Bienvenidos!
Producing a show in Mexico
By Rayna Skolnik

Passage of the North American Free Trade Agreement has focused a brilliant spotlight on Mexico. Among the agreement's provisions are phased-in tariff reductions that will make U.S. goods and services less expensive for, and therefore more attractive to, Mexican industries and consumers. But the sales potential there existed even without NAFTA. The pact is but the latest move -- albeit a major one -- helping U.S. companies enter a vast untapped market that a number of proactive show managers have already begun to penetrate.

"Almost every survey I've seen shows that Mexicans are four times more inclined to buy a product from the United States than from any other country," says Clark McEwen, President of CSM International, in San Antonio, TX. Testifying to that is the success of the International Restaurant/Hotel Expo of the Americas, which CSM launched in Mexico City in January. Show management had anticipated 10,000 attendees; the final count was more than 21,000.

"Never have I experienced what I experienced at that show," McEwen recalls. "In the final hours of the last day, which at most shows is quiet, security guards had to hold the crowds back." By the time the show closed, exhibit space for 1995 was nearly sold out.

CSM is one of many show management companies heading south of the border. "Anyone I speak to is either active in or actively considering the Mexican market," says Bob Birkfeld, President of The Prescott Group, in Stuart, FL. "Competition is increasing in the United States, and there are virgin markets in Mexico."

As U.S. companies demonstrate increasing interest in Mexico, the Mexican government has begun removing the barriers to doing business there. Much of the credit goes to President Carlos Salinas de Gortari. Bill Warnes, President of Marketing International Corp., in Alexandria, VA, says Mexico previously imposed duties as high as 80 to 100 percent on some products and totally prohibited others, such as computers, so that Mexico could develop its own industries. "Salinas has moved rapidly in getting Mexico to modernize and compete on a global standard," he says.

Another significant change is noted by Ned Krause, President of E.J. Krause & Associates, Inc., in Bethesda, MD. At one time, he says, any company that opened a Mexican office needed a Mexican partner with at least a 51-percent interest. That requirement was dropped about four years ago, and his company subsequently opened a subsidiary in Mexico City. "We wanted an office so we'd be viewed as the Mexican organizer, not the Americans coming in," Krause explains. To emphasize that point, and because it made good business sense, Krause named a Mexican national to head the office. Gabriel Covarrubias, now Vice President, Latin America, for E.J. Krause, was formerly Director of Marketing for Cintermex, the exposition facility in Monterrey.

But Mexicans' attitudes toward incoming Americans is progressing. The Food Marketing Institute this year will organize its third U.S.-Canadian pavilion at ANTAD, a retailing show in Guadalajara. "It's becoming a little easier to do the pavilion because there is a more open mind-set toward U.S. participants," says Chris Brown, Director of Exhibits for the Washington, DC, association. "They want to be able to show their support of NAFTA, so it's a bonus for them to have a U.S. presence."

Exhibiting in Mexico, whether organizing a pavilion or an entire show, clearly is becoming easier. But that doesn't mean it's easy. There are still many rules and regulations to be dealt with, as well as business and cultural differences to be learned.

But perhaps the key concern for show managers is that the exhibition industry is underdeveloped. There are few properly designed and equipped exhibition facilities. And the lack of sophistication of some show organizers has hurt the image of the industry there.

"The trade show industry in the last two years has been in critical condition," says Covarrubias in Mexico City. "Local show producers have not been financially capable of producing good shows. When shows fail, exhibiting companies don't want to participate any more." Covarrubias points out, however, that such a situation presents an opportunity for professional show managers. "If you bring in a show and run it correctly," he says, "you'll be developing a market with enormous growth potential."

Assessing the markets
According to Warnes, who has been involved in shows in Mexico for many years, previously with the U.S. Department of Commerce and now with his own company, the markets currently offering the greatest opportunities include computers, heavy machinery, packaging, plastics, petrochemicals, and mining and construction equipment. In addition, there's a tremendous need for telecommunications products as a result of the privatization of Telefonos de Mexico SA.

