México: Vender

Distance Selling

Most Popular Forms of Direct Marketing

Catalog, teleshopping or sales by radio, telemarketing and Internet sales.

Type of Products

All types of products, especially beauty products, cosmetics and food items.

Evolution of the Sector

The total turnover of direct selling in Mexico was USD 4,824 million in 2009. The sector employs around 2 million people. The distance selling sector has become more dynamic and sophisticated.
Electronic commerce has mainly developed in the B2B form (Business to Business). This type of business represents 77.5% of electronic commerce while  the B2C form (Business to Customer/Consumer) only represents 22.5%. The sectors that have strongly developed their market through e-commerce are the sectors of  finance, retail trade and manufacturing.

Direct Marketing Enterprises

Catalog Sales in Mexico
Direct Marketing Mexican Association

Distribution Network

Commercial Intermediaries

Trading Companies

 

• Type of Organization

Very seldom, the distributors deal directly with foreign suppliers.  Because of this, it is necessary to use the services of a local Mexican mediator (export agent, non-manufacturer or  manufacturer of similar products, service company, resale agent or wholesale distributor), who knows the market and can deal directly on how to commercialize the product, develop the clientele, propose the best sales channel, store the merchandise and manage the legal procedures of introducing a new product to the market.

• Main Actors

Wal-Mart of Mexico ,Chedraui ,Soriana . Consult the site Commerce in México to find more intermediaries/wholesalers.

Wholesalers

 

• Type of Organization

Besides their role as commercial intermediaries, the wholesalers also propose services such as the classifying the articles, storing, delivering, etc.  In general, the wholesalers are specialized in high consumption items (food or non-food) or industrial and crafts manufacture equipment.

• Main Actors

In Mexico City there is a large wholesaler market called: Central de Abasto  , where they deal mainly with the trade of food products.

Consult the site Wholesalers in Mexico

Useful Resources

Mexican Enterprises Information System - Intermediaries
Mexican Guide - Find a commercial intermediary

Using a Commercial Agent

The Advantages

A commercial agent is very useful to set up the initial procedures for an exporting activity or when there are potential clients but the type of market is totally unknown.  A commercial agent can establish marketing contacts  in a fast and efficient way; controlling the brands and logistics policies up to the moment when the products are finally delivered (providing security to the producer).

Where to Be Vigilant

Even though, a commercial agent can be the person or representative of an enterprise that opens the doors of a market to a society, it is hard to keep a real control over how effective his procedures are because he works according to his own organization following his own priorities.
It is important to consider that the customers will be direct clients of the agent and not of the exporting enterprise.  It is advised to work with enterprises that offer an association type of business and not only intermediary agents, in order to be directly more involved during the process of commercialization.

Elements of Motivation

The commission fee is a very important motivation element.  A common practice between agents is to participate in contests and competitions.  Control and good contacts can be useful in order to follow up the agent's activities.  Make sure that the agent knows the market well for your product.

The Average Amount of Commission

In general it is 15 to 25% of the total sales value.

Breach of Contract

It is essential to establish a written agreement document.

Finding a Commercial Agent

Ministry of Economy -Commercial Agents
Association of Customs Agents, Mexico City
Intelweb, Dealers in Mexico
Latin American Dealers Group
Alibaba

Setting Up a Commercial Unit

The Advantages

It is an option for medium and large size enterprises planning to be involved for a long term.  It allows the enterprise to obtain a complete legal and financial responsibility of the business activities performed.

Where to Be Vigilant

It is a long process since it has to be registered in different ministries: Finance, Economy, Foreign Affairs, etc.

Different Possible Forms of Settlement

 

• A Representative Office

It is possible to create a subcontract, which allows participation in Mexican territory without investing directly and without having a long term responsibility.

• A Branch Office

There are no major obstacles to create a branch office in Mexico.  A branch office is considered a local association for the authorities.

• A Company

The most common forms of commercial companies are the "Sociedad Anonima" (Joint Stock Company) and  SARL (Limited Corporation).  All foreign capital participating has to be registered at the General Administration of Foreign Investments and at the Ministries of Economy, Finance and Credit and Foreign Affairs.

