Negotiations In Mexico

Negotiations in the Mexican Culture

or How the Rules are Different

By

Daniel P. Litteral, JD

Doing business in Mexico really is different. To some degree this relates to different laws and regulations or different responses to the business climate, but to a substantial degree, the culture of Mexico impacts tremendously on how you conduct business relationships and, more importantly, whether you succeed.

Fundamentally, successful negotiations in Mexico require you to bear several critical topics in mind. In general, these are as follows:

Ð'* A more personalized relationship between business partners or those seeking to create business relationships

Ð'* A more hierarchical business and government structure

Ð'* A more formalistic approach to transactions and regulations

Ð'* Cultural sensitivity to a perceived historical pattern of exploitation

Let’s consider each in turn.

RELATIONSHIPS

While relationships are critical in any successful business negotiation and any resulting business arrangement, they are doubly so in Mexico. In general, you should consider the first meeting strictly a “get to know you” session. You should not expect to cover substantive ground and specifics and are better advised to spend the initial session explaining yourself and what you or your company has to offer.

HIERARCHY

In Mexico, hierarchy, whether in business, industry or government, is a critical factor. Titles, and the prestige and perquisites that go with them, are deemed very important south of the border, and you fail to understand and respect them at your peril. In many cases, the title of a position is seen, both by the person holding it and by others, as more important than the compensation afforded the individual.

People with undergraduate degrees tend to use the title Licenciado (Lic.), generally meaning licensed. Mexicans, when calling on the phone, often will refer to themselves as “Licenciado Juan,” for instance. While seen as presumptuous by us, this is the norm in Mexico.

Particularly in initial meetings, both first- and second-tier individuals or groups of individuals may be present. However, there is not the kind of give and take that you might experience between teams of negotiators in the United States. The second-tier group will remain silent and, oftentimes, will pass written questions or suggestions to the senior team member to decide whether the issue or topic should be raised.

While things are changing in some respects, like it or not, Mexico is still a male-dominated culture at the business, professional, and government levels. While offensive to us, you ignore this reality at your peril when selecting a negotiating team. Oftentimes, in my negotiations in Mexico, I carried much of the negotiating load because my boss, who was an extraordinary academician and executive, was female and we already had one other senior female vice president on the team.

FORMALITY

Mexicans can be very flexible in accommodating those in business with whom they have achieved a comfort level. However, when it comes to documenting the transaction, particularly if it is in a regulated industry in which Mexican governmental agencies will become involved, the documentation must fit precisely into the accepted practice. Innovation on that score is simply not part of the equation. Accordingly, as you negotiate, you should bear in mind how you are going to express this and try to assure that you can fit it within the parameters of the Mexican system, hopefully assisted in that vein by experienced counsel.

Be aware also that direct confrontation is not the Mexican way. If they have bad news to deliver to you or if they don’t agree with a fundamental position that you have taken, the odds are that you will not hear it during the face-to-face