Doing Business in Mexico Successful Partnering in Mexico
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Doing Business in Mexico Successful Partnering in Mexico Presentation held for Swiss SMEs participating in the Economic Mission o...
Doing Business in Mexico Successful Partnering in Mexico Presentation held for Swiss SMEs participating in the Economic Mission of Swiss Secretary of State for Economic Affairs David Syz to Mexico. Mexico City, 11 - 13 September 2002.
Successful Partnering in Mexico 0. Overview: A Partnership - Your Key to Success? 1. First Step: Is Partnering the Right Option? 2. Second Step: Search of Potential Candidates 3. Third Step: Screening of Candidates and Selection 4. Fourth Step: Negotiating a Partnership Agreement 5. Managing the Partnership ! Further information is included in Section 5.2 of Doing Business in Mexico
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0. Overview: A Partnership Your Key to Success? (I) Advantages of Partnering in Mexico • Partnering has been cited by many Swiss firms as the single most important Mexico-specific success factor. • Market entrance with a partner may help in reducing the investment in terms of human and financial resources • Market entrance with a well-established Mexican partner helps to access existing distribution channels • An experienced and trustworthy partner has the knowledge of Mexico‘s market, culture and legal system and may therefore be your most valuable resource in Mexico
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0. Overview: A Partnership Your Key to Success? (II) Challenges of Partnering in Mexico • The search of a suitable partner is a difficult, timeconsuming task because the partner should: - be trustworthy and honest; - have a good knowledge of the legal and fiscal system; - have good references and record of achievement; - be able to offer good services to customers; - not distribute competing products; • Good agreements are needed to protect a deal • Risks of partnering (moral hazard, loss of technology etc.) • Need to manage a partnership effectively (time, visits etc.)
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1. First Step: Is Partnering the Right Option? Is market entry through a partnership the right option? • Thoroughly analyse your company environment: - Is the particular market suitable for market entry through a partnership? - What is your firm‘s experience with partnerships? - Are partnerships part of your firm‘s strategy? - Partnering is a Give-and-Take: What can you offer in order to make a partnership stable and durable? • Does partnering expose your firm to risks? • Do you have the commitment of your firm‘s top management for the partnership?
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2. Second Step: Search of Potential Candidates
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There are several ways to identify potential candidates: Use Existing Contacts to - Suppliers - Producers of Complimentary Products - Customers Make use of business directories Seek assistance from - industry-specific chambers and/or associations - bilateral chambers of commerce and industry Visit industry-specific events such as trade shows
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3. Third Step: Screening of Candidates and Selection
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Thoroughly check the trustworthiness, experience and record of achievement of your prospective partner. Seek information from your prospective partner (such as products / lines handled, industrial / regional coverage, services, logistics, staff, financial relations etc.) Visit prospective partners and tour their installations Check references and record of achievement Seek information from the market environment Seek information from industry-specific associations or chambers, or bilateral chambers of commerce Attend industry-specific events such as trade shows.
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4. Fourth Step: Negotiating a Partnership Agreement
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Negotiate an agreement including the following issues, where applicable: Ownership structure and/or responsibilities Valuation of partners‘ contributions Transfers and updates of technology Governance: Selection of management, decision rules Distribution of earnings or royalties Procedures for raising capital Staffing of partnership Rules for the termination of the partnership Check your agreement with a local lawyer!
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5. Managing the Partnership Remember: The management of a working partnership requires continuous investment in terms of time and dedication. • Regular contacts and visits. • Establishment of joint strategies for the evolution of the partnership • Maintenance of a personal relationship with partners. • Open discussion of problems and disagreements • Resolution of disputes in an atmosphere of good faith.
