Negotiating International Business - Mexico

This section is an excerpt from the 2017 edition of the book “Negotiating International Business - The Negotia-
tor’s Reference Guide to 50 Countries Around the World” by Lothar Katz.

While some businesspeople and officials in Mexico may have limited exposure to other cultures, many
are reasonably familiar with and prepared for doing business internationally. However, this does not
always mean that they will be open-minded. When negotiating business here, realize that people may
expect things to be done ‘their way,’ in which case you should strive to understand, and occasionally
emulate, their behavior in order to gain the acceptance of your Mexican counterparts.
Though the country’s culture is quite homogeneous overall, business cultures differ somewhat between
the North and the South. People in the North tend to be more business-focused and often have a high
sense of urgency. This can be more relaxed in Southern Mexico, where the stereotypical mañana attitude
of conducting business at a leisurely pace may still be found.

Relationships and Respect

Mexico’s culture is generally group-oriented. Asserting individual preferences can be seen as less im-
portant than having a sense of belonging to a group, conforming to its norms, and maintaining harmony
among its members. Building lasting and trusting personal relationships is therefore very important to
most Mexicans, who often find it essential to establish strong bonds prior to closing any deals. People in
this country prefer to do business with those they know, like, and trust. If they initially seem suspicious
and non-committal, you may be able to overcome this with consistent friendliness and goodwill. Es-
tablishing productive business cooperation requires a long-term perspective and commitment. Proceed
with serious business discussions only after your counterparts have become very comfortable with you.
This can be a time-consuming process and may require several trips to strengthen the bonds. Mexicans
tend to distrust people who appear unwilling to spend the time or whose motives for relationship build-
ing are unclear.
Once you have established a working relationship, the Mexicans may still prefer to keep the initial en-
gagement small and low-risk. They view this as an opportunity for you to prove yourself. Larger-scale
business engagements require time to build.
Business relationships in this country exist between people, not necessarily between companies. Even
when you have won your local business partners’ friendship and trust, they will not necessarily trust
others from your company. This makes it highly beneficial to keep company interfaces unchanged.
Changing a key contact could require the relationship building process to start over.
Families play a dominant role in Mexican society and business life. Many companies are family-owned or
controlled. Mexican families can be large and may extend into powerful networks that not only include
extended family but also friends, business partners, and others. Becoming integrated into such networks
through personal relationships is vital to doing business in the country. Who you know could determine
whether people want to get to know you. Similarly, whether people think you are worth knowing and
trusting often weighs much more strongly than how competent you are or what proposals you may have
to make. Personal networks may open doors and solve problems that would otherwise be very difficult
to master. Maintaining honest and cordial relations is crucial. Third party introductions can be very help-
ful as a starting point to building a trusting relationship with a potential partner, especially since people
may initially not trust outsiders who are neither part of their family nor their circle of friends.

While Mexicans are usually warm and friendly, most of them, especially males, are also very proud and
can be easily offended by comments that leave room for misunderstandings. ‘Saving face’ and respecting

Copyright 2006-2017 - Lothar Katz 1

everyone’s honor and personal pride are crucial requirements for doing business in the country. Openly
criticizing someone in front of others can have a devastating impact on your negotiation. Avoid open
conflict, and know that politeness is crucial. In addition, showing genuine interest and compassion will
win people’s hearts.

In Mexico’s business culture, the respect a person enjoys depends primarily on his or her status, con-
nections, and education. Age, while respected, does not necessarily determine the seniority of a person.
Admired personal traits include sincerity, integrity, charisma, and sociability.

Communication
While the country’s official language is Spanish, it is notably different from the Spanish spoken in Spain.
Many businesspeople speak English. Mexicans usually prefer and are more familiar with American En-
glish. Since it is different from British English to the point where misunderstandings may happen easily,
familiarize yourself with the differences upfront if necessary. In any case, being able to speak Spanish
is a clear advantage. With high-ranking managers, it can otherwise be useful to engage an interpreter.
In order to avoid offending the other side, ask beforehand whether an interpreter should be present at a
meeting. When communicating in English, speak in short, simple sentences and avoid using jargon and
slang. It will help people with a limited command of English if you speak slowly, summarize key points,
and pause frequently to allow for interpretation. Mexicans may not admit it if they do not understand
parts of the conversation. Even when the main meeting language is English, your counterparts may
frequently speak Spanish among themselves, not necessarily to shut you out from the discussion but to
reduce their discomfort and ensure a common understanding among them.

