Mexico is a very price-sensitive market with less attention generally paid to quality. Price competitiveness is therefore one of the key factors to being successful in the market.

Although Mexico’s economy and its exchange rate are relatively stable, Kiwi exporters warn you need to be wary of fluctuations in the exchange rate. Product bought at formerly favourable rates to Mexico can become unsaleable with depreciation of the local currency.

Get general advice on setting prices in the Export guide.

Mexico’s size and diversity are often underappreciated by foreign exporters.

It is also a young country. About 60 percent of Mexico’s population is under the age of 25.

Get general advice on identifying your target market in the Export guide.

A New Zealand exporter reports that “One of the wonderful things about working with retailers in Mexico is their eagerness for creative, strategic marketing”.

ZESPRI’s North America Manager, Karen Brux, says she strongly believes that much of ZESPRI's success in Mexico can be attributed to a focus on developing tailored marketing programmes for all of the large retail groups.

“Our ability to do what's right for their customer base has played a key role in building brand awareness and sales. The numerous rules and regulations that often exist in other markets are still relatively few in Mexico and this provides a great creative space for those companies with the resources to take advantage of it.

“Come up with a great idea and, chances are, you'll be able to implement it!”

Get general advice on branding in the Export guide.

Importers, distributors and agents are key factors in successful exporting to Mexico. However, market entry strategies can vary by sector and region.

It can be difficult to find a single distributor or agent to cover this vast territory. In some cases you may need two or more distributors or agents to cover regions.

As usual, in-market visits are needed to show support.

New Zealand Trade and Enterprise staff are available to provide tailored advice to determine the best market entry strategy. Other agencies can also be contacted for advice.

When selling through an agent, make sure the agent is classified as an
independent contractor and not as an employee. Under Mexican law an employee could claim an employment agreement (and associated benefits), regardless of the nationality or residence of the employer.

Vista Entertainment Solutions says a local representative is a must-have. “We were lucky enough to find a very good one and they have guided us through some of the local issues and helped with the language,” says Chief Executive Murray Holdaway.

Steve McKee, Director, Grupo Kiwi Internacional S.A. de C.V. says “Having an ‘in country’ representative who is truly focused on your product or service offering is vital to gaining any headway in Mexico.

“It's great to get your offering with the biggest distributor or reseller in the country, but you'll find, in most cases, your product will just get lost in the wash without a local rep pushing and prodding on your behalf."

You should test the waters - find out the relationship between the distributor and the retailer - before setting up formal relationship with a distributor.

While some distributors may seem big, they may not pay enough attention to your product. They may also want to charge a high price or may not accept exclusivity.

New Zealand Trade and Enterprise can help you select a distributor through its network of local business contacts.

Get general advice on using agents and distributors in the Export guide.

Mexican Customs’ regulations and product standards present possible pitfalls for foreign companies. Each product has different customs duties and regulations – exporters need to fully understand complex import processes or face having their products held up in Customs.

It is recommended you work through a reputable customs broker to understand all the requirements and costs of importing a particular product into Mexico. NZTE has a network of professional custom brokers to refer to.

Mexico requires the use of a customs broker (agente aduanal) to withdraw merchandise from a customs house when the total value of the shipment is more than US$1000.

Mexican Customs law can also be strict and bureaucratic. Errors in paperwork can result in lost time, fines and even confiscation of merchandise.

Steve McKee, Director of Grupo Kiwi Internacional S.A. de C.V says "Having a customs broker who is honest and who will really work hard on your behalf is vital to ensuring your goods actually make it through the minefield that is the customs importation situation in Mexico".

Mexico does not have many import barriers. There are some products, however, in particular food items, where there are special requirements for imports.

Restrictions

The Ministry of Agriculture requires prior import authorisation for fresh, chilled and frozen meat. The Ministry of Health may also require authorisations for some food imports.

Periodically, the Mexican Government publishes lists identifying products subject to import controls. Items are identified according to their HS code; therefore, it is important the New Zealand exporters have their products correctly classified. Examples of controlled products include:

• some leather, skin and hide.
  
• fresh, chilled and frozen meat.
  
• agricultural machinery.
  
• medical products and equipment.
  
• certain types of wood and furs.

Food supplements and herbal products are highly regulated in Mexico. In some cases, only pharmaceutical-type companies may be eligible to import them.

Commercial samples of controlled products shipped by courier are also subject to these regulations. Customs often confiscates or destroys samples lacking the proper documentation. A Kiwi exporter warns that the bureaucracy associated with sending trade samples is “unbelievable. Allocate plenty of resources and patience to the exercise”.

Duties

Generally, all products imported into Mexico from countries without a free trade agreement with Mexico, including New Zealand, will have the following taxes:

• import duty - rates generally range from 0 to 20 percent.
  
• Customs processing fee - 0.8 percent of the value of the product at Customs (value of the product plus freight plus insurance plus packaging).
  
• value added tax - 16 percent (11 percent for areas within 20 kilometres from the border).

Two authorisations are needed at a cost of US$600:

• Padron de Importadores ( Importers Register)
  
• Padron Sectorial (Sectorial Importers Register).

Bob Fenwick, Managing Director of Plan Horse warns that “Import duties are substantive and vary according to the whims of the Customs officers inspecting the imports.”

Some products may require product performance and product safety Official Norms (NOMs). If a product is found to require a particular NOM, it must be tested in laboratories accredited by the local authorities. The resulting certificate of compliance is then presented to Mexican customs officials at the entry point into Mexico.

Not all products are subject to NOM compliance. You can find NOM requirements in the harmonised tariff system (HTS or HS) code numbers here or by consulting a reliable customs broker.

Some imports into Mexico will face quotas (anti-dumping fees) depending on their Harmonised System (HS) code and country of origin.

Mexico has adopted GATT-approved valuation rules that enable the New Zealand suppliers to determine the “normal price levels” for goods shipped to its Mexican importer.

Documentation

Due to Mexico’s attempts to eliminate corruption, customs officials now emphasise the accuracy and completeness of all shipping documentation.

An import declaration is always required and must be completed by a customs broker or forwarding agent. Other shipping documentation includes:

• the commercial invoice.
  
• packing list.
  
• bill of lading.

A certificate of origin of the goods may be required if the goods are imported from a country with which Mexico has a trade agreement.

Packaging or labelling requirements vary depending on the product, but in most cases they relate to content, net weight, safety measures and instructions for use from the manufacturer.

Imported products must include a label in Spanish setting out specific commercial information, information on the manufacturer and on the importer.

Most products requiring a NOM may need to have at least the following information in Spanish attached:

• name and address of the importer.
  
• name of the exporter.
  
• trademark or commercial brand name of the product.
  
• net contents.
  
• use, handling and care instructions for the product.
  
• warnings or precautions on hazardous products.

NOMs do not explicitly state that country of origin is required on the label prior to importation. However, Mexican regulations require country of origin designation, so it is recommended that New Zealand exporters include this information, in Spanish, on the labels of products destined for retail sale in the Mexican market.

It is recommended to include the importer's taxpayer number (Tax ID or commonly known as RFC in Mexico).

(Additional sources: Onate Willy & Cia customs brokers, US Commercial Service, Goodrich, Riquelme & Asociados)