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Table of Contents

General Info Interesting Facts Risk Assessment
Location and Size Economy Business Climate
Government Comparative Indicators Business Protocol
Legal System Credit and Collections Other Sources of Info

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General Information

Full Name: United Mexican States

National Symbol: Eagle on a cactus eating a snake (derived from a legend that the wandering Aztec people were to settle at a location where they would see an eagle on a cactus eating a snake; the city they founded is now Mexico City)

Internet Domain: .mx

International Dialing Code: +52

Location and Size

Mexico is located in southernmost North America. It borders the Caribbean Sea and the Gulf of Mexico on the east; the Pacific Ocean on the west; the U.S. to the north; and Belize and Guatemala to the south. Its territory covers a total of 1,964,375 sq. km., making it slightly less than three times the size of Texas. Mexico City, its capital, is located in south central Mexico.

Government

Mexico is a federal republic comprised of thirty-one states and one federal district.

Branches:

  • Executive: Chief of State and Head of Government - President Enrique Pena Nieto (since 1 December 2012); Cabinet - appointed by the president 
  • Legislative: bicameral National Congress consists of the Senate (128 seats) and the Chamber of Deputies (500 seats)
  • Judicial: Supreme Court of Justice; justices appointed by the president with consent of the Senate.

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Legal System

Mexico has a civil law system with US constitutional law theory influence and judicial review of legislative acts. 

Mexico accepts compulsory International Court of Justice (ICJ) jurisdiction. It also accepts International Criminal Court (ICC) jurisdiction.

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Ten Interesting Facts About Mexico

  1. Mexico introduced chocolate, corn, and chilies to the world.
  2. The National University of Mexico was founded in 1551 by Charles V of Spain and is the oldest university in North America.
  3. The red poinsettia flower originated in Mexico. It is named after U.S. ambassador to Mexico, Joel Roberts Poinsett, who served in the 1820s.
  4. Mexico City is built over the ruins of a great Aztec city, Tenochtitlán. Because it is built on a lake, it is sinking at a rate of 6 to 8 inches a year as pumps draw out water for the city’s growing population.
  5. When Spanish Conquistador Hernan Cortés arrived in 1519, the Aztecs believed he was their returning god, Quetzalcoatl, and offered him the drink of the gods: hot chocolate.
  6. Spanish conquerors brought bullfighting to Mexico, which is now the country's national sport. 
  7. The Chichen Itza Pyramid in Mexico was named one of the new Seven Wonders of the World.
  8. Mexico is the sixth-largest oil producer in the world, with a daily production of nearly 4 million barrels.
  9. Mexico has 707 species of reptiles, 438 species of mammals, 290 species of amphibians, and about 26,000 species of flora.
  10. Per capita, Mexico drinks more Coca-Cola than any other country.

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Economy

Mexico has the second largest economy in Latin America. The outlook for the Mexican economy is favorable. The government has recently expanded competition in seaports, railroads, telecommunications, electricity generation, natural gas distribution, and airports. The banking system is sound and economic stability has been maintained.

Mexico is dependent on foreign trade, which represents approximately 60% of its GDP. Its economic activity is heavily linked to the United States, which accounts for 78% of its exports. Its industrial production, particularly assembly work, is also closely correlated to economic activity in the U.S.

Mexico’s vast market of more than 112 million inhabitants, together with its participation in trade promoting organizations is supportive of future economic growth. However, deficiencies in infrastructure, education, research and justice, as well as poor development of business credit, pose challenges.

Leading Markets (2012): United States 78%

Leading Exports-commodities: manufactured goods, oil and oil products, silver, fruits, vegetables, coffee, cotton

Leading Suppliers (2011): US 49.7%, China 14.9%, Japan 4.7%

Leading Imports-commodities: metalworking machines, steel mill products, agricultural machinery, electrical equipment, car parts for assembly, repair parts for motor vehicles, aircraft, and aircraft parts

Top Industries: food and beverages, tobacco, chemicals, iron and steel, petroleum, mining, textiles, clothing, motor vehicles, consumer durables, tourism

Top Agricultural Products: corn, wheat, soybeans, rice, beans, cotton, coffee, fruit, tomatoes; beef, poultry, dairy products; wood products

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Comparative Economic Indicators – 2012 (estimated)

