What would you name as being the key factor in your success with Japanese clients?
We are a professional services firm in Mexico, one of the so-called "Big Five" and for many years have played a leading role in providing services to Japanese clients here in Mexico. Apart from our many other clients, we provide services to between 85% to 90% of all Japanese companies currently operating in Mexico. One of the main reasons for such a competitive advantage is the number of highly qualified Japanese personnel our Firm has hired. We also have a number of partners of Japanese origin, independently of the association with Tohmatsu, which is the Japanese firm of Deloitte & Touche at global level. A significant number of our partners and personnel are of Japanese origin and many of them are Japanese speakers. We even have several publications in Japanese, covering tax and other matters, which is something other firms are now trying to develop. However, the most important factor in our success with Japanese clients has been the role of partner Mr. Benito Yamazaki.
What is the profile of the Japanese companies you provide services to?
We provide services to all kinds of Japanese companies: industrial, commercial, service and financial companies. What makes them different from our other clients is that they require a more comprehensive service, which we call Integrated Service. Japanese clients not only wish to receive all the tax services or consulting services our firm provides, they also expect a more personal relationship. For example, executives from Japan will often ask our advice about choosing where to live. They want to know if it is better to rent or to buy a house, or where the Japanese community is located here in Mexico. They will also expect us to introduce them to other members of the Japanese community. Basically, they want a completely different service from that expected by Europeans or Americans. Another important characteristic of Japanese clients is their loyalty. They are very loyal; once they choose someone to be their service provider, they tend to stick to that firm. Japanese companies and executives are very loyal once you have demonstrated that you care about their issues. Besides, they traditionally rely on back up from external consulting services when making their decisions and there is also a great deal of communication between themselves, so any new Japanese company coming to Mexico already knows about this Firm, which makes it is easier for them to come here.
Does your experience working with Japanese help you attract firms from other Asian countries, such as Singapore or Taiwan?
There is no doubt that Japan is the biggest economy in that part of the world. However, other countries in the region are also developing and we receive requests from Korean companies or from companies from Singapore, but to be honest, they are way behind those from Japanese companies.
What are the services Japanese companies are demanding the most?
They demand a lot of tax advisory services, they want to know how to structure their companies, the type of transactions that have to be carried on in order to optimize their tax situation here in Mexico, etc. They also require legal services such as contract preparation, joint venture advice, etc.
What has been the key factor behind your firm's growth in the past three years, and in general for the consulting sector in Mexico?
There are many reasons. We started growing in Mexico by attracting a few other smaller companies located in other parts of the country. We now have 22 offices nationwide, including a number of independent practices some years ago. With he passage of time and the advent of globalization, everyone agreed that the most advisable course of action would be to merge with us, which created a large firm with a high profile throughout the country.
Do you have specific services for specific types of industries?
Yes, our firm is divided by functions, audit being one of the most traditional and important services. In Mexico, companies with over a certain number of assets, level of income or employees are obliged to audit their financial statements for tax purposes. These companies require the services of an independent auditor for internal and for tax purposes, which has generated a large audit market in Mexico. Our most important service in terms of size is auditing financial statements, as well as certain other related services.
Market-shaping forces have converged to create a very attractive opportunity for risk management and control consulting services. Recently we developed a very successful business area called Enterprise Risk Services or ERS by unifying three separate Deloitte & Touche practices: Computer Assurance Services, Cosourcing and Control Consulting, to provide our clients with a complete, integrated solution for managing risk in virtually any enterprise or business process. ERS has allowed the Firm to take advantage of the synergies of the three individual practices and provide global organizations with a comprehensive solution to enterprise-wide risk and control. ERS offers an integrated range of services designed to help our clients understand business risks, determine acceptable levels of exposure, implement controls, and provide ongoing measurement and monitoring of the risk environment and compliance. Risk cannot be eliminated, only measured and managed. By looking at risk from a business-wide perspective, managers and directors can determine how much exposure they can accept and how to guard against internal and external surprises. Enterprise Risk Services helps our clients examine threats not only to financial performance and control, but also to the organization's strategies, business objectives and reputation.
Other firms have introduced these kinds of services with different approaches, but, in our case, our unified ERS practice has had tremendous results with impressive growth. In ERS, "We help manage uncertainty from the boardroom to the network".
Besides ERS, what other tailor-made services can you provide your customers?