While discussions may get very lively, Mexicans generally dislike loud and boisterous behavior. They
may show their emotions openly. However, it is crucial never to lose your temper or appear impatient,
as there is always a risk of hurting someone’s pride. People may converse in close proximity, standing
only two feet or less apart. This is usually less pronounced in business situations. In any case, never back
away even if your personal comfort zone calls for more space. Doing so could be read as a sign that you
are uncomfortable around your local counterparts.

Communication in Mexico is somewhat indirect. People may prefer to be careful about what they say
and how they say it. In addition, they may tell you what they think you want to hear rather than what
they really think. They might insist that everything is in perfect order, even when this is not the case,
or give seemingly ambiguous answers such as ‘maybe,’ ‘I am not sure,’ or ‘we will think about it’ when
the message is ‘no.’ ‘Yes’ may only mean that they understood what you said, not that they agree with
it. It may take extensive and unmistakable questioning to find out whether you indeed have agreement.
However, some Mexicans may get straight to the point when trying to get a message across. Silence is
rare and usually signals that there is a serious problem. Avoid being overly direct yourself, as your Mex-
ican counterparts may otherwise perceive you as rude and pushy. The communication often becomes
more direct and frank once a strong relationship has been established.

Gestures and body language are extensive and lively. There can be frequent physical contact with others
of the same gender. The American OK sign, with thumb and index finger forming a circle, could be read
as an obscene gesture in Mexico. Eye contact should be frequent, almost to the point of staring. This con-
veys sincerity and helps build trust. Anger may sometimes be masked with a smile.

Initial Contacts and Meetings

Choosing a local intermediary who can leverage existing relationships to make the initial contact is use-
ful. This person will help bridge the gap between cultures, allowing you to conduct business with greater
effectiveness and may also serve as your local interpreter.

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Negotiations in the country may be conducted by individuals or teams of negotiators. It is vital that
teams be well aligned, with roles clearly assigned to each member. Changing a team member could re-
quire the relationship building process to start over and should be avoided. Mexican negotiation teams
are usually very well aligned. If uncertain what position to support, their members will defer to the
principal negotiator.
Given the strong emphasis on hierarchy in the country’s business culture, a senior executive should at-
tend the initial meeting for your company and your negotiating team should include senior leaders who
know your company well. There will not be an expectation for this executive to attend future meetings.
Similarly, the top executive on the Mexican side, who is likely the ultimate decision maker, might attend
only initially. The most senior Mexican executive to attend throughout the negotiation will likely be at a
similar level in the hierarchy as your own negotiation leader.
If possible, schedule meetings at least one to two weeks in advance. Since Mexicans want to know who
they will be meeting, provide details on titles, positions, and responsibilities of attendees ahead of time.
An agenda is usually set upfront, but this is only a formality. It is usually not strictly followed. Reconfirm
your meeting and be prepared for your counterparts to cancel or postpone meetings with little advance
notice.
While meetings may start considerably late, Mexicans generally expect foreign visitors to be punctual.
Avoid being more than 10 to 15 minutes late, and call ahead if you will be. At the same time, important
people will likely make you wait. Displaying anger because of that will reflect very poorly on you. The
most senior people usually arrive last. Otherwise, authority can sometimes be difficult to pick out, so
watch for small hints of deference to identify the decision makers.
Names are usually given in the order of first name, family names. Most Mexicans have two family names,
the first one from their father, and the second one from their mother. Use Mr./Mrs./Miss or Señor/Señora/
Señorita, plus the father’s family name, which is always the first one of the two family names given. If a
person has an academic title, such as Doctor or Professor, or a professional title such as Ingeniero, Licenciado,
or Arquitecto, use it instead, followed by the father’s family name. You may also hear someone addressed
by the titles Don or Dona. This is a show of great respect. Before calling Mexicans by their first name, it is
usually better to wait until they offer it. Introduce or greet the most senior person first. Thereafter, greet
everyone else individually. Introductions are accompanied by handshakes. Men should wait for women
to initiate handshakes. If a woman does not seem to want to shake hands, it is best just to bow slightly.

