Why should a small business enter the Canadian and Mexican market? There are a plethora of opportunities in both countries. From a United States perspective, they are the largest foreign investor in Canada and the most popular destination for Canadian investment. The U.S. exports to Canada exceed their exports to the entire European Union. Mexico isn't far behind with the second largest market in the world for U.S. exports. In 2007, U.S. and Mexico two-way trade exceeded one billion dollars a day. I will briefly discuss both the challenges, potential, and strategies for entering both the Canadian and the Mexican market.
Because of NAFTA, many American-made products enter Canada almost entirely duty free, with 99 percent of all trade passing the border without any trouble. It isn't all a free ride however. Customs documentation, bilingual labeling, and packaging requirements can make life difficult, but it won't take long to master. There are multiple excellent opportunities to invest in Canada. Some of the top fields include security/safety equipment, general industrial machinery, aerospace and defense, electical power systems, and medical devices. One of the most important things to keep in mind if you wish to expand sales in Canada is to have a constant presence in the country. You can either set up an office, appoint an agent, or appoint a distributor. Making a visit to Canada is important in building a trusting business relationship.
The Mexican legal system can be complex and different from many others. Legal counseling may be a good idea. Another issue with Mexico is the relatively high interest rates, making it hard for small and medium sized businesses to obtain financing. There is a lot of promise for Mexico however. Their size and diversity are often under-appreciated by many businesses. Given the size of the Mexican market, there are a multiple number of promising sectors. A short list of these include airport and ground support equipment, automotive parts and supplies, education and training services, electronic components, energy technology and services, and environmental technologies and equipment.
The companies there are extremely price conscious and appreciate outstanding service. It is important to remember to have patience. Everything can take more time to accomplish in Mexico than what many in fast business cultures are used to, and taking time can grow that trust between the partnership. Business in Mexico is done on a relationship basis. Travelling frequently to Mexico and strenghtening the relationship will have a huge impact on how far you go. To develop that close working relationship, it is smart to work with a locally-based agent, representative, or distributor.