Small software firm gets toehold in Mexican market

SMALL BUSINESS

October 19, 1992|By JANE APPLEGATE

Steve Rothenberg isn't waiting for Congress to sign off on the North American Free Trade Agreement. His nine-person software company in Santa Clara, Calif., is already selling computer programs to the Bank of Mexico and wooing other Mexican customers.

Rothenberg, whose firm develops personal computer-based credit and collections software, admits he was surprised at how relatively easy it was to close the deal with the big Mexican bank. Because he doesn't speak Spanish and had never dealt with anyone in Latin America, Rothenberg retained a Spanish-speaking lawyer skilled in international software copyright laws.

"Now is the time to get a toehold in Mexico and begin building market share while your competitors waste at least a year waiting for the free trade agreement to become effective," advises Richard Neff, a Torrance, Calif., attorney who represents Rothenberg and several other small-business owners doing business in Latin America.

The treaty is not expected to be enacted by Congress until summer.

Neff said Mexico's expanding economy is hungry for American products and services. Mexico is already America's third-largest trading partner behind Canada and Japan. Total trade between Mexico and the U.S. is expected to exceed $70 billion each year. By the end of the year, Mexico is expected to become America's second-largest consumer market, importing nearly $44 billion worth of U.S. goods.

Neff and other international consultants credit President Carlos Salinas de Gortari with moving swiftly to strike down most Mexican trade barriers. "Eighty-five percent of the permits once required to import U.S. goods have also disappeared," Neff said.

Shipping goods to Mexico is still not as smooth as shipping to Switzerland, but U.S. companies are reporting fewer problems with Mexican customs officials, and shipments have a better chance of arriving intact.

Unlike many small businesses eager to sell internationally, Rothenberg didn't set out to sell his software in Mexico. Bank of Mexico officials met Rothenberg at a credit-card industry trade fair in New Orleans last spring.

"When they invited me to a meeting in Mexico City a month later, I almost didn't go," Rothenberg said. "I didn't speak Spanish and I thought it was a real long shot that they would buy software from a small company like mine."

But an American on the bank's staff persuaded Rothenberg to attend the meeting, and his continued involvement in the negotiations increased Rothenberg's level of comfort.

"I learned that you need to be patient, but you also have to be firm," said Rothenberg. "The bank officials wanted us to come down and install the software before the contract was signed, but I said no."

It took about seven weeks to negotiate the contract, which is worth about $200,000. So far, the bank has paid promptly via wire transfer and Rothenberg sent a company representative to Mexico to begin the training program for the software, which is designed to help banks keep track of debts and recover money faster.

Rothenberg said "an incredible army of people" is working on the project, including electricians called in at the last minute because the building where the computers are being installed lacked sufficient power.

Apart from two temporary workers Rothenberg hired to translate the software and training manual into Spanish, the Mexican deal hasn't cost the company more than servicing a domestic client.

Here are some tips for doing business in Mexico:

* Find a trading partner with a good reputation and the right connections inside and outside the government.

* Don't underestimate the importance of personal relationships. Plan on spending time getting to know the people. Prepare to spend a few hours on small talk, discussing sports and family.

* Don't expect to make a quick buck. Deals take longer to be put together and you can expect to be paid slower, usually in 90 to 120 days.

* If you are attracted to the current minimum wage of $4 a day, remember there are hidden costs, including mandatory profit-sharing and generous Christmas bonuses.

* Be prepared to draft new contracts. Most U.S. contracts do not apply under Mexican law.

(Jane Applegate is a syndicated columnist and author. Write to her through the Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.)

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