This section reviews several different factors in selecting and managing your distribution and sales in Mexico.
The Mexican market is a challenging environment for retail sales, with the proliferation of interest-free financing offers (meses sin intereses or MSI), mobile retailing, and continued company activity in the form of mergers, acquisitions, and expansions. A common practice in Mexico is to offer consumer financing in the form of interest-free layaway/MSI. Originally extended primarily by national retailers during special events such as the ‘Hot Sale’ and ‘el Buen Fin,’ the practice has become widespread among both local and international companies. Mexico has several large retail stores and chains including El Palacio de Hierro, Saks Fifth Avenue, Coppel, Grupo Comercial Chedraui, and Sears Roebuck de México.
Walmart de México leads retailing, with its share value more than twice as high as that of the second-biggest player (FEMSA Comercio). Walmart’s performance is especially impressive given Mexico’s fragmented competitive environment, relevance of traditional sales, and small independent retailers.
Meanwhile, online shopping in Mexico is anticipated to more than double by 2022 to nearly USD 18 billion, with the major global eCommerce players moving into high gear following the 2016 recession. These projections have not been updated for a post COVID-19 environment in which growth of online shopping may be even larger than originally forecast.
Key players continuing to vie for a bigger stake in this eCommerce market are Mercado Libre, Amazon, Walmart, and Alibaba. The Argentina-based Mercado Libre is by far the most popular online retailer in the region, with operations in 18 markets.
Importers and Wholesalers
Key retail chains are among the largest importers and wholesalers, including Walmart de México, Costco de México, El Puerto de Liverpool SAB de CV, El Palacio de Hierro, Sanborns de México SAB de CV, and Sears Roebuck de México. The official database of Mexican importers features approximately 3,200 import firms as of December 2017 (the most recent year for which figures are available).
Mexico is a large market to cover, whether for distribution or for sales channels. The U.S. Commercial Service in Mexico recommends that U.S. exporters consider splitting the country into distinct territories rather than trying to sign a single agent or distributor with exclusive national rights.
Logistics and Distribution Infrastructure
Mexico is a leading global logistics center, in large part based upon its 13 trade agreements with 50 countries. Shipping logistics work well in Mexico, though not without some concerns. The World Bank’s Logistics Performance Index for 2023 (the most recent year available) places Mexico in 71st place out of 139 countries in terms of logistics efficiency. Transportation logistics services are expensive in Mexico, representing eight to 15 percent of product costs, compared to five to seven percent in the United States. According to the Mexican Secretariat of Infrastructure, Communications and Transportation (Secretaría de Infraestructura, Comunicaciones y Transportes or SICT), Mexican products for domestic consumption travel by land via truck (56.8%), train (13.3%), ship (29.8%), and plane (0.1%).
The Government of Mexico (GOM) seeks to reduce transport costs across the economy to increase competitiveness and facilitate supply chains. To do so, Mexico is modernizing its national transportation network. The López Obrador administration’s National Development Plan seeks to improve cargo transport infrastructure, particularly in Southern Mexico. This plan builds upon the prior administration’s National Infrastructure Plan, which launched improvements to highways, railways, and ports. These infrastructure projects are described in further detail in the section on Transportation Infrastructure of this guide.
Currently, Mexican transport infrastructure includes:
- Over 397,000 km of highways and roads
- More than 26,900 km of railroads
- A total of 65 international commercial airports, 13 national airports; 1,506 airfields and over 500 heliports 1,424 airfields (including military and small private owned fields), and nearly 500 heliports
- 118 seaports and intermodal terminals
- Nearly 27,000 km of oil and gas pipelines.
Logistics and Land Borders
The main land border crossings with the United States are Nuevo Laredo-Laredo, Ciudad Juárez-El Paso, Piedras Negras-Eagle Pass, Mexicali-Calexico, and Tijuana-San Diego. Tijuana is the busiest border crossing by volume of traffic; however, the Nuevo Laredo-Laredo border crossing is the largest by value, accounting for approximately 53 percent of all U.S.-Mexican trade in merchandise.