Mexico Belize El Salvador Guatemala Honduras USA
Population (millions)* 116.2 3.3 6.1 14.4 8.4 316.7
Population growth rate (%)* 1.07 1.97 0.3 1.9 1.8 0.9
Age Structure (%)
(15 to 64 years old)
65.7 60.6 64.4 59.1 60.6 66.1
Age Structure (%)
(65+ years old)
6.9 3.6 6.7 4.1 3.9 13.9
Literacy (%) 86.1 76.9 81.1 69.1 80.0 99.0
Unemployment rate (%) 5.0 11.3 6.9 4.1 4.5 8.2
Inflation (%) 3.6 2.8 2.4 4.0 5.1 2.0
Population below poverty line (%) 51.3 41.3
2010 
36.5 54.0 60.0 15.1
GDP** (USD billions) 1,761.0 2.9 46.0 78.4 37.7 15,660.0
GDP real growth rate (%) 4.0 2.3 1.5 3.1 3.8 2.2
GDP per capita** (USD) 15,300 8,400 7,700 5,200 4,600 49,800
Public debt (% of GDP) 35.4 90.8 57.4 29.9 34.5 73.6
Industrial production growth rate (%) 3.6 1.4 1.8
2011
4.1
2011
2.4 4.1
2011
Exports (USD billions) 370.9 0.6 5.8 9.9 6.9 1,612.0
Imports (USD billions) 379.4 0.8 10.4 15.6 10.7 2,357.0
Reserves of foreign exchange and gold (USD billions) 163.6 0.2 2.6 6.3 3.2 148.0
2011
Currency Peso
MXN
Dollar
BZD
Dollar
USD
Quetzal
GTQ
Lempira
HML
Dollar
USD
Exchange rates (per USD) 07/5/2013 12.9 2.0 1.0 7.7 19.9 1.0
Exchange rates (per EUR) 07/5/2013 16.8 2.6 1.3 9.9 25.8 1.3
Rating in 2012 Corruption Perceptions Index*** 34 na 38 33 28 73
Rating in 2013 Index of Economic Freedom*** 67 57.3 66.7 60 58.4 76.0

* July 2013 estimate
** PPP – Purchasing Power Parity
*** 2012 Corruption Perceptions Index: 80-100=Clean; 0-39=Corrupt
**** 2013 Index of Economic Freedom: 100-80 = Free; 49.9-0 = Repressed

Economic Data from CIA World Factbook

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Credit and Collections

Mexican Statutes of Limitations:

  • Open Account: 4 years
  • Promissory Notes: 3 years
  • Written Contracts: 4 years
  • Oral Agreements: 4 years

Dispute Resolution

As a participant in NAFTA, Mexico subscribes to its regulations pertaining to dispute resolution.

Chapter 11 of NAFTA contains provisions designed to protect cross-border investors and facilitate the settlement of investment disputes. It permits an investor of one NAFTA Party to seek money damages from other NAFTA Parties that allegedly violate any provisions of Chapter 11. Investors may initiate arbitration against the NAFTA Party under the Arbitration Rules of the United Nations Commission on International Trade Law ("UNCITRAL Rules") or the Arbitration (Additional Facility) Rules of the International Center for Settlement of Investment Disputes ("ICSID Additional Facility Rules"). A NAFTA investor also has the option of using the registering country's court system instead.

The Mexican government and courts recognize and enforce arbitral awards. Under Mexican law, however, many commercial disputes that would be treated as civil cases in the U. S. may be treated as criminal proceedings in Mexico. As a result, depending upon the evidence presented, a judge may decide to issue arrest warrants.

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Risk Assessment

Coface Country Rating: A4 -- very acceptable risk
Coface Business Climate Rating: A4 -- very acceptable risk

Coface Country Rating: The overall risk is a combination of business-specific factors and factors relating to the country in which the business operates. The analyses use a seven-level ranking. In ascending order of risk, these are: A1, A2, A3, A4, B, C and D.

Coface Business Climate Rating: Evaluating the business environment involves measuring the quality of a country’s private sector governance – in other words businesses’ financial transparency and the effectiveness of the courts in settling debts. Evaluations use a seven-level ranking. In ascending order of risk these are: A1, A2, A3, A4, B, C and D.

Ducroire Delcredere Political Risk Rating: 1 -- low risk
Ducroire Delcredere Commercial Risk Rating: A -- low risk

The Belgian Export Credit Agency (ONDD): Risks on Export Transactions

  • Political Risk - Short Term <2 years: 1 -- low risk
  • Political Risk - Medium-Long Term >2 years: 3 -- low to moderate risk
  • Commercial Risk: A -- low risk

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Business Climate

Mexico is open to foreign direct investment (FDI) in most economic sectors and has consistently been one of the largest recipients of FDI among emerging markets.

The 1993 Foreign Investment Law, consistent with the foreign investment chapter of NAFTA, is the basic statute governing foreign investment in Mexico. It provides national (i.e. non-discriminatory) treatment for most foreign investment, eliminates performance requirements for most foreign investment projects, and liberalizes criteria for automatic approval of foreign investment.

