and make transactions online in a safe, private manner. 

Some of the transactions available using your FIEL:
Customs documentation
Fiscal documents

For more information (in Spanish) visit:

The FIEL is very easy to get.  Make an appointment at Hacienda and you will get your FIEL with a period of minutes (no more than an hour depending on how busy they are)! 

Tuesday, May 25, 2010

Fiesta! Fiesta! Ford Fiesta 2011 to begin production in Mexico plant

Ford has chosen Cuatitlan Izcalli, Estado de Mexico (State of Mexico - on the outskirts of Mexico City) as the location to produce its new Ford Fiesta 2011.  The plant will create over 2,300 direct jobs and 6,000 indirect jobs.  Some of the new Ford plant employees have undergone an application process that has lasted over a year.   

The plant was previously operational, but was shut down and revamped in preparation for the new Ford launch.  Almost 70% of the parts used in the new Ford Fiesta will be purchased through local suppliers, which is a great boon for the local economy.  This means Ford will purchase over $6 billion USD of parts a year in Mexico!!!

Friday, May 21, 2010

Mexican Shrimp Imports - Change of Plans?

Recently, the United States placed a ban against Mexican shrimp imports.  The reason behind the ban?  The United States claims that Mexican fishermen do not have the proper safety measures in place to protect sea turtles. 

In a twist of fate, on May 12 the Deepwater Horizon rig (British Petroleum) exploded, leading to one of the biggest oil spills in history.  Scientists say that the leak could be as large as 95,000 barrels of oil a day. 

Mexico is now considering taking its case to the World Trade Organization in order to begin exporting Mexican shrimp into US territory once again.  Mexico argues that they do have the proper methods in place and strongly defend their shrimping practices. 

It is still too early to tell the effects of the BP Oil Spill, but shrimp farmers in Mississippi and Louisiana are already preparing for the worst and the first round of lawsuits are being filed.  Will the United States change its stance because of recent events?  We can only wait and see...but if there was a shrimp shortage in the United States before the oil spill ocurred, things will only get much worse if the Mexican shrimp ban continues. 

Monday, May 17, 2010

Unemployment in Mexico remains low despite financial woes

If you look at the recent unemployment rates of countries around the world during this financial crisis, something stands out.  Mexico, despite all its ups and downs, has a surprisingly low unemployment rate of 4.9% (tied with Austria!!). 

Unemployment rates around the world:

1. South Korea - 3.8%
2. Netherlands - 4.1%
3. Austria - 4.9%
3. Mexico - 4.9%

Which country had the highest levels of unemployment?  Spain at 19.1%.

The main reason that Mexico has such a low unemployment rate is because of the informal economy.  Nearly 28.6% of the Mexican population is working in the informal market.  This means no benefits, no government intervention, and no taxes.

Friday, May 14, 2010

Weekly Currency Update: Peso

Today the Mexican Peso is trading at $12.55 MXN  = $1 USD. 

Recent events that affected the peso:

-The price of crude oil (Mexico's largest export) plummeted to its lowest price in 8 months
-European debt crisis
-Mixed US jobs data

Thursday, May 13, 2010

Setting Up: What is an S.A. de C.V.?

When you first open a business in Mexico, you will be faced with a variety of options...S.A. de C.V., S.R. de L., S.A., S.C., etc

It is important to note that in Mexico, sole proprietorships do not exist.  You must have someone else on the papers when you incorporate.  Many people who want to run their own businesses have silent partners who are listed in the paperwork, but in reality do not make any of the business decisions.

S.A. de C.V.'s must have a minimum of two partners (individuals or entities).  There is a misconception that corporations in Mexico can NOT be completely foreigned owned.  This is simply not true.  There are certain protected industries (oil and electricity for example), but the majority of corporations can be opened with foreign partners.

S.A. de C.V. means "Sociedad Anonima de Capital Variable" or.  In a S.A. de C.V. setup, the partners may alter the amount of capital at anytime either by adding new partners or just simply adding more capital, without ammending the original incorporation documents.

