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Published on Oct 17, 2013 in Featured Articles, Mexico, News

Negotiating Transactions in Mexico

In continuing our series of how negotiating styles differ in various countries, I thought discussing how transactions are negotiated in Mexico would be of particular interest. This is not only because Mexico is our southern neighbor, but also because US companies conduct a substantial amount of trade with Mexico.

My partner Dave Dodge and I have had exceptionally good relationships when dealing with Mexican companies. Part of the reason for this is that I have a good friend of mine, Jose Sada, who has been a patient teacher to us on how business is conducted in Mexico. Here’s what we’ve learned from over a decade of negotiating business transactions in Mexico.

Characteristics of Mexican Negotiations:

1. Relationships matter. Relationships are important in Mexico and, if you think you’ll get a transaction done on the strength of the deal itself, you may be disappointed. Your Mexican counterpart will more than likely want a long lasting and trusting relationship in order to consummate a transaction. The reason for this is that, culturally, business in Mexico is transacted among those who know and trust each other. Therefore, business transactions can sometimes become very time consuming, requiring a number of meetings and conversations to strengthen the relationship. Once your Mexican counterpart becomes comfortable with you, the transaction will then tend to proceed at a quickened pace.

2. Always hand out business materials. Don’t throw documents on, or across the table. That doesn’t work well in Mexico, even though you might consider it a gesture of informality. Instead, hand documents out separately to individuals attending the meeting. This will show respect for those in attendance.

3. Mexican businesspeople accept risk. One of the characteristics of Mexican businesspeople is that, unlike those in many other cultures, they’re not risk adverse. However, unlike the US, where we identify risk in a financial perspective, risk in Mexico also involves the possible loss of friendship and relationships. Therefore, Mexican businesspeople realize that a bad transaction will not only have adverse financial ramifications, but also social ones as well. Mexican businesspeople accept this, but consequently want to establish a relationship and trust prior to consummating a transaction.

4. Mexican businesspeople don’t view time as linear. US businesspeople, as I’ve mentioned in previous blog’s, tend to view time in a linear fashion. This means that we expect exactness according to a defined schedule. A linear adherence. If a meeting is due to start at 10 AM, and someone arrives at 10:10, then they’re late and the US businessperson is usually irritated. In contrast, Mexican businesspeople tend to focus on a number of business matters at one time. This means that the simultaneous handing of many difficult situations may make them “late” for a meeting or a phone call according to US standards. However, in Mexico, “late” isn’t always an issue nor is it considered late.

5. Mexican businesspeople deal hierarchically with one another. Decision making is usually done from the top down in Mexico. What this means is that, in negotiations, senior members of a company should be present during negotiations, and a senior executive should attend at least the initial meeting between parties. This will also be the case for the Mexican side. If however, the senior executive from the Mexican company attends more than the initial negotiating session, he will expect his senior executive counterpart to also be present.

6. Temper tantrums must be avoided. A display of temper in business meetings with your Mexican counterpart will reflect badly on you and will be counterproductive in forming a relationship. In addition, showing one’s temper is considered a sign of disrespect, something that doesn’t work well at all in any negotiating process.

7. Dress for success and keep it formal. Mexican businesspeople tend to be more formal than Americans. Therefore, appearance is important in a business meeting. Mexico is a class-conscious society. As such, dressing appropriately, being more formal, and conducting oneself in a professional manner elevates you in the eyes of your counterpart. Most of the world, including Mexico, view United States businesspeople as being too informal. Informality with your Mexican counterpart should come only after you’ve been prompted to become informal, such as, call me Jose. Otherwise, keep it formal.

8. Negotiations tend to be methodical rather than quick. Even though Mexican businesspeople tend to start discussions quickly, don’t expect the pace of negotiations to be a sprint. Instead, look upon it as a marathon. Relationship building, negotiating, and decision-making all will take time. If you try to speed up this process, it’s not going to work. Mexican negotiators want to get to know who you are and, just as importantly, how your company operates. Their name is going to be attached to both. If your company is not one that’s highly thought of, or your reputation is less than stellar, they’ll distance themselves from both you and the transaction. In addition, Mexican negotiators view a relationship with you as long lasting. Therefore, what’s the hurry? You’re going to be doing business, in one form or another, for quite a while. Establishing the relationship, and negotiating a win-win, is what’s important. They won’t rush that process.

9. Mexican negotiators are tough. Mexican negotiators are both shrewd and tough. Although they maintain an air of civility throughout the negotiating process they can, at times, be firm and somewhat emotional. They like to bargain, and bargaining can become protracted. Once they plant their feet on a particular position, it’s very difficult for them to change their mind. This would likely cause a loss of face, as the Chinese would call it. If you find it impossible to agree with your counterpart’s position, the best course of action would be to come back to that issue in another session. Pushing your counterpart to change their mind, and make a compromise during your current session, isn’t going to work. The important thing is to stay calm, be respectful, and don’t push for an immediate change in your counterpart’s position.

10. Expect the use of pressure. Mexican negotiators will often use time pressure, as well as giving you a “final” offer. However, final doesn’t usually mean final with Mexican negotiators. They want to consummate a transaction and they view negotiating as a process, and not a take it or leave it situation. “Final” is usually meant as a pressure tactic. In addition, don’t open negotiations with your best and final offer as your Mexican counterpart will probably ignore it. They’ll want to negotiate with you. In addition, they’ll probably have their own ideas on what the final agreement should look like. Also, giving a best and final offer could be viewed in Mexico as being insulting. Stay away from ultimatums or final offers when negotiating with your Mexican counterpart.

11. Information is rarely shared. Some cultures will readily share information in the negotiating process. They believe that putting everything on the table is an important part of resolving differences and getting to a final resolution. Mexico isn’t one of those countries. Mexican businesspeople are reluctant to share information because they generally believe that it puts them at a disadvantage in negotiations. Therefore, don’t expect to get new information from your counterpart during the negotiating process.

12. A handshake and a contract carry equal weight. Legally, this is not the case, of course. However, because relationships, honor, and trust are such an important part of Mexican culture, I’ve never found a Mexican businessperson who deviated from what we agreed to. That’s not to mean that business disputes don’t happen, they do. However, this is primarily caused by both sides not being on the same page when they’ve made their agreement. The best way to address potential conflicts is to place a dispute resolution mechanism in the contract to resolve such issues.

I’ve found negotiating in Mexico to be more straight-forward than negotiating sessions I’ve had in many other countries. Mexican negotiators are not push-overs, but they tend to be fair, open-minded, and want to consummate a transaction that leads to a long term relationship and profitability for both sides. In this respect, Mexican businesspeople are very synergistic with their counterparts in the United States.

Alan Refkin

 

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