Despite Mexico's relatively open economy, a number of key sectors in Mexico continue to be characterized by a high degree of market concentration. These include telecommunications, electricity, television broadcasting, petroleum, beer, cement, and tortillas which feature one or a few dominant companies with enough market power to restrict competition. In support of smaller enterprises, state governments have passed small business facilitation measures, making it easier to open businesses.

As a free market economy comprised of modern and outmoded industry and agriculture, it is becoming increasingly dominated by the private sector.

Economic Freedom: Mexico’s economic freedom score is 67.0, making its economy the 50th freest in the 2013 Index. Its score is 1.7 points better than last year, reflecting notable improvements in investment freedom, trade freedom, and monetary freedom. Mexico is ranked 3rd out of three countries in the North America region, but its score is well above the world average.

Market Access: Mexico has free trade agreements with over 50 countries including Guatemala, Honduras, El Salvador, the European Free Trade Area, and Japan - putting more than 90% of trade under free trade agreements.

The Mexican government is currently developing an International Trade Single Window to simplify import, export, and transit-related operations, increase efficiency, and reduce costs and time for international traders.

Regulatory System: The Federal Commission on Regulatory Improvement (COFEMER) is the agency responsible for reducing the regulatory burden on business in Mexico. The federal government has been making steady progress on this issue. Despite this, many difficulties remain. Foreign firms continue to list bureaucracy, slow government decision-making, lack of transparency, a heavy tax burden, and a rigid labor code among the principal negative factors inhibiting investment in Mexico.

Intellectual Property Rights: Multiple federal agencies are responsible for various aspects of intellectual property rights protection in Mexico. The Industrial Property Law and the Federal Copyright Law provide the core legal basis for this protection.  Despite strengthened enforcement efforts, weak penalties and other obstacles have failed to deter the rampant piracy and counterfeiting found throughout the country. The U.S. Government continues to work with its Mexican counterparts to improve the business climate for owners of intellectual property.

Exchange Control: Mexico has open conversion and transfer policies as a result of its membership in NAFTA and the OECD (Organization for Economic Cooperation and Development). In general, capital and investment transactions, remittance of profits, dividends, royalties, technical service fees, and travel expenses are handled at market-determined exchange rates. Peso/dollar foreign exchange is available on same-day, 24- and 48-hour settlement bases. Most large foreign exchange transactions are settled in 48 hours.

Corruption: According to Transparency International’s 2012 Corruption Perceptions Index, Mexico scored 34 on a scale of 1 to 100, where lower numbers represent a greater perception of corruption. Corruption is pervasive in almost all levels of Mexican government and society. Aggressive investigations and operations have exposed corruption at the highest levels of government. The government has enacted strict laws attacking corruption and bribery, with average penalties of five to ten years in prison. 

Political Violence: While political violence is rare, narcotics and organized crime related violence has skyrocketed. Transnational criminal organizations (TCOs) fighting each other and the government for control of drug smuggling routes have carried out violent acts unprecedented both in number and nature. Institutions, including major media outlets and a U.S. Consulate, have been subject to unprecedented attacks. TCOs continue to expand their operations into any available money-making venture, often targeting business owners and others innocent of any involvement in narcotics trafficking.

For more detailed information on these topics, visit the 2013 Investment Climate Statement - Mexico, U.S. Department of State.

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Business Protocol in Mexico

  • It's important that your initial delegation include an upper-level executive as the initial meeting will generally be with someone of high stature.
  • Business appointments are required and should be made at least 2 weeks in advance. 
  • It's important that you arrive on time for meetings, although your Mexican business associates may be up to 30 minutes late. 
  • Expect to answer questions about your personal background, family and life interests.
  • Have all written material available in both English and Spanish.
  • Negotiations and decisions take a long time and will include a fair amount of haggling. Do not give your best offer first and do not include an attorney on your negotiating team.
  • Men should wear conservative, dark colored suits; women, business suits or conservative dresses.
  • Business cards are exchanged during introductions with everyone at a meeting. Have one side in Spanish.

More information on Business Protocol: Kwintessential

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Sources for further information on doing business in Mexico

American Chamber Mexico

Doing Business in Mexico, Baker Tilly International (2012-PDF)

United States-Mexico Chamber of Commerce

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Mexico. For further information, contact info@abc-amega.com.

This report represents a compilation of information from a wide variety of reputable sources.

Comparative Economic Indicators: CIA World Factbook

Risk Assessment information: Coface Country Rating, Ducroire/Delcredere and Political Risk Insurance Center.

Exchange Rates: OANDA.com The Currency Site.