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Analysis

Fully Grasping the Mexican Market

Tue, 01/22/2013 - 13:26

Inelectra was originally set up in Venezuela in 1968 with the aim of catering for the needs of the power generation market; however the rapid growth in the Latin American oil and gas industry eventually pushed the company into redirecting its focus. After spending much of the 1980s and 1990s developing Venezuela’s oil and gas infrastructure, Inelectra later expanded into Colombia and Argentina. The company first came to Mexico in 2003, after winning a bid to become the Project Management Contractor at the Minatitlán Refinery. According to Carlos Sandoval, General Manager of Inelectra Mexico, that was the turning point that peaked the company’s interest in increasing its portfolio in the country. “After this experience, Inelectra identified Mexico as a key Latin American market, and decided to look for more business in its o†shore market,” Sandoval recalls. “After collaborating with Bay and being awarded an EPC contract for Ku-Maloob-Zaap’s living quarter platforms, Inelectra then divided itself into two parts: a domestic Venezuelan company and an international company headquartered in Panama.”

This structure was not su·cient to satisfy Pemex’s demands for EPC services, so at that moment the company decided to form a third branch, Inelectra North America, in partnership with a Mexican engineering company based in Monterrey. The new company, however, was not an individual service provider for long; Inelectra sold its international operations on to Tiger Companies, and the joint venture was sold back to the original partner. But, as Sandoval explains, things did not stay that way. “In early 2011, Tiger Companies decided Mexico was too profitable a market to resist, so it built a new strategy based on its experiences in the country. The company’s first change was to establish its main operations center in Mexico, in order to be closer to its clients, and to sta† the business predominantly with Mexican employees, so as to obtain a better understanding of the country’s business culture.” The result has been dramatic: the company has grown from 20 people in April 2011, to 150 by mid-2012, and it is expected to peak at 200 by the end of this year. “Our experience shows that you need to have three or four di†erent approaches in Mexico before landing, in order to fully grasp the complex Mexican market: it is key to understanding how business works here, what people mean when they do or say certain things, and then figuring out what will work best for the company,” Sandoval concludes.