The GOM and some state governments are trying to promote other border crossings to decrease the concentration in Laredo and to offer options for expanding bilateral commercial traffic, such as Colombia, Nuevo León. At the federal level, the U.S. and Mexican Governments meet regularly in various working groups focused on the border to advance joint efforts to increase the capacity, efficiency, and speed of border crossings for people and goods. One result was the establishment of the Unified Cargo Processing (UCP) program. The UCP brings together Mexican Customs (Aduanas) and U.S. Customs and Border Protection agents at the same location to jointly clear cargo. This has the potential to dramatically speed up cargo inspections and increase border security. Starting in 2021, Aduanas and CBP established a new Unified Customs Processing operation at the Reynosa-Pharr port of entry. Despite this progress, as of April 2022, shippers have continued to report intermittent delays for truck and rail crossings as border personnel respond to competing priorities.
Over 55 percent of goods in Mexico are distributed by trucks. Mexico has a modern highway system, primarily comprising toll roads, connecting the main industrial areas located in the Mexico City-Guadalajara-Monterrey triangle. Outside this area, road transportation is more challenging.
The main maritime ports (based on the volume/tons of cargo moved) on the Gulf Coast of Mexico are Veracruz, Coatzacoalcos, Altamira, and Dos Bocas. On the Pacific Coast, the main maritime ports are Lázaro Cárdenas and Manzanillo. All these ports have the infrastructure and equipment to facilitate intermodal, door-to-door merchandise transportation. The government’s infrastructure program includes major projects to modernize and expand existing ports, improving existing multimodal corridors, connecting Gulf and Pacific ports, and linking production and consumer centers with international logistics corridors.
Using an Agent to Sell U.S. Products and Services
Some U.S. companies sell their products through individual sales agents, and there are many Mexican firms eager to offer this service to U.S. companies. The use of sales agents can be an effective way to reach smaller cities and remote locations in Mexico.
Selecting an appropriate agent or distributor requires time and effort. There may be many qualified candidates and U.S. firms should set high standards to select the best suited agent/distributor. Since most Mexican firms sell in limited areas, U.S. companies should consider appointing representatives in multiple cities to broaden the distribution network. It is usually not advisable to grant an exclusive, national agreement. It is essential to develop a close working relationship with the appointed agent/distributor and maintain continuous communication. Appropriate training, marketing support, samples, product support, and timely supply of spare parts (depending upon the industry) are critical for success. There are no indemnity laws to prevent a company from canceling an agent or distributor agreement, but cancellation clauses should be specific. Sales performance clauses in agent/distributor agreements are permitted, and failure to meet established standards can be a reasonable cause for contract cancellation. Before signing an agent/distributor agreement, all parties should fully understand the terms and conditions, and how the relationship is to be developed. Many international commercial relationships become strained because insufficient time is invested in developing a full understanding of what is expected.
The U.S. Commercial Service and other organizations —such as the American Chamber of Commerce in Mexico and U.S. state government trade representatives— maintain lists of Mexican agents/distributors, manufacturers, GOM offices, and private sector trade organizations. After identifying a suitable agent/distributor, we encourage U.S. exporters to conduct a commercial background check on the Mexican firm. The U.S. Commercial Service offers a report called an International Company Profile that provides background information on a potential business partner. Commercially available services, such as Dun & Bradstreet, may list larger Mexican firms.
If a product is new to the market, or if the market is extremely competitive, advertising and other promotional support should be negotiated in detail with your representative. Product and industry knowledge, track record, enthusiasm, and commitment should be weighed heavily. We suggest the U.S. exporter schedule annual visits of Mexican personnel to the U.S. company headquarters for training (more information on visa requirements is provided in the Business Travel section of this guide). Another important factor to consider is financing, as credit from Mexican banks is limited and can be expensive. Joint venture agreements may also be considered to strengthen market penetration. Direct marketing is another common strategy. Telemarketing is evolving and gaining in popularity and scope. While Internet penetration has not yet reached U.S. levels (the GOM estimates Internet access by 71 percent of the population over the age of six), social media marketing is becoming increasingly important and should be factored into marketing plans when appropriate.
Establishing an Office
For U.S. companies interested in establishing a presence in Mexico, the General Law of Mercantile Organizations (or Civil Code) regulates many different forms of business entities. The type of business incorporation that a U.S. company or individual chooses is extremely important, as it determines the operations they may perform in Mexico and, among other liabilities, the amount of taxes owed.
