Setting Up: Factura Electronica required starting in 2011

In a past post, I went over what a factura was (think of it as an official receipt for tax purposes).  Beginning January 1, 2011 all businesses in Mexico will be required to use what is called "Factura Electronica".  This is Hacienda's way of electronically keeping records.


After the end of 2010, all receipts over $2,000 MXN must be electronic. 




So, as a small business, how do you go about issuing electronic receipts? 

There are a number of companies that are authorized by SAT (Hacienda) to help companies with electronic receipt software:

DigiFact

Enlace Fiscal

Castelec

Facture Ya

Weekly Currency Update: Mexican Peso

Today the Mexican Peso is trading at $12.72 MXN = $1 USD. 

Events affecting the Mexican economy this week:

• Durable goods orders in the US fell in June
• Auto production in Mexico has picked up
• The peso hit a 2 month high this week due to the fact that economic growth accelerated faster than expected (grew 8.9% in May, while 8.5% growth was expected)
• Cemex posted weak second quarter earnings, but investors were hopeful because for the first time in several quarters US cement volumes should grow (around 8-10%)

Televisa sells off stake in Volaris

Article courtesy of Poder360

Inbursa and Televisa Sell Off Volaris

The Slim family bank and the television company sell their shares of airline, but Interjet remains out

Inbursa and Televisa, which up until last Fri. owned 50% of Volaris airline stocks, sold their shares to a new group of Mexican investors. Grupo Televisa said it received $80.6 million for its 25% of shares, while Inbursa has made no statement. Interjet and its offer of $360 million for the entire airline remained outside the purchase and sale of the stocks. Among Volaris's owners are Maria Cristina Kriete Avila (a relative of Roberto Kriete of TACA, with 25% of Volaris), Emilio Diez Barrozo Azcarraga and Ignacio Guerra. These investors joined private capital fund Indigo Partners LCC, which specialize in transportation and aviation, to make the purchase.

----

Note: Volaris is a low cost airline (similiar to Southwest) in Mexico.  Interjet is Volaris's main competitor.  Inbursa is a bank owned by Carlos Slim.







Read more: http://www.poder360.com/dailynews_detail.php?blurbid=8206#ixzz0uzU8eBW8

Mexico Business Etiquette: The Importance of Titles

In today's more relaxed business environment it is not uncommon to refer to people by their first names, even when you have never met in person.  In Mexico, the business environment tends to be much more formal (in general, but it also depends on your industry).  Titles are very important, so when you are addressing someone in an e-mail or in person be sure to refer to them by their title and their last name until they tell you otherwise. 
Some popular titles in Mexico:

Lic. (pronounced as "lick" in English) - this is short for Licenciado or Licenciada and it refers to someone who has an undergraduate degree, or licenciatura.  Basically a way to show you made it through college.  A Licenciado can hold any number of degrees from business administration to law. 

Ing. - this is short for Ingeniero or Ingeniera, someone who has a degree in Engineering.

Arq. - short for Arquitecto or Arquitecta, which means Architect.  It may seem strange to say "Arquitect Rodriguez", but it is a formality that is very much appreciated.

Sr. - short for Señor.

Sra. - short for Señora, this is the equivalent of Mrs. in English.

Srta. - short for Señorita, refers to an unmarried or young woman.  When all else fails, use Senorita instead of Sra.  You will never offend someone for making them feel younger!

Names in Mexico

Many foreigners are confused by what seems to be a lot of names in Mexico.  I'm going to show you how the naming sequence works.

Let's take Arq. Rodriguez as an example.

His full name:  Luis Fernando Rodriguez Villanueva

First name: Luis
Middle name: Fernando
Paternal last name: Rodriguez*  (this is the name you will refer to him by)
Maternal last name: Villanueva

Let's say Luis Fernando is married to Gabriela Fernandez Coto.  Her name becomes Gabriela Fernandez de Rodriguez.  Let's say they have a son named Jaime.  Jaime's full name would be Jaime Rodriguez Fernandez.  The first last name is always the paternal last name and the second is always the maternal.