The exchange of business cards is an essential step when meeting someone for the first time, so bring
more than you need. It is recommended to use cards with one side in English and the other in Spanish.
Show doctorate degrees on your card and make sure that it clearly states your professional title, especial-
ly if you have the seniority to make decisions. When presenting your card, ensure that the Spanish side
is facing the recipient. Smile and keep eye contact while accepting someone else’s card, then carefully
examine it. Next, place the card on the table in front of you. High-ranking people may not hand out their
card, which is a sign of their importance.
Business meetings usually start with some small talk intended to establish personal rapport. This could
include personal questions about your background and family, allowing participants to become ac-
quainted. It may be important to remain patient and let the other side set the pace. Initial meetings may
appear very formal, but the atmosphere usually gets a bit more relaxed in subsequent meetings. People
appreciate a sense of humor, but keep it light and friendly, and be careful not to overdo it. Business is a
serious matter in Mexico. Meetings may appear somewhat chaotic, with frequent interruptions and sev-
eral parallel conversations. Do not take this personally; it also does not indicate a lack of interest.
The purpose of the first meeting, maybe also subsequent ones, is to become acquainted and build rela-
tionships. Business will be discussed, but do not try to hurry along with your agenda. Some Mexicans
dislike people who try to get to the point too quickly. The goal should be to establish respect and trust
between yourself and your counterparts. It is unrealistic to expect initial meetings to lead to straight de-

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cisions. In addition, it is rare to get open opinions at the conference table, so watch for subtle clues and
use other opportunities such as one-on-one conversations or business dinners to learn more.

Presentations should be short and concise. Make sure your proposal is clearly structured and presented.
Mexicans prefer oral communication to data exchanges, so avoid overburdening your material with
many facts and details. Presentation materials should be attractive, with excellent and clear visuals.
Any materials you bring, such as letters, presentation handouts, and promotional literature, should be
immaculately designed and presented since initial appearances matter a lot in this country. Having your
handout materials translated to Spanish is not a must, but it will be appreciated and helps in getting your
messages across.

Negotiation
Attitudes and Styles - Leveraging relationships is an important element when negotiating in Mexico.
Nevertheless, Mexicans often employ distributive and contingency bargaining. While the buyer is in
a superior position, both sides in a business deal own the responsibility to reach agreement. They ex-
pect long-term commitments from their business partners and will focus mostly on long-term bene-
fits. Although the primary negotiation style is competitive, Mexicans nevertheless value long-term
relationships. While proposals should demonstrate the benefits to both negotiating parties, neither of
them should take attempts to win competitive advantages negatively. It is critically important to remain
non-confrontational and avoid direct conflict throughout the bargaining exchange. Ultimately, the cul-
ture promotes a win-win approach. You will earn your counterparts’ respect by maintaining a positive,
persistent attitude.

Should a dispute arise at any stage of a negotiation, you may be able to reach resolution or an acceptable
compromise by leveraging personal relationships, assuming that they are strong enough.

Sharing of Information –Even when personal relationships are strong, your counterparts could be reluc-
tant to share information openly. Many Mexicans believe that privileged information creates bargaining
advantages. In addition, figures and numbers can be unreliable in this dialog-driven culture, which
could make them misleading.

Pace of Negotiation – Expect negotiations to be slow and protracted. Be prepared to make several trips if
necessary to achieve your objectives. Relationship building, information gathering, bargaining, and deci-
sion making could all take considerable time. Attempts to rush the process are unlikely to produce better
results and could be viewed as offensive. Throughout the negotiation, be patient, control your emotions,
and accept the inevitable delays.

Most Mexicans prefer a polychronic work style. They are used to pursuing multiple actions and goals
in parallel. When negotiating, they often take a holistic approach and may jump back and forth between
topics rather than addressing them in sequential order. Negotiators from strongly monochronic cultures,
such as Germany, the United Kingdom, or the United States, could find this style confusing, irritating,
even annoying. In any case, do not show irritation or anger when encountering this behavior. Instead,
keep track of the bargaining progress at all times, often emphasizing areas where agreement already
exists.

If your counterparts appear to be stalling the negotiation, assess carefully whether their slowing down
the process indicates that they are evaluating alternatives or that they are not interested in doing business
with you. Mexicans may be reluctant to deliver a final ‘no,’ preferring to stay in loose contact instead.
However, this behavior may also either represent an attempt to create time pressure in order to obtain
concessions, which happens frequently, or it simply reflects the slow decision process in the country.
Again, patience and persistence are vitally important.

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Bargaining – Mexicans can be very shrewd and tough negotiators. They are used to hard bargaining and
often do a lot of haggling. Surprisingly strong emotions and many exaggerations may accompany the
process.