For more information, consult the website: General Administration of Foreign Investments

Franchising

Evolution of the Sector

The franchising sector in Mexico occupies the seventh position in world records according to the data provided by the WFC (World Franchise Council); it represents 5% of its gross domestic product  providing about 550,000 jobs.
45% of the franchises are in Mexico D.F. and the rest are distributed around the country, most of them are from United States.
However, a franchise represents numerous obligations to government authorities as well as to the franchisor.

Some Big Franchises

Mc Donald's, fast food
KFC, fast food
Domino's Pizza, pizzeria
Burger King, fast food
Dunkin' Donuts, fast food
Pemex, gas station
Nutrisa, nutrition
Sanborn's Brothers, various products

For Further Information

Mexican Institute of Industrial Property
Mexican Association of Franchising

Finding Assistance

Export Trading Companies

Export and Import Enterprises
Foreign Trade Enterprises in Mexico

Customs Procedures

Import Procedures

The importing agent is in charge of handling all the formalities and he requests the authorization to allow customs clearance.  It is advised to work with experienced importing agents.

The agent must present an import requisition (issued by the Ministry of the Economy), as well as a commercial invoice, a bill of lading, an exemption permit, and a certificate establishing the origin of the goods so that the corresponding taxes and duties can be applied.

General import taxes depend on the tariff bracket in which the imported goods are classified, in conformity with the Tariff of the General Import and Export Taxes Law or the Mexican Tax  Allowance Table proposed in the free trade treaties.

Specific Import Procedures

Companies that import goods that are listed in the customs classification schedule of the  Annex 10 of General Foreign Trade Rules have to be registered in the  Mexican Importers' Registry for Specific Sectors

Importing Samples

Samples must be classified according the customs list 9801.00.01 of the Legislation of General Tax for Imports and Exports, and they cannot be the object of commercialization.

Customs Duties and Taxes on Imports

Average Customs Duty (Excluding Agricultural Products)

In 2006, the average tax rate, according to UNCTAD (United Nations Conference on Trade and Development), was of 11.5%. It is a very high rate, when compared to the tax rate applied in other emerging countries such as Brazil, China and Russia.
You can consult the Tariff information system via Internet.

Preferential Rates

There are customs duty reductions (and even exemptions) for products helping  the development of the local industry ("Maquiladora" Program).
Also, Mexico has signed several free trade exchange agreements which have generated a few free trade zones:
- The ALENA (suppresses customs duties with a progressive decrease until 2009, especially for goods subject to origin regulations).
- There are other agreements with Latin American countries, such as Chile, Colombia, Venezuela, Bolivia and Costa Rica.
- Mexico is also part of the APEC.

Customs Classification

Mexico participates in the Harmonized System of Goods Classification's.

Method of Calculation of Duties

Customs duties are calculated Ad Valorem on the CIF  (cost, insurance and freight) value of the goods, except for goods originating from the USA and Canada for which the FOB (freight on board) value is used.

Method of Payment of Customs Duties

Payments for rights are paid in cash, check or bank transfer.

Import Taxes (Excluding Consumer Taxes)

Tax rate applied on imported goods

- Standard rate: 15%
- Reduced rate: 10% when the company's activities are done in a neighboring region, 0% in the case of some specific goods: articles for human consumption, books, medicines, agricultural products.

Customs rights and processing fees: 0.8% on the declared value.

 

Labeling and Packaging Rules

Packaging

The official  Mexican list of standards and regulations NOM-050-SCFI-2004 provides information regarding the general labeling of products.
Labels must contain: manufacturer's name, importer's name, description of its components, risk warning if applicable, etc.
Refer to NOM: labeling regulations

 

Languages Permitted on Packaging and Labeling

It has to be written in Spanish, and it can include expressions in other languages as well.

Unit of Measurement

The Metric Decimal System must be used, conversion to other units of measurements can be added.

Mark of Origin "Made In"

It must always include the phrase: "Produced in..", "Made in....", "Fabricated in....." or other similar phrases.

Labeling Requirements

There are specific regulations for goods such as: mass volume products, living animals, books, magazines and press publications, among others.

Specific Regulations

NOM-050-SCFI-2004, NOM-008-SCFI-2002