Expanding to Mexico
Cancun offers a carefree, dress-down business atmosphere
- December 29, 2010
Alfredo Carvajal is careful not to overdress when conducting business in Cancun, Mexico.
“It’s more casual in Cancun,” he explains. “Men don’t wear suits or jackets during the day. Going into a meeting wearing a tie sends the message to the people you are meeting with that you are not as comfortable as they are.”
Carvajal, executive vice president for Universal Cos., helped the company open its temporary office there in 2008. The company opened a permanent office and warehouse in Cancun on Dec. 1. Universal, based in Abingdon, distributes products, equipment and supplies used by spas, resorts and skin-care professionals
The company’s distributors work with countries around the world, and the company has cultivated corporate relationships with hotel chains such as Hyatt, Ritz-Carlton and Four Seasons. It frequently ships to the Caribbean and Canada as well as Mexico. “Mexico has had a boom in the resort spa market. It’s an economical place for people in the U.S. to travel to and get luxurious accommodations,” says Universal founder Marti Morenings. “We have two employees in Cancun and an existing clientele that has been begging for us to come there.”
Carvajal sees Cancun as a natural market for Universal because of its high concentration of resorts. “It has 148 resorts in the state of Quintana Roo, which includes Cancun and Playa Del Carmen,” he says.
Mexico, in Carvajal’s estimation, is one of the most complicated countries to do business with because of what he refers to as triangulation. “Any foreign companies have to use a broker [comerzialidora] to sell products to Mexico,” he explains. “That changes the game for everybody.”
Universal’s office in Cancun allows the company to invoice clients directly. “We have still had to use a broker to get products into the country,” Carvajal explains. “In the future, we will set up our own agency to import products because we are now a Mexican company.”
Carvajal has learned several lessons while doing business in Mexico. One is not to expect timely bill payments. “The terms and conditions of payment are loose,” he says. “You have to build more time for payment into your business model. It may be double the usual 30 to 90 days.”
Even though his visits are work-related, Carvajal likes Cancun’s relaxed, carefree ambience, especially on days when he gets time to sit by the pool. Located on the east coast of Mexico’s Yucatan Peninsula, Cancun is a mecca for sun worshippers and water sports — everything form scuba diving to fishing. “It’s a beautiful place,” Carvajal says.
He offers these tips for doing business in Cancun:
- Secure a business partner that specializes in building relationships in Mexico. “We subcontract out all of our logistics — the billing, warehousing and shipping.”
- Understand that business relationships start with an air of formality. “Once you start doing business, you get the reverse spirit. It’s more informal.”
- Don’t underprice other American companies. “Provide your best service and deliver on time and articulate that in your marketing materials. That will do better than the discount. Once you underprice, they will expect it.”
- Find a local partner such as the U.S. Consulate, U.S. State Department or VALET program from the Virginia Department of Economic Partnership. “That’s a must for anyone going to that market.”
- Rent a car or have someone drive you around.
- Be aware that timing is more relaxed in Cancun. “There is more of ease when it comes to a scheduled time. Don’t be offended if you have to wait. It’s typical for people to be late; however, you need to arrive on time.”
- Don’t be afraid to use American currency. “You need a little local currency but not much. Taxis will take American dollars. Also, use your credit card, but if you take an American Express card be sure to bring a VISA or MasterCard with you. A lot of businesses in Mexico don’t accept American Express.”
The city’s economy
Cancun’s main economic driver is tourism, mainly hotels. Carvajal says. Palace Resorts is headquartered in Cancun. The company has 12 oceanfront resorts in Mexico and the Dominican Republic.
Where to stay
Cancun has a plethora of luxury hotels. Alfredo Carvajal suggests staying at the Ritz-Carlton, Cancun; the Mayan-inspired Le Meridien Cancun Resort and Spa; and the sleek Me Cancun by Melia. For a small business-to-business resort, try B2B in Malecon Plaza near the financial district. “The rates are cheaper and it’s clean and beautiful,” Carvajal says.