“Go down to Mexico and take a look at the terminal markets; see what’s moving in and out. Go into the supermarkets,” he recommends, to learn retailer preferences in both communication and buying patterns. “Simply talk with people.”
Papangellin also suggests talking to U.S. customers who have cross-border relationships, and to ask for references. Conversing with brokers located close to the border is a good idea, as they may be able to provide background information or references as well. Lastly, “contact freight forwarders or customs brokers, then go online and do searches.”
Some retailers like Walmart, Costco, and H-E-B have operations on both sides of the border. “If someone happens to be doing business with Walmart in the United States, ask them if they can point you to Walmart Mexico, where they’re located, and who to talk to,” Papangellin says.
Partnering Pros and Cons
Another option is to partner with a firm already doing business in Mexico. Opinions on the value of this strategy, however, are mixed. “It may be easier for someone who is completely new at exporting,” asserts Papangellin, “but if you’re an established company, you may already be known, even though you’re not doing much business there… If you’re new, obviously, it’s the other way around. So I don’t see a need to partner up with a U.S. company that is already doing business in Mexico.”
Hanemann, too, believes a partnership is unnecessary except in specific circumstances, for example, if “your sales goal is short, in terms of time, or limited in terms of volume.”
But Miller advocates a partnership strategy. “Don’t go at the process blind. There are significant processes and documentation required to minimize the risk of product being refused at the border.”
Attorney Colter-Carswell agrees with Miller. “A joint venture with a Mexican partner can be very helpful to start a business.” He stresses that any partnership must be “formalized according to all legal compliances to avoid the risk of legal misunderstandings. You have to be very careful in such ventures.”
Costs, Risks, and Profit
To assess costs and profitability, Hanemann says to find out “what prices are being paid by size and grade during your field visits, then determine how this stacks up with your next-best options for those same sizes and grades in other markets. If it appears to make sense, ship a few loads and learn a few lessons through direct experience.”
