Knowledge Will Go a Long Way For New EntrantsWed, 01/18/2017 - 14:50
Information, it is said, is power. As Mexico’s oil and gas industry welcomes a host of new, international players, knowledge will go a long way in helping them face the many challenges awaiting them, says Gabriel Parrodi, Managing Director Mexico of business facilitator Rainmaker. Global Business Development. “Learning the Mexican way of doing business will pose the biggest challenge for newcomers,” he says.
With a presence that spans Houston to Dubai, and Aberdeen to Vienna, Rainmaker was founded in 2007 and announced its expansion to Mexico City in February 2016, specifically to assist oil and gas, energy and mining-related companies to develop their business in the country.
“Rainmaker acts as the eyes of foreign companies in Mexico,” says Parrodi. With his extensive experience guiding foreign businesses as they enter new markets and his past involvement in PEMEX construction projects, Parrodi says adequate guidance is indispensable for new international companies arriving on the scene.
Overcoming the inevitable cultural barriers that will spring up is a big part of that but also involves getting used to interacting with the Mexican government. “Even though the oil and gas industry is being opened to private players, newcomers must remember that the government still plays a significant role,” Parrodi says. It is not just a case of negotiating and communicating with the government but also of complying fully with the documentation it requires and the regulations it sets out, he says.
In announcing its entry into Mexico, the company said on its website that its focus would be twofold. “First, it will connect our clients to the advanced Mexican supply base to build products for the oil and gas industry, worldwide. Second, this office will be instrumental in assisting oil and gas, energy and mining-related companies to develop their businesses and increase their profile throughout the region.”
Commenting more specifically on how companies should approach their entry into Mexico, Parrodi highlights the different strategies for success depending on a business’ size. “It will be easiest for small companies, which just need a few resources and one or two contracts to get started.” Medium businesses face the challenge of securing financial backing, for which they should seek out larger firms to partner with. “Lastly, large companies need to complete mergers and acquisitions to truly capitalize on the reform and accelerate lasting change,” Parrodi concludes.
As well as posing a challenge for foreign companies regardless of size, Mexico’s opening oil and gas market can be tough for national companies too. “As Mexicans, change is never easy for us,” Parrodi says. “This is especially true in the oil and gas industry.”
Even though the country’s culture may lean toward the status quo, Parrodi thinks this factor is counterbalanced by Mexico’s young population. “Unlike Europe and the US, Mexico is not disadvantaged by an aging population and thankfully young people are more courageous in the face of change.” He mentions the fact that thousands of engineers graduate from university every year, emphasizing the emerging talent pool that will be at the disposal of Mexico’s oil and gas industry in the coming decades. Also, the entrance of a younger generation into the market means innovative technologies will be absorbed and used at a faster rate, which will benefit business greatly.
Despite the challenges ahead, Parrodi praises Mexico’s investment potential and reassures companies interested in expanding that their preconceptions about the country are probably wrong. “Foreigners often come to Mexico full of fear and caution because of what they have heard in the media,” he says.
Rainmaker’s mission, therefore, is to make companies “fall in love with Mexico,” a task Parrodi says is greatly facilitated by the country’s young, dynamic population and the government’s policy improvements in recent years. From his point of view, “Mexico’s stability has improved greatly in the past two decades,” and business can now be done without corruption. “But it is not easy. It is essential to be persistent in always doing the right thing.”