Everything is tailor-made. Even our audit service is tailor-made because to provide it we have to conduct a very comprehensive study of the company by analyzing specific internal controls. Many people think that audit is mostly a mechanical task where there is no place for innovation, but they are mistaken. Each case is different; the audit programs have to be designed according to each specific company and every specific need. The audit provides not only with the bases on which we will express an independent opinion about the financial statements of the company, but also helps us provide company management with useful advice and recommendations. Frequently other services may arise from an audit, such as consulting and tax services. Audit also enables us to find out useful information about the company, such as the efficiency of its internal controls, which allows us to better advise the company in a number of ways. Another area, related to IT and E-Commerce, is Management Solutions, where we help companies select and implement the best computer and information management systems. We currently have strategic alliances with several software providers, such as JD Edwards, and are currently collaborating on several projects, in which they provide the software and we provide the implementation assistance. | Have you ever been involved in any privatization process?
We are frequently hired to provide due diligence services to buyers, where we determine whether company's financial statements are accurately prepared, in order to make the acquisition possible. The possible buyers can then be certain that the financial statements provided by the seller are accurate and correct.
What is your opinion regarding a possible privatization of both PEMEX and the CFE?
This is a difficult subject. Many people think that oil should not be privatized and should still be handled by the government. I have no particular preference one way or the other, but I do believe that PEMEX should improve its efficiency. I think we all agree on that point, but it doesn't necessarily mean that PEMEX has to be privatized.
How much of a concern are the bureaucratic proceedings facing a company wanting to set up a business in Mexico, for you or the other big four consultancy firms?
We have been working with the government for many years, providing tax law-related advisory services and one of our main aims has been to simplify the tax system in Mexico. Many people complain about it, everyone knows that it is quite complicated, that it requires adjustments for inflation, many procedures with the authorities, and, of course, we have been trying to simplify all of these requirements. However, this situation represents something of a dichotomy, because the government requires lots of information, which creates more work for us. On the other hand, despite the situation here, when compared to the number of pages contained in U.S. internal revenue regulations, Mexico still has a long way to go.
What would you recommend to the government if a free trade agreement were about to be signed with Japan or Singapore? When do you expect a treaty like this to be signed? To what extent would it help trade and investment between these countries? How would you be benefit from it?
Over 10 years ago Mexico started opening its borders and now trade is quite open; foreign trade in particular has increased tremendously. Mexico is today one of the biggest trading countries in the world. First we had NAFTA, now we have several agreements with other Latin American countries and very recently Mexico signed a free trade agreement with the European Union. This trend will continue. Any free trade agreement signed with Japan or Singapore or other Asian counties will doubtless bring enormous benefits to Mexico. Japanese investors will find this country more attractive, and goods will be brought here almost duty-free, manufactured here and then shipped to the US market. Most of Mexico's trade is with the U.S. market, for which reason we must diversify. This could be a very significant achievement for both Mexico and Japan.
What are the weaknesses of the Mexican internal market?
The number of poor people. There are 40 million people with no purchasing power, and it is very difficult to grow the economy with such a heavy burden. Mexico has to create a very substantial number of jobs in the very near future, so that these people can be fully incorporated into the country's economy.
How do you see all the recent movements that have been made within the Mexican banking system?
These are all positive and inevitable. The good thing is that the banking system is being strengthened and foreign investors have come to have joint ventures with Mexican banks. Many complain that all that has happened is that banks that were once in government hands are now in the hands of foreign investors. However, I think that the banking sector is just like in any other business in that it is immersed in the globalization process. Mexico needs the participation of foreign investors, given that domestic investors cannot fulfill all the demands generated by the growing Mexican economy.
If you were to prioritize your goals, would you choose growth over quality of service, or would you rather focus on offering a larger range of services?
Quality for us is the most important asset. Quality is indispensable, and quality brings growth. Growth never comes free. Quality brings satisfied clients, and satisfied clients bring growth. Of course, adapting ourselves to provide new services is "a must" or we will disappear from the market.
After 36 years working with Deloitte & Touche, what challenges are still left?
I have been the managing partner of Deloitte & Touche for only eighteen months, so there are still a lot of challenges left, more than I would like, in fact. We are in a very good position; people are motivated, the number of partners is continuously increasing, we are creating a culture in our firm that allows anyone coming here to become a partner of the Firm. We are making that vision a reality. In fact, on June 1st we will be announcing 16 new young partners. The Firm continues to grow and many new services are provided to new and old clients. E-business will be an enormous challenge for our people; working in that environment will change the way of doing business around the world and we have to be able to provide services there. We have many challenges in terms of training our people, growing our client base and providing new services to our present client base. We are also currently involved in the globalization of Deloitte & Touche. We have been members of the Firm for a long time, but now we are going to share economic interests with other Deloitte & Touche Firms in other parts of the world. That will make us stronger, more globally oriented, our people will go abroad more often to be trained and we will be receiving people from other parts of the world. This will create a very good development opportunity for both our Firm and our people |
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