The S.A. de C.V. set up is the most common form of incorporating your business in Mexico. 

Wednesday, May 12, 2010

Mexico - Happiest People in the World?

When you turn on the TV these days, bad news seems to be all you hear.  The economic meltdown and financial crisises of the world, rising unemployment, natural disasters, murders, narcoviolence - the list goes on and on. 

While watching the nightly news this week, I saw something that caught my attention.  According to a study by Coca-Cola, Mexico has the happiest people in the world.

One of the biggest differences I've noticed in my travels back and forth between the US and Mexico over the past few years is the happiness of the people.  No matter how bad the situation may seem, Mexicans continue to have a good attitude.  We can attribute part of this to the fact that Mexicans have been through financial crisises (la crisis!), devaluations, etc before so they know what its like.  My generation has never experience a financial crisis in the United States before, so this is a new experience for the majority of Americans.  Mexicans aren't accustomed to living beyond their means, while Americans are used to charging everything on credit (many times buying what they can't really afford).  The tremendous financial pressure that Americans are facing these days has affected personal relationships in a big way.

The intense interpersonal relationships that exist in Mexico are key to happiness.  Someone I know made the observation that the close knit families give people the reassurance that no matter what happens, at the end of the day, they will still be surrounded by a family that loves and supports them. 

Happiest countries in the world (according to Coca-Cola):

1.  Mexico
2.  Phillipines
3.  Argentina
4.  South Africa
5.  Romania
6.  USA

Tuesday, May 4, 2010

Spring Break: Not Just for Frat Boys Anymore

One of the things that I love about living in Mexico are the holidays.  Every time you turn around, it seems like there is a puente, or 3-day weekend.  Mexicans take their holidays so seriously in fact that the law was changed to move any holiday that falls during a weekday to a Monday (the holiday is still celebrated on the official day, but the "day off" from work and school is that Monday).

Recently, a friend of mine in the U.S. was complaining that no one in Mexico was answering his e-mails or calls.  "What is going on down there?!!!" he said.  And I told him - "We're on Spring Break!"  I explained to my friend that in Mexico, a country that is close to 90% Catholic, Holy Week is a very important week.  Some companies shut down for the entire week, some shut down for Holy Thursday and Good Friday, and others pick and choose when they will be off.  The schools are officialy off for two entire weeks, so some business owners and higher level execs take there families and leave for 2 weeks. 

While this frustrates many foreign business people, I'm all for it.  A well deserved rest is very welcome once April rolls around.  Who says Spring Break has to be just for college kids??

*Photo from USAToday

Monday, May 3, 2010

Doing Business in Mexico - The Best and Worst Places

So, you know you want to start a business in Mexico, but not sure where to set up?  Mexico has come a long way in terms of red tape for foreigners setting up a business.  I remember back in 2002 it took a friend of mine close to 5 months to get their corporation set up, but recently it took me less than a month!!!  The government is moving to more online processes, which is a wonderful thing, as it cuts down the time it takes to process permits, register corporations, etc.

According to Doing Business in Mexico, a report published by the World Bank group, Aguascalientes is the best state within Mexico to do business in.  The factors taken into consideration are ease of incorporating, access to credit, registering property, hiring/firing, and enforcing a contract.  Aguascalientes has lead Mexico in ease of doing business for years.  The state is located about 537 km northwest of Mexico City and has a population of around 1 million.

(Jim Cine Photo)

So, what's the most difficult state for doing business in Mexico according to the report?  You guessed it...Distrito Federal, aka Mexico City.  This is not surprising - the bigger cities usually have more red tape to cut through.  Doing business in the biggest city in the world can have it's challenges, but it can also have its advantages.  Mexico City is where most multinational corporations have their headquarters and if you can't find something in Mexico City, you probably can't find it anywhere else within Mexico.

No matter where you set up you will run into headaches that come with setting up a business in a foreign country, but don't let that stop you.