doing business in Mexico for Japanese firms


Japanese companies are rapidly setting up factories in Mexico, but often fail to appreciate the unique aspects of Mexican culture.  As a result, many Japanese firms experience high turnover and other problems in their Mexican operations.  These can be avoided by adjusting the management style to harmonize with Mexican culture.


Japanese companies are discovering the excellent business environment offered by Mexico’s border region – a high quality workforce, reasonable costs, and the advantages of NAFTA.  As a result, Japanese-owned factories are mushrooming in border towns like Tijuana and Mexicali. 


Unfortunately, just as quickly stories are beginning to circulate about Japanese factories in Mexico that are experiencing operational difficulties.  High turnover, quality problems…many Japanese companies simply shrug their shoulders and assume that these are part and parcel of doing business in Mexico.  Yet this is absolutely not the case.  When managed in a way that is culturally appropriate, Mexican employees will be loyal to the company and will do high quality work.  The problem lies in Japanese companies’ insufficient understanding of Mexican culture.


Mexico is a country that is little known in Japan.  Although most businesspeople in Japan, when questioned, could probably name at least a few aspects of American culture, those who could name anything Mexican are quite rare.  And the United States is little better.  Apart from tequila and tacos, most Americans know next to nothing about our large neighbor to the South.  On top of this ignorance, not a few Americans also harbor various negative and inaccurate stereotypes about Mexicans.


Thus, when Japanese companies set up shop in Mexico, they often make the mistaken assumption that Mexicans are similar to Americans.  And their American employees usually don’t have sufficient knowledge themselves to correct that assumption.

Due to the fact that many of our clients have been opening factories in Mexico, I have had the opportunity to work with several Japanese-owned firms in Mexico facilitating cross-cultural teambuilding sessions for their Japanese and Mexican management teams. This has given me the wonderful opportunity to learn about Mexican culture, and to observe firsthand how the challenges for Japanese companies operating in Mexico are different from those they face in the U.S. Also, our firm has opened a branch in Mexico and I’ve learned a lot collaborating with our talented team there. 

A tale of two factories

To show the difference that culturally appropriate or inappropriate management styles can make, here are the stories of two Japanese factories, located in the same town.


Factory #1 is the subsidiary of a major Japanese electronics manufacturer.  Ever since its establishment two years ago, things have never quite settled down.  High turnover has prevented the firm from achieving technology transfer, so a larger number of Japanese expatriates is onsite than had originally been anticipated, adding to costs.  It’s been difficult to meet quality goals, and the increasingly frustrated Japanese expatriates have been known to blow up at production workers when discovering yet another quality problem.  Morale among employees is low, and they often appear sullen while doing their jobs.  Just the other day, a group of key engineers defected en masse to another factory, adding yet another headache for management.


Factory #2 is also a subsidiary of a major Japanese electronics manufacturer, established three years ago.  It has experienced much lower staff turnover than Factory #1, and high quality standards have been achieved.  Morale is high, and the company is considered an employer of choice in the community.  The parent company is so pleased with the plant’s results that it has given it more and more product lines to handle, so that now it is over three times its original scale.  Even while rapidly expanding, the plant has maintained good quality and efficiency.


There is very little difference in the products made by these two companies, nor in the resources of their parent companies.  Yet their factories in Mexico are like night and day.  The difference is in how carefully they built their corporate culture, and how much attention they paid to fitting in with the Mexican environment. 


Factory #1 sent in a staff of Japanese engineers as well as a group of Americans from one of its U.S. factories far from the border.  Both the Japanese and Americans were unaware of Mexican culture, and did many things that rubbed Mexican employees the wrong way.  They also failed to invest time and energy in creating a company spirit.


At Factory #2, instead of only sending Japanese engineers, from the very start highly capable experienced Mexican staff were hired to take on key positions.  From the design of the company logo to the layout of the offices and factory, great care was taken to integrate Japanese and Mexican preferences.  The company makes a great effort to hold celebrations that foster a team spirit, and provided cross-cultural training to key Japanese and Mexican managers.


Key cultural factors


What are the key cultural factors that Factory #2 addressed but Factory #1 did not?  The following paragraphs describe two ways in which Mexican culture differs from Japanese and U.S. culture – communication style and relationship building — with some suggested strategies for bridging the differences effectively.


Communication style


The U.S. tendency is to communicate in a way that is direct, straightforward, and open.  Conflict is considered acceptable, because it may be needed to solve problems.  Americans share their opinions freely and say what’s on their mind, even if it’s something the other person won’t enjoy hearing.  In general, Japanese tend to be more indirect than Americans, avoiding confrontation and wrapping unpleasant information in vagueness in order to cushion it.  However, in the workplace Japanese can be quite direct when pointing out problems, particularly if the person pointing out the problem is of higher rank than the person who caused the problem.  In such cases, the reprimand will even be made in front of others.


