In a previous article, we talked about the importance of good business relationships with Mexico and the opportunities for expansion Mexico brings to our table in the agricultural sector. There are multiple additional opportunities such as importing, exporting, opening subsidiaries or relocating businesses to Mexico.
However, one fundamental principle of successful negotiations is that it is imperative to understand the cultural differences between the two countries.
We have distilled those cultural aspects that play a key role in the success or failure of a business relationship between companies in the United States and Mexico into seven easy-to-remember points. Not to offend our great neighbors to the South and their rich and varied cultural nuances, but to provide a simple jumping off point.
It is exciting to expand your business and to make a profit, but if I were a betting woman, I would bet my bottom dollar that any money you earn as a result of your business in Mexico will pale in comparison with the riches you enjoy as the result of your relationships with the people who run those companies. What lovely people.Buena suerte!
For Mexican businesspeople, a commercial deal extends far beyond the contract. And, the expectation is that oral agreements are to be honored just as if they were written. The precursor to many contracts is establishing a good relationship between business partners.Trust and respect are intrinsic parts of a healthy business transaction. Business typically includes socialization outside of the work environment. Therefore, it is not uncommon for Mexican business associates to invite their counterparts to their home during the weekend, and introduce them to their family, as a way to get to know the person more intimately.
Mexicans are warm and welcoming, and therefore, it’s completely acceptable for them to stand at a considerably closer distance than in the U.S. (up to 3 to 4 inches less than what we’d call “normal”).
You may also notice how much more open Mexicans are to physical contact, compared to Americans. For example, handshakes’ duration is longer, and it’s normal for them to use both hands, placing the other hand on the upper arm, or even on the shoulder. In workplaces and other business scenarios, it’s common to see men patting their backs, or men and women hugging to greet each other. It’s acceptable for men to kiss women on the cheek when they first meet.If these differences make you feel uncomfortable, keep in mind that Mexicans may consider you unfriendly, even untrustworthy or rude, if you back away from these physical demonstrations.
Mexicans tend to be late for meetings a lot more than Americans, although this has started to change, and even more in international negotiations. But keep in mind that Mexicans are more relaxed regarding time, and for them it’s completely understandable to be late for a meeting or business lunch, and it’s certainly not a sign of disrespect.While Americans like to get down to business and close the deal as quickly as possible, Mexicans take the time to know the person they’re considering doing business with, to create a relationship, and establish trust. They do business with “the people,” not with “the corporation,” which is too impersonal for them.
Mexicans give importance to professional titles. Always address other people by their title (“Licenciada,” “Ingeniero.” “Doctora”), followed by their last name. If the professional title of a person is unknown, or if they don’t have one, use courtesy titles (“Señor,” “Señora,” “Señorita”). Even though Americans may prefer to call people by their first name as a sign of friendship, it may seem disrespectful to Mexicans. You may omit the last name of a person, as long as you use their title. Address people by their first name only when you’re invited to do so.
Mexicans like to start their business meetings with foreigners by chit-chatting about their country, what places you’ve visited, and what aspects of their culture, or about their country you’ve liked. Avoid topics like immigration, poverty, or others that may be considered “unpleasant.” Try to talk about light and cheerful topics.
Most business lunches won’t be about business until the last moments of the meeting, which may last between 3 and 4 hours. Business breakfasts are shorter. Most Mexican businesspeople are willing to discuss business over breakfast, or lunch, but not over dinner. In any case, don’t make “business” the main part of your business meeting, and try to follow the lead of your counterpart. Remember, these are opportunities to establish a good relationship, not so much about the business itself.
When setting up a meeting at a distant date in the future, it’s totally acceptable to confirm appointments several times as the day approaches, and even the day before. This is actually good, as it shows your interest and willingness to participate in the meeting, and most people take it as a courtesy for reminding them of the meeting.
The general rule is to try not to schedule important meetings during Christmas vacations (which unofficially end until the 6th of January), because this time is reserved for family. Truthfully, best of luck trying to schedule a serious meeting between mid-December through the end of January. Likewise, be aware of national holidays, which in most cases come with a long weekend that will most likely be spent with… you guessed it: family.
Businesspeople are expected to dress conservatively and professionally.
For the younger generation: during the meeting, be polite at all times, and keep a good posture. Slouching is a sign of boredom and disrespect. Also, keeping constant eye contact is considered rude, try not to stare too much. Pointing at a person is also considered disrespectful. Don't text during lunch.Finally, keep in mind that Mexicans are not as direct as Americans when it comes to answers or decisions. It is a normal practice for people to say they will “get back to you,” when in reality they’re not interested in closing the deal. It’s important to learn the difference between actually taking the time to analyze your proposal, and avoiding to give a definite answer. It is not that they are being deceptive, it is rather a point of being polite and not wanting to offend.