Now that goods can flow back and forth across the border, Warnes adds, such consumer goods as apparel, cosmetics and consumer electronics also will be in great demand.

With Mexico as with any other market, exhibitors often can tell organizers if there is potential for an existing show. For example, CMC, which operates the T&D World Expo, a trade show and conference for the electric utility industry, this month launches T&D World Expo Mexico in Mexico City. "The first thing we look at is where our exhibitors would like to do business, not where we want to do shows," says Paul Mackler, CEO of CMC. "Mexico is an important market for them. The country needs goods and services and information to help increase its electric utility capacity."

When exploring the market for a brand new show, however, a good first contact is the Department of Commerce. Its Economic Policy Country Desk Officers can provide information on the overall market potential of a specific country, and Trade Development Industry Officers can identify countries with potential for a specific industry.

You can also do your own research, as Miller Freeman did before deciding to launch a sportswear show, Deportexpo, and a general merchandise show, Mercatodo '94, in Guadalajara in May. "We did a careful demographic analysis of the consumer market," says Verne Packer, Senior Vice President, Tradeshow Div., of the Dallas company. The analysis showed that although many young people were enthusiastic about sports, "there was a tremendous lack of awareness of what's available in sports equipment, with the exception of tennis shoes."

On the general merchandise side, Packer says, "The people as a rule desire U.S.-made products. They'll even travel to the United States to buy them if they can afford to."

The demand exists, but there is no organized market, he says. "There's no association, no trade magazine." Thus, Miller Freeman is working to develop that market. "We're aligning ourselves with major manufacturers, asking them about their vision for the future, making them part of the process," says Packer. "That will put us in a much better position to deliver what they expect." Retailers are being consulted as well, he says. "We asked about their buying patterns and what they're interested in selling."

McEwen, who managed a food service show for the Texas Restaurant Association for six years, regularly traveled to Mexico, promoting the show to potential exhibitors and attendees. He learned that Mexico lacked -- but was able to support -- such a show. His visits also established the relationships that were vital in developing the show in Mexico.

Choosing your partner
Although Mexican law no longer requires U.S. companies to align themselves with a local partner, many show managers find it beneficial to have a Mexican connection. The cultural distance between the United States and Mexico is greater than the geographical distance, and a local representative can clarify the complexities.

"Partnering with a local is a very smart move," says Warnes. "It can help you interface with the government, trade associations and publications. Also, the Mexicans will be much more supportive. A Latin American national prefers working with a representative from his own country." Warnes explains that many people believe a local person will be accountable and see that all obligations are met.

"A foreign show producer must have someone who understands the government procedures, which can change every year," Covarrubias says. For example, he mentions a new law that went into effect in late December making show management liable for exhibitors' customs violations.

When CMC began its move into Mexico, says Mackler, "We had no expertise in that market. We looked for people and companies who could help us succeed." Initially, CMC contracted with Warnes to assist with operational matters. Later, however, the company entered into a joint venture with Mexico City-based TRADEX Exposiciones Internacionales, S.C.

"You must have a local presence in the market you're serving," Mackler says. "You need someone who speaks the language and understands the culture. I'm really surprised when I hear people talk about entering new markets and they aren't taking the time to learn the culture. It's incumbent upon us to do so."

Another local presence for CMC is the Mexico City office of public relations firm Burson-Marsteller, which not only is handling public relations and promotions for the show, but also is providing another benefit. "They've helped us enormously in understanding the culture," Mackler says.

McEwen, meanwhile, forged an alliance with Coca-Cola de Mexico to be the national sponsor and promote his show to its customers throughout Mexico.

Miller Freeman is partnering with the principals of the Guadalajara World Trade Center, who developed the Expo Guadalajara facility. "They have significant experience, but not on the producer side," says Packer. "Their role is to provide a full staff for marketing, sales, communications and public relations. They're also working closely with us on building relationships with government entities."