The bargaining exchange can be extensive. Concessions never come easily, and although Mexicans may
show interest in new ideas and concepts, they often find it difficult to change their position. Requesting a
compromise may become an issue of pride if presented in the wrong way. Be respectful throughout the
bargaining exchange. Rather than pushing for concessions, it may be better to re-address disagreements
in follow-up meetings, which gives your counterparts the opportunity to reconsider their position with-
out overtly losing face. Effective negotiators may be able to move prices by 40 percent or more between
initial offers and final agreement. Leave yourself a lot of room for concessions at different stages. After
making one, always ask the other side to reciprocate. Throughout the process, remain cool and respect-
ful, avoid confrontation, and frequently reaffirm the relationship.

Although Mexicans generally prefer a straightforward negotiation style, they also use deceptive tech-
niques, such as telling lies, sending fake non-verbal messages, pretending to be disinterested in the
whole deal or in single concessions, misrepresenting an item’s value, or making false demands and
concessions. telling lies and sending fake non-verbal messages, pretending to be disinterested in the
whole deal or in single concessions, misrepresenting an item’s value, or making false demands and
concessions. Your Mexican counterparts may play stupid or otherwise attempt to mislead you in order
to obtain bargaining advantages. Do not take such tactics personally and refrain from lying at or grossly
misleading your counterparts, as doing so could damage business relationships. Even when you can
see right through a lie, it would be a grave personal insult to state or even hint that your counterpart
might not be telling the truth. It is advisable to verify information received from the local side through
other channels. Similarly, they treat ‘outside’ information with caution. ‘Good cop, bad cop’ is a tactic
that Mexicans rarely use, though it could be effective on either side of the negotiation table. However, it
could be devastating if the other side recognized this as a tactic, and your team will need to exclude any
‘bad cop’ member from future negotiation rounds. Businesspeople may claim limited authority, stating
that they have to ask for their manager’s approval. Mexican companies use many checks and balances
in order to limit fraud, so unless you are negotiating with the head of an organization, this will often be
the truth.

Negotiators in the country may use pressure techniques that include making final offers, applying time
pressure, showing intransigence, or nibbling. Final offers may come more than once and are rarely final.
Be careful when using tactics such as opening with your best offer or making decreasing or expiring of-
fers. Mexicans may consider these inappropriate or even insulting. Silence can be a very effective way to
signal rejection of a proposal or to obtain further concessions. Your counterparts will generally be very
persistent throughout the bargaining exchange.

Mexican negotiators avoid openly aggressive or adversarial techniques. While they may use indirect
threats and warnings, or subtly display anger, they will be careful not to appear aggressive when doing
so. Extreme openings are not frequently used since they may adversely affect the relationship, so be very
cautious when using the tactic yourself. Never walk out or threaten to do so in an aggressive fashion as
your counterparts will likely take this as a personal insult and could end all talks. However, threatening
a ‘friendly walkout’ while strongly emphasizing the relationship can be very effective.

Emotional negotiation techniques, such as attitudinal bargaining or attempting to make you feel guilty,
are frequent and can be effective. Be cautious not to hurt someone’s personal pride when employing any
of these tactics, though. Pleas to personal relationships and other emotional appeals, such as emphasiz-
ing how your proposal will add to your counterparts’ personal satisfaction or heighten their honor, can
be very powerful.

Mexicans may frequently employ defensive tactics such as blocking or changing the subject, asking
probing or very direct questions, making promises, or keeping an inflexible position.

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Corruption and bribery are somewhat common in Mexico’s public and private sectors. Laws pertaining
to bribery are also less stringent than in many other countries. People may draw the line differently,
viewing minor payments as rewards for getting a job done or ‘unofficial service charges,’ rather than as
bribes. Also, keep in mind that there is a fine line between giving gifts and bribing. What you may con-
sider a bribe, a Mexican could simply view a nice gift.

Decision Making – Most companies tend to be very hierarchical, and people expect to work within
clearly established lines of authority. Communication is expected to take place across similar levels in the
hierarchy and it could damage the respect you enjoy if you spent much time and attention on someone
you outrank. Decision makers are senior executives who are often autocratic but will consider the best
interest of the group or organization. They might consult with others before making the call. Subordi-
nates may be reluctant to accept responsibility. Decision makers also rarely delegate their authority, so it
is important to deal with senior executives.