Family is the most important unit for the Mexican culture, and in Latin American in general. Families usually get together during weekends, not only on special occasions.
Family hierarchy is very clear, with the oldest male commonly being the head of the household. This same hierarchy is respected in family-owned businesses, in which key decisions are made by the patriarch, or matriarch, which is not at all uncommon.
In Mexico, the term “family” is not reserved only for parents, siblings, spouse and children, as in U.S., but also extended to in-laws, uncles, aunts, cousins, nephews, nieces, and even the godparents of the children, and very close friends. The family ties with all of them are equally strong as they are with the primary family.
Most Mexicans identify themselves as members of a particular family, and take great interest in keeping and increasing the clan’s good reputation.This family dynamic permeates through business, as you can imagine. It’s common for family members to start businesses together, and nepotism is not only accepted, but encouraged, as family is expected to help other members make a career and flourish financially. Hiring family members is often a guarantee of loyalty and hard work, which contrast with the bad perception nepotism has in the U.S.
Although this is changing, Mexico is still widely Catholic, and religion is a big part in their culture and all aspects of their life.
It is a regular practice to have a priest bless new corporate premises, having religious imagery in the workplace (for example, images of the Virgin of Guadalupe, patron saint of Mexico), and publicly displaying religious values and belief in God.
Mexico used to observe many religious festivities. There have been recent changes, and now those festivities are not officially considered holidays; however people celebrate them in the offices and corporate environments by sharing the typical foods. Students even skip school during those days. Corporations sometimes sponsor religious processions to commemorate religious festivities.
Mexicans tend to speak in a softer, calm tone, and silence is just as eloquent as words. During business transactions, they can nod without agreeing, just as a sign of respect. Again, be patient and learn nuance.
Senior family members are respected by the rest of the members, and outsiders are expected to do the same. When greeting a family, or a group of people, shake the hand of the oldest member of the group first.
Machismo is seen as a fading stereotype. In many households, both parents work outside of the house. Men are ultimately responsible for making the decisions, but all adults may be consulted.Regarding language, most businesspeople and managers speak English with great fluency. However, it makes a good impression if you speak Spanish - even some. It demonstrates interest in their country and culture, and helps them create that good relationship they’re looking for. It goes without saying that it is a definite advantage for a U.S. businessperson to either speak Spanish fluently, or to have a business associate who is bilingual.
Mexico is a colorful, warm, and friendly country full of opportunities. As outsiders, U.S. businesspeople must learn to appreciate the cultural differences. As we’re able to learn from them, we’ll be able to have good personal and business relationships, that favor the growth of both countries.
The driverless car industry is hot and super-competitive. That’s a given. Here’s what’s not hot if you are Waymo, the self-driving car business that was spun out of Google’s parent company:
Recently, there was a trademark spat between Adidas and Tesla. The story piqued my interest because the big players make mistakes that are instructive for small businesses (only on a grander scale)—and because it illustrates the importance of brand identity and underscores why it’s smart to register your mark.In a nutshell, here’s what happened: Tesla filed with the US Patent and Trademark Office (USPTO) to register its Model 3, three-bar logo as a trademark. If the registration had been for the purpose of using the mark on a car, there would not have been a problem. BUT, Tesla registered to use its three-bar “E” on clothing. Adidas, a company known for rigorous policing of its brand identity, challenged Tesla’s right to register the mark as confusingly similar to the Adidas three-bar logo. Tesla withdrew its application. Adidas protected its three-bar brand identity.
The Trans-Pacific Partnership (TPP) is the largest regional trade agreement in history, between the United States and 11 other Pacific Rim countries. Following in the footsteps of the North American Free Trade Agreement (NAFTA) between the US, Mexico, and Canada, the TPP expands upon this to establish new rules for global trade by eliminating 18,000 tariffs, promoting an open internet, disciplining state-owned enterprises, and establishing environmental and worker protection. Its aim is to increase Made-In-America exports, grow the US economy, support higher-paying US jobs, and strengthen the middle class.
You've probably heard references to the TPP in recent campaign coverage. It is the result of years of trade negotiations, and has been hailed as a hallmark victory for the Obama administration. However, the agreement is still in limbo, pending ratification by Congress--a delay that hardly comes as a surprise. And, both presidential candidates for the major parties have come out against the TPP. Given this, the future of the TPP is up in the air.
