If you don't have trustworthy Mexican partners, you can get into trouble here; only idiots try to figure it out themselves.
R. HECKMANN, CEO, U.S. FILTER.
For every factory opened in Mexico (whether by Asian, Canadian, European, or American firms), the U.S. wins service, transportation, or distribution jobs.65 Also, American firms which supply components to those factories are profiting from the boom south of the border. This is because primary components in products such as VCRs must be made in North America to benefit from NAFTA. U.S. and Mexican companies also benefit from orders for supplies from European and Asian firms.
While many Canadian and American companies are expanding into Mexico, taking advantage of the increased confidence and opportunities resulting from passage of NAFTA, most firms face an uphill battle because they make incorrect assumptions about the similarity of the market and distribution system. Problems include corruption, American arrogance, red tape on both sides of the border, and misunderstandings about the Mexican culture and how to do busi nes there. -
Coupling these problems with those in the infrastructure, it is easy to see why many foreign firms have had difficulties expanding into Mexico, often giving up. While it is easier now to get a business phone line, transportation and mail systems are still behind American expectations, and bill collecting often must be done in person because of numerous problems with the mail and required documentation. Electricity is sometimes cut off without notice, and the legal system is so difficult to figure out that foreigners risk going to jail without being accused of a crime. Mexican partners and alliances seem to be the answer-as even the giant Wal-Mart Stores Inc. found out when it ran into so many distribution problems in Mexico that it decided it would cost no more in the long run to use local distributors.
So why do American companies bother? Typically, because they want to take advantage of market expansion opportunities. One example is U.S. Filter, a water-purification company whose target in Mexico is 90 million people who can't trust their tap water, and a slew of companies under government pressure to clean up waste water.
From the North Looking South : Managing Interdependence article from Global Management Catagory From the North Looking South
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