Certainty Needed for Foreign Investment to Keep ComingBy MBN Staff | Tue, 01/01/2019 - 16:39
Knowledge on how to do business in a new country can make or break a company. Finding a good partner that can provide investors with a soft landing is essential, according to Alexander Mahoney, Country Manager of Biz Lain Hub, especially in an uncertain economic and political environment.
“Companies are sometimes taken advantage of due to their lack of knowledge on the market and its regulations,” says Mahoney. “Therefore, the first contact with foreign clients is crucial for them to gain confidence and grow their business.”
Coming from a different country, investors face many challenges that start with basic cultural differences and probably a language barrier. As a back-office service provider, Biz Latin Hub has identified this need and is now specialized in supporting incoming investors looking for someone with experience in corporate management, as well as a cultural connection with the client. The company has offices throughout Latin America to support projects at a regional level and has experienced partners who are proficient in English, Spanish and French, offering flexibility to its clients. Over 2017 and 2018, the company also transitioned from working with local companies to global corporations, which has forced it to reshape its operations to be able to serve much more demanding ventures. “We grew 35-40 percent in terms of revenue,” says Mahoney.
Biz Latin Hub already works with several local automotive clients as well as investors from Canada and China, all of which now represent almost 15 percent of its revenue. The company handles everything: looking for a place to land the company, finding and hiring workers, registering the company before the Tax Administration Service and filing tax declarations, filing for visas for expat workers and working on due-diligence projects focused on accounting and legal issues.
Cultural differences are not the only barrier preventing companies from successfully bringing their operations to Mexico, though. Understanding the business environment is also crucial and in Mahoney’s experience, companies do not normally understand the kinds of permits or licenses they need or what processes to follow if they want to grow or terminate their operations. “Investors need someone who can help them understand the legal and fiscal reality of the market so they can build an appropriate budget to grow their operations,” says Mahoney. “Many of them think that they cannot bring their companies to Mexico unless they have a Mexican investor, which is not true.”
Most recently, companies have had to deal with an extra complication in doing business: the political uncertainty stemming from the USMCA negotiation and Andrés Manuel López Obrador’s election as President of Mexico. Mahoney says companies have taken more time to decide whether or not to come to Mexico. Furthermore, they now prefer to work through a shelter service to outsource their labor, fiscal and legal management. “That way, they can test the waters first and see if there is political turmoil that could impact their business,” he says.
Now that USMCA is signed and awaiting full ratification, companies must learn how to work with the new rules of origin established in the agreement. Biz Latin Hub is ready for that thanks to its specialists on foreign trade who can support companies wanting to export their products under USMCA standards, according to Mahoney. What the country needs now, he explains, is a clear vision from the new administration on how it plans to run the country and what it will do to attract foreign investment. “There have been some positive changes with the shift in administration, including the signing of USMCA, but there is still much unpredictability as well.”