Supporters hope for a vote during the lame-duck session, but the TPP's passage could very likely depend on the next presidential administration. In the meantime, we are left to consider the implications of passage of this agreement, as well as its impact on NAFTA, a pre-existing trade agreement of a similar nature.
The TPP is a piece of legislation I have been closely following, and recently had the opportunity to moderate a panel entitled, "The Impact of TPP on NAFTA: Opportunity for Strengthening Ties -- Or Recipe for Disaster." Panel members included Aristeo Lopez of the Mexican Embassy, Laura Sierra of Alston & Bird, Nicholas Guzman of Drinker, Biddle & Reath, and Greg Kanargelidis of Blake, Cassels & Graydon.
The American Bar Association Section of International sponsored this event with the intention of presenting US, Mexican, and Canadian standpoints on the TPP and the impact of its passage on NAFTA. What followed was a thoughtful and informative discussion, and although the topic is highly complex, I thought I'd share some highlights with you.
Ms. Sierra explained some of the political context surrounding the TPP, including that the US has historically been pro-trade, and this is the first time since 1992 that trade has been a significant issue in presidential election year politics. US FTAs are modeled after NAFTA. The agreement eliminates a significant number of tariffs that would be beneficial to US businesses, but there are dissenting voices. Some of the concerns include employment issues, the manipulation of currencies by various countries, and opposition in specific industries such as auto, segments of agriculture and pharmaceuticals and biologics whose concerns were not addressed in the agreement. For example, intellectual property protection for biologics is not included in the agreement.
Mr. Lopez pointed out the benefits of NAFTA--growth in trade between Mexico and the US, especially--and explained that the TPP is intended to expand upon this growth, with attention to subjects that were treated less comprehensively in NAFTA. Another goal of TPP, in Mr. Lopez' view, is to strengthen Mexico's ties to NAFTA and other FTA partners, allowing Mexican goods to reach new markets.
Mr. Kanargelidis noted that the TPP is not intended to replace or override NAFTA, but that the two agreements can co-exist. He pointed out US, Mexican, and Canadian businesses can operate under the clauses of whichever agreement is most favorable to them in a given transaction. For example, the "de minimis" value threshold is 10% under TPP, and only 7% under NAFTA.
An audience member posed the question of whether TPP shipments will be exempt from US Merchandise Processing Fees (MPF) like NAFTA shipments are. Mr. Guzman explained that even though TPP does away with "ad valorem" fees, US Customs might find another way to collect MPF that is compliant with the agreement. He also described the TPP's "focused value" methodology for determining goods' origin, which might be more stringent than NAFTA methods.
Opponents to the TPP often cite concerns about the Investor-State Dispute Settlement (ISDS) provision, which outlines the mechanism by which agreement disputes can be settled. Mr. Lopez explained that the TPP’s ISDS provisions are more transparent than those found in NAFTA.
At the conclusion of the panel, Ms. Sierra suggested that a full renegotiation of the TPP is unlikely, given that the agreement was difficult to reach in the first place, and that several countries have already ratified it. However, we might see some side letters that result in alterations to the text pertaining to certain issues. Panelists agreed that the TPP will pass. It’s a matter of time and final form.
The TPP has been negotiated between 12 countries who together form about 40% of GDP, and 1/3 of world trade. The agreement is of an unprecedented scope, and the implications of this agreement are huge. We will soon know if it can pass during the lame-duck session before the election, which is fast approaching!
Granville, Kevin. “The Trans-Pacific Partnership, Explained.” The New York Times. 20 August 2016. Web.“The Trans-Pacific Partnership.” Office of the United States Trade Representative. Executive Office of the President. 2016. Web.
In July, we reviewed the Defend Trade Secrets Act (DTSA) that passed in Congress by a sweeping majority, and was signed into law by President Obama on May 11—a rare piece of legislation that was largely agreed upon on both sides of the aisle!
In this post, “Trade Secrets: Part Two,” I want to emphasize the importance of understanding what a trade secret is, regardless of whether it is under the DTSA or state law. Surprisingly, many businesses I work with rely heavily on trade secrets for their economic livelihood, and they don’t know it. Not knowing and not tending to that little gold mine of yours can mean a significant financial hit to your business in many ways, not the least of which is losing your competitive advantage.
So, what are the components of a trade secret, and how do you protect it? Think of it in threes: the three key elements of a trade secret and three steps to protect it.