E-commerce in Mexico

When most people think of business in Mexico, e-commerce isn't exactly the first thing that comes to mind.  Part of this is due to the fact that a good part of the population does not own/use a computer, but things are changing.  While computers used to be something that only the uppper and upper middle classes had access to, today there are a number of programs that allow consumers to pay off a computer
in monthly payments (such asTelmex). 

In my opinion, e-commerce in Mexico is going to explode over the next few years.  Consumers are getting more used to paying bills and other services online, and it is just a matter of time before more companies realize the benefits of offering online ordering services to their customers. 




Some interesting Mexico internet facts:

• In 2008, 27.4 million Mexicans were online, a number expected to increase 82% by 2012!
• Mexico was one of the biggest growth markets for Facebook in 2009
• E-commerce sales in Mexico in 2006 were $537 million and reached $1.6 billion in 2008
• Travel packages are what Mexicans purchased the most online in 2009
• In 2007, 48% of internet users in Mexico were female, while 52% were male
• In 2008, PayPal expanded to Mexico

Off Topic: Mexico Road Trip

I recently took a road trip through the Mexican states of Sonora, Sinaloa, Nayarit and ended in Jalisco.  I was very fortunate to have the opportunity to meet people and see places that not many people get to see. 

I crossed the border at Nogales, Sonora and proceeded down to Hermosillo, Sonora.  Hermosillo is the state capital and home to some of the most beautiful sunsets (example below) and best steak I've ever eaten.  The people of Sonora are some of the friendliest I've encountered. 

As I traveled down Sonora, I passed through towns like Guaymas - a beach town in the middle of the desert, Ciudad Obregon, and Navojoa.  I picked up some coyotas (Mexican pastries from the north) and flour tortillas along the way.

Sinaloa is famous for agriculture (tomatoes!) and its seafood.  One of my favorite parts was visiting Mazatlan.  Check out this sunset...

The Mexican government has done a wonderful job of improving its roads.  In honor of Mexico's bicentinneal this year (Independence from Spain in 1810) and the 100th anniversary of the Mexican revolution, Mexico has created what they call "Ruta 2010".  There are markers along the toll roads that show you are on the historical route, which highlights important monuments from the revolution and other important sites.

For more info on the Ruta 2010 click here (in English)

Mexico and South Korea to restart Free Trade Agreement talks

Mexico and South Korea had initiated free trade agreement talks back in 2007, but the talks were put on hold in 2008 because Mexico was worried about a possible trade imbalance.  Felipe Calderon and

South Korean President Lee Myung-bak visited Mexico earlier this month to discuss a number of issues, trade being one of them.

A free trade agreement between South Korea and Mexico would be a huge boost for trade between the two countries.  Many people are unaware that South Korea is actually Mexico's 6th largest trading partner.  Trade between Mexico and Korea has tripled since 2001, and reached $11.4 billion in 2009.

Many Mexican business owners opose a free trade agreement with South Korea because they say more analysis needs to be done to examine how the agreement will negatively impact Mexican businesses.
South Korea hopes to have some kind of agreement by the end of the year, but it remains to be seen whether both countries will make a decision by then.

Weekly Currency Update: Mexican Peso

The Mexican peso is trading at $12.81 MXN = $1 USD today.

Important events this week that affected the peso:

• Imports of copper fell for the third month in a row, which may mean that global economic recovery is slowing down
• Soft US retail data caused Mexican stocks to suffer this week
• Mexico's auto production more than doubled last month, setting a new record
• Slowdown in US manufacturing
• The Fed cut the growth outlook in the US, which could affect the Mexican recovery which is based on exports to the US

Obesity in Mexico Will Collapse The Medical System

Those of you who have read my blog for awhile know that I am a big proponent of getting healthier foods into Mexico and have been following the changes in the schools closely.  Well, today I read a headline in El Universal that literally made my jaw drop. 
"75% of hospital beds occupied because of obesity" - GDF:  The health system collapses because of obesity epidemic.