The most commonly used types of business classifications are the Corporation (Sociedad Anónima) identified with ‘S.A.’ at the end of the company name, and the Corporation with Variable Capital (Sociedad Anónima de Capital Variable) identified with ‘S.A. de C.V.’ One of the advantages of the latter is that the minimum fixed capital can be changed after the initial formation.
The Civil Partnership (Sociedad Civil) is the most common organization for professional service providers. It has no minimum capital requirement and no limit on the number of partners, but it is taxable in the same way as a corporation. It is identified with ‘S.C.’ The Civil Association (Asociación Civil) is the form that charitable or nonprofit organizations adopt and is identified with ‘A.C.’.
A Limited Liability Partnership (Sociedad de Responsabilidad Limitada), identified with ‘S. de R.L.,’ is similar to a LLP in the United States and has the option of having variable capital, indicated by ‘S. de R.L. de C.V.’ As this is a partnership structure —an organization formed by individuals as partners— it has similar characteristics to a Civil Partnership apart from unlimited liability.
A foreign company may open a branch (sucursal) in Mexico as an alternative to incorporating. A branch can provide rights and responsibilities similar to a corporation, including tax liability and access to local courts, but requires the approval of the National Foreign Investment Commission (Comisión Nacional de Inversiones Extranjeras or CNIE).
Consulting with a law firm in Mexico prior to establishing an office in the country is important. A partial list of Mexican law firms with international business focus and experience can be found at the U.S. Commercial Service’s Mexico Business Providers List. For other types of legal representation, contact our U.S. Commercial Service in Mexico to obtain the Embassy’s attorney list.
For the latest Investment Climate Statement (ICS) which includes information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees, visit the U.S. Department of Department of State’s Investment Climate Statements website.
With the establishment of large international firms in Mexico and their emphasis on adopting similar marketing strategies to those employed in their home market, the marketing services industry has become more segmented and specialized, offering U.S. companies a complete array of marketing options. The most important promotional tools include ‘above-the-line’ (ATL) methods such as paid digital and print media and ‘below-the-line’ (BTL) methods such as targeted marketing, trade shows, and direct marketing.
Small and medium-sized U.S. companies entering the Mexican market should work closely with their local distributor/representative to create marketing strategies. Mexican consumer habits have evolved to bring together the online and traditional shopping experiences. A recent study from the Association of Online Sales (Asociación Mexicana de Venta Online or AMVO) indicated that nine of 10 Mexican shoppers interact between digital and physical channels, prior to making the final purchase, either online or during an in-store visit. The leading association in Mexico for communication, brand, marketing, and public relations firms is the Alliance for the Strategic Value of Brands (Alianza por el Valor Estratégico de las Marcas or AVE):
Alianza por el Valor Estratégico de las Marcas
Cerrada de Palomas 36, Col. Reforma Social
11650 Mexico City
Phone: +52 (55) 2623-0561
Given the flexibility of engaging in joint venture agreements, U.S. firms frequently use joint ventures and licensing agreements to establish a presence in Mexico. Although some Mexicans rely on verbal agreements when doing business, we highly recommend you sign a written joint venture agreement with your Mexican business partner. According to Mexican law, joint ventures are considered separate entities from their parent companies and must register separately to pay taxes.
To safeguard intellectual property rights against third parties, licenses and patents in Mexico may be registered with the Mexican Institute of Industrial Property (Instituto Mexicano de la Propiedad Industrial or IMPI). Recording a license entails a government review that can take four to six months. For more information on IMPI, please see the Intellectual Property section of this guide.
United States professional licenses (engineer, architect, lawyer, etc.) are not generally recognized in Mexico. One must become accredited in Mexico or have a Mexican counterpart co-sign or validate the U.S. work. For example, a U.S. architect may draw up plans for a building, but a licensed Mexican architect must sign off on them. A list of local professional associations can be found in the Principal Business Associations section of this guide. Instructions to register your professional degree in Mexico (information is in Spanish) can be found at the website of the Secretariat of Education (Secretaría de Educación Pública or SEP). For additional information, please contact the U.S. Commercial Service in Mexico.
The parcel and messaging sector in Mexico traditionally operated as a basic courier service, with broad service windows and minimal guarantees on delivery timing and verification. However, the sector has rapidly modernized as it has in the United States, extending the range of services and focusing on logistics efficiency.
