Mexico: opportunities for Cdn. marketers

It has been said that Canadians define themselves not so much by what they are, but by what they are not.Chief among the things Canadians will lay claim to being is 'not American'. In this, we have much in common with...

It has been said that Canadians define themselves not so much by what they are, but by what they are not.

Chief among the things Canadians will lay claim to being is ‘not American’. In this, we have much in common with Mexicans.

I saw many examples of this common cause during the two years I spent working in Mexico in the early 1980s.

For longer than Canada’s 125 years of Confederation, Mexico has also tried to keep the u.s. and its influence at bay.

Iron Curtain

The Progressive Revolutionary Party has ruled Mexico since the 1930s, and during that time it erected an Iron Curtain of tariff barriers and anti-yanqui attitudes.

To sustain this closed market (producing primarily for domestic consumption), massive government intervention in the economy was required (most major industries are government-controlled, if not government-owned.)

It also created an immense and lethargic bureaucracy and cadres of intellectuals opposed to all things American.

Sound familiar?

Well, the irresistible forces of free trade, free enterprise and democracy have forded the Rio Grande.

Herculean will

The Mexican president’s commitment to the North American free trade agreement (nafta) is an act of Herculean political will beyond the appreciation of most Canadians (or perhaps just most Canadian journalists.)

The president has used the evidence of the wildly successful maquiladoras to convince Mexicans of the value of free trade.

These duty-free industrial parks that dot the Mexico/u.s. border have helped Mexico, almost alone among the Latin American economies, to recover from a debt crisis and subsequent disastrous collapse of its currency and economy in the early ’80s.

The Mexican president has reversed more than a century of history and policy to aim his country firmly at the 21st century and the North American economy.

As with the Canada/u.s. free trade agreement, we can expect to hear the usual nonsense from anti-business intellectuals, professional nationalists and trade unions. Their left-wing, protectionist arguments must inexorably dissipate in the face of reality.

And that reality is compelling.

nafta will create a continental market more populous than the much-vaunted European Community and with almost the same gnp and industrial output.

Canada will win in two obvious ways that the torrent of predictable objections from special interest groups cannot obscure.

Mexico is America’s third-largest trading partner, right behind Japan and Canada. nafta will help the u.s. economy to grow and as has always been the case, the Canadian economy will float upwards on the tide of increased opportunity that will result in the u.s. market, our largest trading partner.

Less obvious benefits

The other way in which the Canadian economy will benefit from nafta is less obvious to those political reporters whose opinions cloud the airwaves.

But it is obvious to any marketer. Most commentators have interpreted the fact that Mexico accounts for less than 3% of Canada’s foreign trade as a negative in interpreting nafta.

But an assistant product manager, fresh out of business school, recognizes this as an astounding opportunity. Canadian market share in Mexico has nowhere to go but up.

The question for Canadians is: ‘How can we benefit? What opportunities will there be to market our products and services in Mexico?’

The first piece of advice I have is a marketing truism – ‘Get to know the market.’

Mexico’s economy will explode under nafta, so our presumptions and prejudices about who and what Mexicans are will be radically altered by the end of the decade.

Middle class

Free trade will see the rapid expansion of the middle class and, over time, it will result in the return of hidden capital stashed off-shore to avoid inflation and devaluation.

Wealthy Mexicans will start to invest in their country again. Free trade will elevate the standard of living of the average Mexican worker. That same worker, with his or her new, relative affluence can become a buyer of Canadian goods and services.

So here are four ideas:

1. Tap the fast-growing Mexican appetite for (upscale) financial services.

nafta will accelerate Mexico’s transformation from a Third-World to a First-World economy. Such economic development invariably increases the number of wealthy individual Mexicans – the desirable, high-value customers of private banking, securities or insurance services. Already, the demand for private credit is growing 20% annually in real terms.

Complete operations

By 2000, Canadian firms will be permitted to set up complete financial service operations in Mexico. Besides the wealthy, the burgeoning middle-class market is ripe for efficiently-delivered, technology-driven banking.

Only 8% of Mexicans have chequing accounts; less than 1% hold mortgages. With our expertise in building and managing profitable national financial services networks, who better than Canadians to meet this need?

Do not forget about the Mexican’s strong sense of class distinction and status. A single, homogeneous type of service is unlikely to fly. Be seen to treat different types of customers differently.

2. Help upgrade Mexico’s computer and telecommunications capabilities.

Infrastructure is a key component of a growing economy, and Mexico’s needs a lot of help.

The opportunities range from improving telecommunications to computerizing routine manufacturing and service functions. This will range from massive digital switching facilities to local and wide-area computer networks and the software to run them.

Technology

Since the world respects Canada’s technological capabilities, we have a great opportunity to help Mexico get on its feet. The secret is to start early, and build productive relationships with the key decision-makers, supervisors and managers.

It does take longer to close deals in Mexico, because Mexicans only buy from people they know and like. Networking is crucial. Go with your customer out into the field to truly understand his or her needs. Demonstrate your commitment to finding the right solution.

Be prepared

And, yes, be prepared for the infamous two-hour Mexican business lunch at which business only comes up in conversation during the last 10 minutes. Raising matters earlier is considered rude.

During my tenure there, I learned that to be successful, you needed to recognize Mexicans as people first, and business people second. It is a natural extension of their tightly knit family tradition.

3. Quench Mexico’s hunger for things visibly North American.

Mexicans are inundated with North American commercial culture. Although they envy the freedom and wealth of their northern neighbors, they resent the sense of superiority that often comes with it.

Instant trappings

Despite this love-hate relationship, Mexicans desire the instant trappings of North American culture – the brand name jeans, designer watches, flashy cars, legendary liquors, and macho cigarettes. Even simple T-shirts adorned with product names or college logos convey status and prestige.

Obviously, there are terrific opportunities for Canadian makers or distributors of licensed American merchandise and apparel.

And do not forget our own products. Brands such as Clearly Canadian beverages, or Roots outdoor wear, which have already caught on in the u.s., should be successful in Mexico, too.

4. Feed Canada’s desire for the exotic and novel.

As Canadians, we seem to thrive on a constant diet of novelty, from rollerblading and bungee-jumping to de-alcoholized beer and reusable nylon lunch bags.

Often, these exotic new products or trends are imported, sometimes from Mexico.

Mexico has an extraordinarily rich art and culture. In mediums from papier-mache to silver, copper, wool, and leather, Mexican artisans produce some of the most beautiful work imaginable.

Most Canadians are only familiar with cheap imitations of the real Mexican artisans’ work – there are famous artists who will need representation here, in the u.s. and in Europe.

Distribution

Canadians with experience in distribution, import and export could expect to get lots of help from the Mexican government in this area. Mexicans are fiercely proud of their culture and would like nothing more than to export it.

Undoubtedly, the heightened awareness of Mexico due to nafta will increase the northward flow of products, styles and trends into Canada.

Vacation destination

And interest in Mexico as a vacation destination is also bound to increase. Travel to Canada has broad appeal to Mexicans – they like Canadians and the Canadian mixture of wide-open natural beauty and sophisticated cities. Salinas’ son goes to school in Canada.

When you factor everything in, nafta will not single-handedly revolutionize your business. However, Mexico’s 85 million people and its bold step into a continental marketplace can provide Canadian business with valuable new opportunities.

Buena suerta.

Paul Luksha is president of The Mariposa Group, a Toronto-based sales and marketing communications company. Luksha has worked in consumer marketing throughout Latin America and spent two years in Mexico as director of marketing for a major packaged goods company.