This is not a prediction, this is a sad reality.  The minister of Health in Mexico City has said that in 5 to 10 years the number of patients in hospitals as a result of obesity could be so great that the public health system would collapse.  The article also goes on to mention the over 5 million children that are categorized as obese.  The rates of juvenile diabetes are skyrocketing, and if things don't change soon the numbers will continue to grow and this children's lives will be forever changed.

Mexico has been hesitant to make changes in these areas, but these figures do not lie. 

Here is a great piece by TIME Magazine that highlights the obesity problem in Mexico:

Best Opportunities for Doing Business in Mexico

Business opportunities are everywhere - if you know where to look for them.  Today we will look at some of the most popular sectors for foreigners doing business in Mexico.

AGRIBUSINESS

Canada's number #1 market for their beef exports? You guessed it, Mexico!  Mexicans associate American and Canadian products with high quality and value.  Also, Mexico has no national pesticide or fertilizer market, leaving the market wide open for exporters.





EDUCATION SERVICES
From English schools to computer classes, education services are growing at unprecedented rates in Mexico. 

IT SERVICES

As the number of computer users continues to grow in Mexico, so will the need for the IT infrastructure to support it. 











HOTEL & RESTAURANT

Mexico's tourism industry is one of the main industries that supports the Mexican economy and is always open to the latest and greatest services and products.  Most restaurant equipment in the country is imported, as Mexico does not have many local manufacturers of equipment. 




ENERGY
Although Mexico's energy industry has been protected (government owned PEMEX-gas, and CFE-electricity), there is a new trend towards renewable energy.  In order to make this move, Mexico will need to import technology from countries that are already more advanced in this area.

PACKAGING

Mexico is the second largest importer of packaging machinery from the US (after Canada).  The best opportunities within the packaging industry?  Food processing, cosmetics and PCG, and pharmaceuticals.





These are just a few examples of opportunities.  If you have a question about any of these (or a sector that's not listed) feel free to contact me!

Mexico in a Positive Light Thanks to the Mexico Report

When you turn on the news today, you are bombarded with negative images of Mexico.  With all of the bad press that Mexico has been receiving about the drug wars, immigration, etc, you would think that nothing positive is happening in the country.

That's where The Mexico Report comes in.  Susie Albin-Najera has created a wonderful blog that focuses on "Communicating a Positive Image About Mexico".  Her blog highlights places to travel, fabulous resorts, events, food, charities, and much more. 

I'm often asked by family and friends if I'm scared to live here and if I feel unsafe.  My answer?  No.  There is a great saying in Spanish that I love - "el que nada debe, nada teme" which would translate to "he who does nothing wrong, has nothing to fear".  While I'm not denying the narcoviolence, I'm saying that Mexico is much more than that.  Can you imagine if the international news only covered the violence in our major cities?  Murders, rapes, and school shootings?  Everyone would be terrified to go to the US!

I invite you to celebrate the positive today and check out The Mexico Report!

Mexico Business Etiquette: The Long Lunch

Since it is Friday, I thought I'd touch on something that confuses many foreigners when doing business in Mexico - the long lunch.  If you've ever done business in Mexico then you probably know what I'm talking about.

TIME
Mexicans usually eat around 2pm, sometimes an hour earlier, sometimes an hour later, but NEVER will you have lunch before 12pm. (Make sure to have a big breakfast if you are used to eating lunch at noon or earlier!)

FOOD
Lunch is a heavy meal in Mexico, if not the biggest meal of the day.  Most Mexicans subscribe to the thought "Breakfast like a king, lunch like a prince, and dinner like a pauper."  It is not uncommon to see people ordering an appetizer, a cut of meat with beans or some other side, and then finishing it off with a dessert. 

