Mexico has such a bad press. The U.S. media only covers the drug wars and illegal immigration. We eat Tex-Mex and think it is Mexican. The real secret never leaks out: nearly 50,000 small American companies export to Mexico!
Oh, down in Mexico
I never really been so I don’t really know
I guess I’ll have to go
I never really been but I’d sure like to go
I guess I’ll have to go now
- James Taylor, “Oh, Mexico“
Sure, Mexico has problems. Surveys rank the country as 98th in the world for transparency and 66th for competitiveness. 52% of the population is poor or extremely poor. Those drug war headlines aren’t made up.Jeff Hamilton, a U.S. Commercial Service officer in Mexico City, discussed all that with a business group in Honolulu just before Christmas. Jeff pointed out on a map how to avoid the drug wars (don’t go to certain northern cities, for the most part) – and argued that more than 80% of the casualties are members of the drug cartels, and 6% are police. Takeaway? They are not aiming at you. Use due caution and you’ll do all right.
Hamilton argued that Mexico’s extreme income distribution means that companies might want to think about products that will sell to the upper and upper-middle parts of the market. Yes, Mexico ranks behind Brazil and Panama for competitiveness, but it is also ahead of places like Colombia and Peru.
There are still those 50,000-some American companies selling in Mexico, so the story can’t be all bad. Perhaps you are missing a bet if you aren’t there. You can chalk it up to geography or NAFTA, but Mexicans have a liking for U.S. products, sourcing 49% of the their imports from the United States.
Hamilton turned to things that Hawaii companies might sell in Mexico. Hawaii is famous for its tropical agriculture, but that’s not going to cut it in Mexico, which grows its own coffee, papaya and other tropical crops. Some of our specialty prepared food products might go down better, but he wasn’t too excited.
He sees good prospects for Hawaii’s expertise in green tropical architecture, experience with green buildings, and for our wind power and geothermal companies.
Hawaii might do even better selling services, such as architectural design, education, and the big one – tourism. Mexicans are eager to get their kids into U.S. colleges and universities and never think about Hawaii, so this could be an opportunity for Hawaii schools to make some headway.
Tourism needs to be targeted to the people who can afford it and Hawaii is a tough sell as long as Mexicans think of it only as a place with scenery and beaches. They’ve got scenery and beaches. Hamilton, however, said that 14 million Mexicans visited the United States in 2010. Their favored destinations, unsurprisingly, are Texas, Florida, California, New York and – drumroll – Las Vegas. Their primary interests, says Hamilton, are shopping, good restaurants, museums and Disneyworld. Honolulu has restaurants, some of the shopping, world-class museums that few tourists venture to, and now we have the Aulani Walt Disney Resort and Spa. Might be time for a tourism campaign in Mexico, you think? Jeff recommended two ways to start: The annual Visit USA show in Mexico every February, and especially FITA 2012 (the Tourism Fair of the Americas) in Mexico City, September 20-23. With FITA, you can spread your message throughout Latin America.
As a general matter, Hamilton advised companies new to Mexico to focus first on at most three cities: Mexico City, Guadalajara and Monterrey. Decision-making tends to take longer than north of the border, so plan to be patient. Also expect drawn out negotiations on payment terms. While it might be a red flag in dealing with other markets, firms often ship to Mexico by sending their goods to an intermediate shipper in Texas, who then gets them across the border to their destinations.
I did some market research for a Hawaii company selling aloha-oriented products and was surprised to see a large number of hula halau (teams and dance schools) in Mexico, indicating a possible affinity for Hawaii. Hamilton didn’t think so. He said Hawaii is not well-known in Mexico, that most Mexicans only think of it as a tourism destination, maybe not even part of the United States. Incidentally, they don’t call it hula in Mexico, it is simply “Hawaiian dance”. We’ve got our work cut out for us.