Opening an office in Mexico naturally represents a greater commitment. E.J. Krause, which opened its office three years ago, currently runs five shows in the country and aims to develop 10 to 15 shows over the next three to five years. The first show it launched was Expo Comm Mexico, a clone of its Expo Comm shows in China and Moscow. Expo Comm is a computer, telecommunications and office automation exhibition and conference.

Finding a facility
There are fewer than a dozen exposition halls in Mexico, and many major shows are held at hotels. For example, E.J. Krause's Expo Comm is at the Camino Real in Mexico City. Ned Krause remarks that it was a challenge to convert the hotel into an appropriate facility.

"Mexico City doesn't have a major hall that's up to U.S. standards," says Krause. "That has held back the development of the industry." The situation should change this fall when the city opens its new World Trade Center -- to which Expo Comm will relocate.

According to Mackler, whose show is at Exhibimex in Mexico City, the facilities in the United States are larger and more advanced. "They've given more thought to logistics, like marshaling yards and freight storage, as well as floor load and seminar rooms," he says. "We've had to rethink the way we operate in order to deal with some of those issues."

Despite the lack of facilities, some show managers insist that Mexico City is the preferred venue. They say attendance will be stronger because the city has a population of 22 million and is the business, financial and government center. Others disagree, saying it's more important to select the right facility, and then find creative ways to attract attendees.

Both Cintermex in Monterrey, which opened in 1992, and Expo Guadalajara, which has been open about eight years, are purpose-built exhibit halls. Covarrubias notes that Cintermex has been less competitive because of a lack of hotel rooms in Monterrey. But 1,500-2,000 five-star rooms will open there in 1994 and 1995.

One thing that all Mexican exhibit facilities have in common is high cost, the result of their being privately owned and not supported by visitor taxes. "Rental charges are staggering," says McEwen. "Exhibimex is about one-fifth the size of the George R. Brown Convention Center in Houston, and I pay almost twice as much for the facility." Higher rentals naturally translate into higher exhibitor costs. In Mexico City, McEwen charges $20-$24 per square feet, compared with $12-$13 in Houston.

Note that although show organizers sometimes state dimensions in feet, as a convenience for exhibitors, Mexico uses the metric system. A space of 3- by 3-meters approximates a 10- by 10-foot space in the United States.

Birkfeld points out that whereas in the United States, show producers typically handle exhibit sales by phone, in Mexico, a field sales force is important. "People want a lot more personal contact," he explains. Also, the Mexican phone system isn't equal to ours. "Getting calls through and reaching the right people is very difficult."

Selecting suppliers
Although show managers may feel more secure using a U.S. service contractor when venturing into unfamiliar territory, they find it advantageous to involve Mexican companies as well. "One reason I receive the support and cooperation I do is that I'm not just another U.S. promoter working in Mexico and ignoring Mexican suppliers," says McEwen. "I make every attempt to work with Mexican firms." He contracted with GES Exposition Services, which subcontracted some services to Mexican companies.

Packer also uses a combination. "There are very few service contractors in Mexico," he says. "There are so-called general contractors that can provide one element, but there's no one-stop shopping. The show organizer must take on more operational responsibilities and organize the team." For Miller Freeman's shows, Freeman Decorating is working with all the U.S. exhibitors and will supervise the on-site Mexican contractor.

Mackler, however, is using a local contractor only. "The facility was very helpful in providing names, and we called other show managers for recommendations also. We debated bringing in a U.S. company as an overseer, but we don't think it's necessary." But it is necessary for show management to be more vigilant, he says. "We take certain things for granted in the United States. Here, for example, the general contractor handles drayage. If we assumed the Mexican contractor did, we'd be dead wrong -- that's a separate contractor."