ALCOHOL
At business meeting lunches it is common to order a bottle of wine or other alcoholic beverages (tequila!).  Mexico used to have a reputation for it's liquor-fueled lunches, but getting drunk at lunch has lost its appeal and more people are taking it easy so that they can go back to work and get things done.

CONVERSATION
If you have something important to discuss, make sure you leave it to the middle of the meal.  Start off getting to know eachother and eachother's cultures.  Jumping right into business can be a culturally insensitive move that may cost you the deal.

LENGTH OF LUNCH
This is where things get tricky...depending on who you are with, what you are discussing, and how much tequila you have had a business lunch in Mexico can last anywhere from an hour and a half to 6+ hours.  It is not uncommon, especially on Fridays, to see the lunch crowd at a restaurant when the dinner crowd starts to role in.  My point is this: don't budget an hour of time for the lunch because you never know how long it is going to go. 

Weekly Currency Update: Mexican Peso

The Mexican Peso is trading at $12.83 MXN = $1 USD.

Events in the Mexican economy this week:

• Wal Mart de Mexico (WALMEX) same store growth (4.7%) was lower than expected (5.5%)
• Consumer prices fell .03% in June from May
• Mexican Peso bond yields decline
• Hiring in the US increased a rate lower than expected

Business Matchmaking in Mexico

You've got a great product.  It's selling like hotcakes in your home country and the time has come to expand your market.  How do you go about entering the Mexican market when you don't speak the language, understand the business culture or know who the key players are?

That's where our business matchmaking service comes in.  Think of it as speed dating for your business with pre-screened candidates.  Finding the right distributor or value added reseller to carry your products can be very tough.  We take all of the guess work out of it for you.  Let's say you have some "must haves" in a distributor...you may spend thousands of dollars (and valuable hours) on a trip to Mexico and get here only to discover that the particular distributor you thought sounded so great doesn't have what you really need. 

Many people think "Oh I'll just do a Google search for distributors in Mexico and find one that way."  I hate to let you down, but many of the most successful distributors in Mexico don't even have websites!!  It may seem hard to believe, but it is true.

If you really want to sell your product in Mexico, let us take on the challenge while you concentrate on building your business at home. 

Carlos Slim's Monthly Salary

As many of you know, Carlos Slim has overtaken both Bill Gates and Warren Buffet as the world's richest man (according to Forbes annual list).  I came across an article recently in El Universal that I thought was interesting.  Slim has a biography coming out this month, written by Jose Martinez

His monthly "salary"?  $24,000 USD a month or the equivalent of $300,000 MXN/month at today's rates.  What was most interesting to me was to read the comments below the article from readers. 
Never have I seen people so divided over one person.  Many people complained that it was "outrageous" that he would take such a salary when millions of people in Mexico are barely making it.  Others applauded his business saavy and thought that he had earned it. 



Some of Carlos Slim's businesses:

Telmex (which includes Prodigy Internet)
Telcel
America Movil
Banco Inbursa
Sanborn's
Sears
Mixup
Saks Fifth Avenue (only one in Mexico)
Cigatam
Condumex
Percentage of stock in the New York Times (largest shareholder that is not a family member)
Carso Construction
....and many more!

Love him or hate him, you cannot deny his ability to run profitable businesses!

Hold the Phone: Getting a monthly cell phone plan in Mexico

This post was inspired by the 2 hours that I spent at Telcel this weekend trying to change my plan.  Getting a cell phone anywhere should be easy, but getting on a monthly plan in Mexico as a foreigner is not for the faint of heart. 

SOME REQUIREMENTS
Some companies require a credit card...but a credit card issued IN MEXICO.  Your Visa, MasterCard or American Express will not be accepted if it was issued outside of Mexico. 

Other companies require that you bring in a payment of your last property taxes in Mexico.  "But I just moved here!" you say..."I'm renting and I don't pay property taxes!" you say...It doesn't matter.  They need to see that before you will get your phone plan.  The solution?  Find a friend that will vouch for you (as a cosigner) and get a copy of their last property tax bill called the predial.