Gaining access to top managers can be difficult, though. You may have to deal with subordinates who
could strongly influence the final decision, which may be made behind closed doors. Maintaining good
relationships with these intermediaries is crucial to your success. Decision making is often a very slow
process that requires much patience. Attempts to rush or put pressure on the process are futile. However,
once a decision has been reached, the remaining steps to close the agreement often happen quickly.

When making decisions, businesspeople may not rely much on rules or laws. They usually consider the
specific situation rather than applying universal principles. Since Mexicans highly value intuition, per-
sonal feelings and experiences usually weigh more strongly than empirical evidence and other objective
facts do, even though both may be considered. Mexicans are often uneasy with change and reluctant to
take risks. If you expect them to support a risky decision, you may need to find ways for them to become
comfortable with it first, for instance by explaining contingency plans, outlining areas of additional sup-
port, or by offering guarantees and warranties.

Agreements and Contracts

Capturing and exchanging written understandings after meetings and at key negotiation stages is useful.
Oral commitments may sound stronger than what your Mexican counterparts might be willing to put
in writing. At the same time, keep in mind that written memos or letters can already be contractually
binding. Do not rely on interim agreements to be final. Any part of an agreement may still change sig-
nificantly before both parties sign the final contract.

Pay particular attention to payment terms, making sure both sides know what is expected. It is common
practice to use Letters of Credit, bonds, and similar instruments.

Written contracts tend to be lengthy and very legalistic. They often spell out detailed terms and condi-
tions for the core agreements as well as for many eventualities. It is advisable to consult a local legal ex-
pert before signing a contract. Signing the contract is important from a legal perspective. However, many
Mexicans believe that the primary strength of an agreement lies in the partners’ commitment rather than
in its written documentation.

Signed contracts may not always be honored. Payment terms are frequently violated, so expect to be
paid late. Overall, the level of contract compliance depends to no small degree on the strength of the
continuing relationship between the partners. It is strongly advisable to continue staying in touch and
maintaining the trust of your Mexican business partner. Business partners may expect the other side to
remain flexible if conditions change, which may include agreeing to modify contract terms.

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Women in Business
Though this is gradually changing, machismo attitudes remain strong in this country. Women may be
considered inferior, and they still have a hard time attaining positions of similar income and authority
as men. As a visiting businesswoman, emphasize your company’s importance and your role in it. A per-
sonal introduction or at least a letter of support from a senior executive within your company may help.

Female business travelers will usually have few problems in the country. However, they should gra-
ciously accept any chivalric gestures they receive, while exercising caution and acting professionally in
business and social situations. Displaying confidence and some degree of assertiveness can be effective,
but it is important not to appear overly bold and aggressive.

Other Important Things to Know

Formal attire is very important when doing business here. Male business visitors should wear dark suits
with neckties on most occasions. First impressions can have a significant impact on how people view
you.

Business dinners and all kinds of social events are frequent opportunities to get to know each other bet-
ter. If business is discussed over meals at all, this will rarely be extensive. Mexicans often invite visitors
to their homes. ‘Mi case es su casa’ (my home is your home) is still a common attitude in Mexico. Do not
be surprised if someone invites you to visit ‘your home’ – they mean their own one.

Social events do not require strict punctuality. While it is best to arrive at dinners close to the agreed
time, being late to a party by 15-30 minutes is usually acceptable. In Mexico City, where traffic delays are
a common excuse for tardiness, arriving even later is rarely an issue.

Never throw documents or collateral on the business table, as this is considered highly offensive. In-
stead, show respect by individually handing them out to each recipient.

Gift giving in business settings is not necessary but often welcome. However, it is best not to bring a sig-
nificant gift to an initial meeting in order to avoid raising suspicions about your motives. Small gifts such
as pens or notebooks with your company logo are much more appropriate. For bigger occasions, such as
the end of a negotiation, tasteful gifts of somewhat greater value may be exchanged.

Negotiating International Business (CreateSpace, 2017 edition)

is available from Amazon.com and other bookstores for $29.99. A
reference guide covering 50 countries around the world, the 479-
page book includes an extensive discussion of the negotiation
principles and tactics frequently referred to in this excerpt.
Please recommend this Country Section and others to colleagues who
might find them useful. Country Sections are available individually at

www.leadershipcrossroads.com/NIB

Copyright 2006-2017 - Lothar Katz

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