An experienced freight forwarder is vital to both exhibitors and show management. Brown says that exhibitors experienced many problems with customs the first year that FMI organized its pavilion. Subsequently, "We worked directly with freight forwarder R.E. Rogers. They struck up a relationship with the Mexican freight forwarder that made a big difference." Also, he says, "We've learned that we have to be meticulous in our paperwork."

As Covarrubias pointed out, show management is responsible for exhibitors' customs violations. But a good freight forwarder, he says, can ensure that exhibitors comply with all regulations.

Drawing a crowd
Attendance promotion for a show in Mexico is tedious, time consuming and costly because many of the standard approaches cannot be used. To begin with, there are no list brokers, there are very few trade magazines from which to buy lists, and show organizers share their lists with no one -- not even exhibitors.

Key sources for names are chambers of commerce and industry associations; the latter are extremely important in Mexico. But Warnes cautions that those lists are not likely to be clean. And because so few companies are in the database business, those that are charge accordingly.

McEwen says that compiling his database took two years of contacting every possible association and "fringe group" and making countless phone calls. And as a further indication of just how difficult the process is, Packer says, "We think we've developed a brilliant system" -- and refuses to discuss it.

Not only is it difficult to compile a mailing list, but "direct mail" isn't always direct. "You can't count on the mail; it's fairly common knowledge that the service is slow," says Krause. He supplements mail with courier services, especially for contacting the 200-300 high-level people who are invited to the show's opening ceremony.

The scarcity of trade publications not only makes it harder to compile mailing lists but also changes the approach to advertising, says Mackler: "General media are used much more frequently than you'd expect for a trade show." Still, they are only supplementary, he says. "We have found direct mail and fax to be the most reliable and useful ways to promote our show."

Warnes notes that radio advertising can be effective because people spend more time commuting; most people go home for lunch. Thus, "drive time" includes not only the morning and evening commutes, but also the lunchtime trip home and back.

The show in Mexico
All these efforts culminate into an exhibition that is very different from one in the United States. It begins with a ribbon-cutting ceremony that is taken quite seriously. "We made sure that the Mexican government, from the president's office on down, was represented at our event," says McEwen. "We have to adapt to their ways."

Mexican participants expect to see top officials not only from industry associations, but also from government ministries, at the opening. A U.S. company acting alone could find it difficult to obtain that support -- another reason for having a local partner or representative. "You must have someone who can pull the government and the private sector together," says Covarrubias.

Show hours are later and often longer in Mexico. McEwen's show ran from noon to 9:00 p.m. on the first two days, and noon to 6:00 p.m. on the third. "The Americans were really dragging," he says. "But sometimes at 9:00 at night you couldn't get through the aisles." Exhibits were open because the attendees were there.

Similarly, Krause says that at his shows, seminars are scheduled for the morning and exhibits are open from 3:30 or 4:00 to 8:00 or 9:00. "That's when we get our best attendance." Mexican participants are pleased that their schedules are accommodated. And for U.S. or European exhibitors -- who were of course alerted in exhibitor bulletins -- "it's a minor adjustment."

In other areas, however, U.S. show organizers do well to break with tradition. For example, most Mexican exhibitions are open to the public, but apparently exhibitors wish it were otherwise. "Our show was successful because it is one of the few trade-only shows in the country," says McEwen. "The Mexican exhibitors were ecstatic."

Krause, whose shows also are trade-only, remarks that at Mexican trade-only shows, attendees aren't always well-screened. "We've gone to great lengths to screen attendance," he says. Holding the event at a top hotel helps. "People don't just walk into that hotel."

Of all the differences show managers encounter in Mexico, the one that Mackler finds most striking is a positive one. "Relationships are even more important there than they are here," he says, "and I enjoy that. People are friendly and hospitable, and they reach out to you. It's expected that you'll get to know each other."

That attitude makes it easier to deal with the inevitable difficulties. But what also helps is knowing that a vast market exists. An exhibitor brochure for The International Restaurant/Hotel Expo of the Americas reads, "Mexico needs U.S. technology and products...if we do not respond to their needs, someone else will!"