According to latest available data from the National Institute of Statistics and Geography (INEGI), the Mexican Association of Couriers and Parcels (Asociación Mexicana de Mensajería y Paquetería or AMMPAC), and Mexico’s National Association of Courier Companies (Asociación Nacional Mexicana de Empresas Courier or ANMEC), Mexico’s parcel and messaging sector has registered a sustained annual growth of 11.5 percent from 2015 to 2020. Most notably, in 2020 the industry grew by 21.4 percent compared to 2019, at a time when the Mexican economy contracted by 8.2 percent due to the pandemic. Approximately 3,000 courier and parcel delivery companies currently operate in Mexico. They provide local, regional, and international coverage. Competition is strong and varied in terms of supply, prices, and guarantees. Still, local courier companies complain that they do not face a level playing field when providing international services. They particularly cite terms negotiated under the original North American Free Trade Agreement (NAFTA) granting equal access to Mexican motor carriers entering the United States which have not been realized.
Express Delivery Investments
According to AMMPAC, recent investments in technology and infrastructure have driven the express delivery sector’s expansion. To match the growth of foreign providers, Mexican companies have invested significantly. In 2017 and 2018, DHL, UPS, and FedEx increased their presence in Mexico with more e-customer shipping centers. However, local firms Estafeta Mexicana, RedPack, and others continued to invest in technology, infrastructure, fleet modernization, points of sale, operating centers, and customer service. In 2021, Estafeta announced that it would invest MXN 1.95 billion (USD 97.5 million) in 2021 to improve its physical and digital infrastructure, including the construction of a new hub in Mexico City focused entirely on eCommerce. The following year, Estafeta announced an additional MXN 2.1 billion (USD 1-5 million) investment to expand and renew its fleet, improve infrastructure, and update its technology. The goal of these companies is to differentiate based on their ability to harness big data intelligence to minimize the level of misdirected shipments, incorrect routes, and losses and damage to packages.
Extension of Express Delivery Services
The sector has also grown as it has sought to incorporate a wider range of services. Companies are competing aggressively on shorter and guaranteed delivery times, efficiencies through route consolidation, customs clearance expertise, geographic scope in cities served, and service reliability through technological improvements such as satellite tracking.
Several sectors have particularly benefited from the expansion of express delivery services. These include computers, spare parts, high-value products, and industries using just-in-time supply chains such as high technology, automotive, pharmaceuticals, textiles, and manufacturing. Consequently, these sectors have been key to driving ever-greater cargo volumes through express delivery services.
With the onset of the pandemic and the subsequent rise in online purchases —according to the Mexican Association of Online Sales (AMVO), sales through digital channels grew more than 80 percent in 2020— the sector is now expected to grow even more. Expanding capacity has become even more of an imperative, as some express delivery players saw their operations become saturated in the first half of 2020 and experienced the need to devise a strategy to address growing demand.
Future Express Delivery Trends
For a variety of reasons —from the extent of rural areas to high security costs protecting shipments from organized crime— Mexico has relatively high logistics costs, which contrast with labor costs and customer demand for ever lower prices. To support further growth of the sector, AMMPAC has called for progress on several challenges, including improvements in the legal framework for express delivery and efforts in combatting organized crime.
In the short term, the sector will continue to work on a wider range of integrated logistics solutions beyond transportation. It will also seek improvements in customer service, communications tools, and faster response times to requests. The sector further plans to tailor services to the diversity of industries that most demand express service, from banking services, textiles, and apparel to electronics, pharmaceuticals, and cosmetics.
In February 2023, a decree banning all cargo operations at Benito Juárez International Airport (AICM) in Mexico City was published, requiring air cargo operations to be moved to the new Felipe Angeles International Airport (AIFA) by July 7, 2023. Given the complexities of transferring operations and the logistical adjustments that are necessary, an extension has been granted until September 2023, but concerns remain from a number of courier and express delivery companies on the impact that this change may have on transportation costs and delivery times.
In 2022, the GOM introduced a requirement for a digital waybill complement, known as the Carta Porte, to be generated for each parcel and incorporated into an e-invoice for the transport of goods. This requirement applies to all imports and exports of goods in transit within Mexican territory. For more information, please see the Customs, Regulations, and Standards section of this guide.