Negotiations In Mexico
As you already know, Mexicans prefer to do business with people they know and value. For this reason, the informal exchange also plays an important role in negotiations. Going to dinner the evening before is already part of the negotiations in Mexico! Making a good impression will influence the outcome of the talks.
The Process Of Negotiating
Negotiations in Mexico will start with small talk as well. For instance, the topics of conversation from the previous evening are picked up on. It would be very rude to get straight to the nitty-gritty.
Mexicans also engage in an indirect style of communication when negotiating. Furthermore, the course of discussions in Mexican negotiations often seems chaotic, barely based on facts and not really result-oriented to international business people. They get the impression that everyone jumps from one topic to another. This may have to do with the fact that the Mexican partners are seeking common ground and similarities. Controversial and conflict-laden issues are excluded from the discussion. Besides, a direct “no” is considered rude. Instead, people will say that they will look at something again or see what they can do. Or the subject may be changed without comment. In countries with a direct style of communication, silence tends to be seen as consent, while in Mexico it tends to mean rejection.
The Mexican negotiating style is intuitive and flexible rather than fact and data-based. Emotional arguments also play a role and you can for instance appeal to your excellent mutual working relationship in the past. Expressive body language is used to support this. If you are dealing with a negotiating team, the individual members will be loyal to each other.
Do not make the mistake of thinking that your Mexican partners have not prepared themselves thoroughly and that you already have the contract in the bag. It is part of Mexican courtesy to approach a negotiating partner in a friendly and open manner. By consulting their large network, the Mexicans will have already informed themselves about you and your company and know more about your negotiation goals than it would appear.
During the talks, your Mexican business partners will reformulate their own demands indirectly but persistently until they receive your approval or find a suitable alternative. Final decisions after negotiations in Mexico can therefore take a long time.
Since business always means a personal bond and a lot of time is invested in building relationships, Mexicans are mainly interested in a long-term, trusting business relationship. However, if they are put under time pressure or feel that their trust has been misplaced, e.g. due to lack of loyalty, lack of support or harsh criticism, there is a risk that the business relationship will suddenly come to an end. Economic or financial considerations will no longer matter. This applies in particular to family-owned and owner-managed companies. You should keep this in mind when negotiating.
It is part of the Mexican negotiating style to demand a lot before making concessions in the course of negotiating the price, depending on the situation and the negotiating partner. So make sure that the relationship is on the right foot and that there is a friendly and respectful atmosphere.
In addition, price negotiations in Mexico often involve economic factors that are not necessarily known elsewhere. Allowing for and regulating inflation compensation is an important part of Mexican price negotiations. Some product prices are fully or partially negotiated in US dollars. It is important to find a way of dealing with currency fluctuations between the Mexican peso and the US dollar.
Negotiations in Mexico become even more difficult when raw materials and components from Europe are paid in Euros and these exchange rate risks have to be taken into account in the price as well. You will demonstrate professionalism to your Mexican business partner if you address these issues from the get-go and they do not have to educate you first.
Decisions are only made by the top management or even by a single owner. It is therefore very important in negotiations with Mexican partners who sit down at the negotiating table and discusses with you. If no decision-maker is present, the negotiators will be evasive and take any issues with them for internal consultation. This will result in delays. In addition, when you meet with Mexican executives, make sure you have delegates of equal status in your ranks. If you do not, it could be seen as an affront and a lack of respect.
Verbal And Written Agreements
Mexicans generally prefer to communicate verbally. They are much quicker to reach for the telephone or arrange a personal meeting than to write long reports. Negotiations once again demonstrate the importance of personal relations. Keeping to verbal agreements is therefore also a question of honour. Nevertheless, agreements and negotiation results are recorded in formal documents and contracts. If these are official papers that have to be processed through the Mexican regulatory bureaucracy, this process can be very lengthy.
However, from a Mexican point of view, agreements and contracts are not always set in stone. Should the basic conditions change, it may also be necessary to change or adapt the content of a contract. Your Mexican business partners will expect corresponding flexibility on your part. After all, you are working together in a spirit of trust and partnership. Even in difficult and conflict-prone contractual matters, you should always ask for a personal meeting.