Then there is always the most famous document....pay attention to this because you will hear it over and over again...the comprobante de domicilio, or proof of address.  It seems kind of counterintuitive that they would ask you for a proof of address when you first move somewhere.  Here's the thing - the proof of address doesn't have to have your name on it!  If you are renting, ask your landlord or property manager for their last Telmex bill and you will be good to go.

The cell phone company will do an actual investigation before you are approved.  They want to make sure you are who you say you are and you live at the address given.  They will send someone out to verify, so don't lie on your application. 

*Note: This info is for monthly cell phone plans, getting a pay as you go phone is not that difficult.

More on cell phones in Mexico in future posts....

BMW May Invest $1 Billion in Mexican Auto Parts, Minister Says

This article was sent to me by one of Mexipreneur's loyal readers, Kyle.  Thanks Kyle!

By Jens Erik Gould


June 30 (Bloomberg) -- Bayerische Motoren Werke AG, the

world’s largest maker of luxury cars, may invest more than $1

billion in Mexico to prepare local auto-parts companies to boost

supplies to its U.S. plants, Mexican Economy Minister Gerardo

Ruiz Mateos said.

“They want to increase the production of auto parts here

in Mexico,” Ruiz Mateos said in an interview in Bloomberg’s

Mexico City office yesterday. He said he’s going to Germany in

the coming weeks to discuss the project with BMW.

BMW is purchasing more supplies outside Germany as part of

a goal to lower costs by more than 4 billion euros ($4.9

billion) by 2012 and to reduce the impact of foreign currency

swings on earnings. By buying parts in Asia and North America,

the company will cut currency risk by 1 billion euros by 2012,

Herbert Diess, BMW’s purchasing and logistics chief, said in a

May 4 interview.

For Mexico, the BMW initiative would help President Felipe

Calderon’s plan to increase foreign investment at a time when

the country’s share of North American auto production may rise

at a quicker pace as U.S. automakers seek lower labor costs.

Mathias Schmidt, a spokesman for BMW in Munich, didn’t

immediately have a comment.

Chrysler Group LLC, the U.S. automaker run by Fiat SpA,

said in February it would invest $550 million to begin producing

the Fiat 500 model at a plant in Toluca, Mexico. Last month,

Ford Motor Co. reopened an assembly plant in Cuautitlan to build

2011 Fiesta cars. The factory will generate 2,000 jobs and is

part of $3 billion in investments announced since 2008.



More Investment



Mexico’s share of North American auto production will rise

to 19 percent over the next decade from an average 12 percent in

2000 to 2009, said Dennis DesRosiers, president of DesRosiers

Automotive Consulting Inc in Richmond Hill, Ontario.

The U.S. is BMW’s second-largest market after Germany. In

the first five months, almost one in every five BMW vehicles was

sold in the U.S.

BMW is investing $750 million at its plant in Spartanburg,

South Carolina, to boost capacity by 50 percent. The factory,

which manufactures X3, X5, and X6 sport-utility vehicles as

BMW’s sole U.S. assembly plant, will have capacity to produce

240,000 vehicles a year by 2012.

Setting Up: What is a FACTURA?

If you live in Mexico, it is a phrase you'll hear over and over again "Necesita factura o solo el ticket?"  Loosely translated, they are asking if you need an official receipt or non-official receipt.  Facturas are super important pieces of paper that you will be glad you saved during tax time.

WHAT IS A FACTURA?

A factura is an official receipt for goods or services that can be used for tax purposes.  In order to issue a factura, the place of business must have your RFC (your Corporate tax identification number).  Many people carry a laminated copy of their RFC in their wallet so it is easy to access.

CAN I USE A SIMPLE RECEIPT FOR TAXES?

No.  The only document that can be used for business tax deductions is a factura.

WHAT IF I FORGOT MY RFC NUMBER BUT I NEED A FACTURA?

Many places have a window of time where you can come back with your receipt (el ticket) and present your RFC to get a factura.