The Mexican tendency is to be indirect, especially with negative information.  Mexicans are reluctant to disagree openly with colleagues, and tend to avoid  conflict and confrontation at all costs.  In fact, Mexicans will prefer to avoid communication altogether rather than have a negative communication.  Similarly, they are reluctant to be the bearer of bad news. In Mexico, it is sometimes considered preferable to tell someone what they want to hear rather than the (unpleasant) truth.


Due to this difference in style, Japanese working in Mexico often complain that their Mexican colleagues are not sufficiently specific in their communication, and that it is difficult to tell what they are thinking. (From a U.S. view this is quite ironic, because this is exactly the comment that Americans have about Japanese). By the same token, Americans, who tend to equate directness with confidence and competence, need to be careful not to misjudge their Mexican colleagues’ indirect communication style.


The Mexican indirect communication style means that there is less expression of opinions and questions.  Mexicans are reluctant to question or even comment upon a decision made by a superior or someone of higher status, even if they completely disagree with it.  They may be reluctant to ask for clarification of directions that are not completely understood, because they do not want to appear uninformed or critical.  They may also be reluctant to express disagreement with instructions they are given. Instead, they might do the job partly, in a different way, or not at all.


You can help to bridge this difference by letting your Mexican colleagues know that they will not lose face in your eyes if they admit a mistake or bring up a problem or question.  Let them know that they can say what they think without fearing rebuff from you.  Developing a relationship of personal trust will encourage Mexican colleagues to be more open with you.


It is also important to avoid having your more direct communication style become overbearing. Try giving Mexican colleagues the opportunity to state their views before giving yours. (If you express your views first, your Mexican colleague will feel reluctant to say anything that conflicts with your

opinion.)  Remember that words and how you use them is considered important.  If your tone is one of giving orders, you will cause your Mexican colleagues to become more passive. As an American employee at a Japanese company with a Mexican plant observes, “A lot of U.S. people want to go down (to Mexico) and tell them what to do, instead of helping them come up with their own ideas so they want to do it.”


Although it is not particularly comfortable for Americans either, direct criticism and pointing out of problems are especially disliked in Mexican culture.  If you criticize a Mexican directly, you run a strong risk of seriously damaging your working relationship, perhaps permanently.  If you criticize a Mexican in front of others, you cause him to lose face and you will be perceived as extremely disrespectful.


At the same time, problems in the workplace have to be dealt with.  When discussing problems or mistakes is necessary, you should always do so one-on-one, in a separate room.  Be careful with your choice of words.  Tact and diplomacy are important.  Avoid saying directly “You are wrong” or “It is your fault.”  Instead, say “We have a problem with XYZ”.  Concentrate on finding solutions, not on placing blame. As a Mexican employee at a Japanese manufacturing firm puts it, “The Mexican people expect that when they fail, you will support them in order to solve the problem, not point a finger at them.” Finally, don’t forget to use positive feedback when it is merited — this will help to balance out the times when negative feedback is necessary.


Task vs. relationship orientation


For Americans, while at the workplace getting things done is highest priority.  Other people are a means toward getting things done, and there is a distinct separation between “work” and “play”.  In order to be considered a good worker, one needs to be focused, efficient, no-nonsense.  This can be described as being “task oriented.”


While in general Japanese tend to have a stronger relationship orientation in their work than Americans do, I have found that Japanese expatriates in manufacturing plants, due perhaps to the pressures of their assignment, also tend to be quite task oriented.  They may become so wrapped up in their work that they forget to greet co-workers, and only engage in coversations when absolutely necessary and directly related to work.


This “let’s get down to business” approach of Americans and Japanese can seem quite cold and impersonal to Mexicans, for whom relationships and the human element are important in the workplace.  Mexicans prefer to work with people who they can have a warm, friendly rapport with.  In Mexico, proper etiquette is extremely important.  In particular, taking the time to be polite and cordial is important.


In order to bridge this gap, it is important to take the time to get to know Mexican colleagues as individuals, as people. Be sure to greet co-workers, and take a few moments each day for small talk.  Spend time in relationship-building activities, including meals.  Social activities formally planned by the company, particularly celebrations of important milestones, are an effective tool to enhance relationships and team spirit.


It is also important to make the effort to learn Spanish.  Even though the Mexican managers, engineers,  and other white collar staff you will be working with likely speak excellent English, learning Spanish shows your respect for their culture and will be appreciated.  Although you may speak English with these colleagues during working hours, being able to switch into Spanish during social time such as meals can help to build relationships. Spanish is also an important tool to enable you to interact with production staff, who likely speak little if any English.




The comments above only begin to scratch the surface of the important cultural issues that need to be taken into account when managing in Mexico.  Japanese companies who assume “it’s just like the U.S.” or even worse, “We need to do things exactly how they are done in Japan” will be unable to reap the benefits offered by the Mexican business environment.  Making the effort to understand Mexican culture and take it into account in your management style is the key to success in Mexico.


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