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Interview with
Victor Aguilar Villalobos,
President and General Director of Mancera/Ernst & Young
February 22, 2000
| Please tell us about the history of Mancera/Ernst & Young in Mexico.
Our Firm was founded over 65 years ago; we have been partners of Ernst & Young for 40 years. We are one of the four largest firms in Mexico and Latin America. We currently have an extensive portfolio of legal, actuarial, accounting, auditing, domestic and international, and excise tax services, as well as foreign trade services. We also have a network of twenty offices in the most important Mexican cities – all the way from the border with the United States, to the border with Guatemala. Our Firm has grown over the years, fulfilling its mission of providing added value and service. One of the factors that has contributed most to our success has been the hiring of talented people, and the training we give them, not only in Mexico, but in other parts of the world as well. The international residency programs with Ernst & Young permit our personnel to work in the United States and in Canada for 18 to 24 months, providing us with the advantage of having bicultural personnel that can adequately respond to our clients' needs.
What is the most important service your Firm offers?
Our global auditing services, included in the internal control and computer systems evaluations, security systems, internal audits, due diligence analyses, financial audits, the conversion of financial statements to U.S. GAAP, and tax services are currently the most important, followed by the legal and foreign trade services. Our acting as auditors and consultants has been questioned through the years in many countries – primarily in the United States and in certain Latin American countries. Brazil now has a law that prohibits public accounting and auditing firms from acting simultaneously as consultants.
What are some of the biggest mistakes companies make, once they have established operations in Mexico?
Investors coming into Mexico for the first time must obtain advisory services from persons who are very familiar with the country's business environment, its laws, its
culture, and the way business is done in Mexico. When they fail to do so, they usually have a myriad of problems, because they underestimate the legal requirements and provisions that are particularly formal in certain sectors. In Mexico, formalities, documentation, and evidence are matters of great importance from a legal and tax standpoint. If investors neglect these situations, acting as they would in their countries of origin, they could incur in problems involving direct liabilities as administrators, with serious economic consequences. We have a specialized area that provides tax , legal, and accounting advisory services to new investors. Unfortunately, Mexico continues to be a highly regulated country, requiring 34 notifications to be filed with government agencies to open a business, which is a time-consuming process, but nevertheless is required under current provisions.
Is it indispensable for foreign investors to obtain consulting services as an entry platform?
As a platform – no; they can enter Mexico without consulting services. Large companies perform their project evaluations themselves and decide how to enter the Mexican market. It is advisable, however, in other areas that regulated entities in the financial and energy sectors obtain advice from business consultants. At times, these regulations require investors to file a business plan with the Ministry of Finance, the Ministry of Energy, the Mexican Banking and Securities Commission, or the Insurance Commission, and such plan must be developed in conjunction with a specialized firm.
What type of companies most approach the consulting firms?
Companies in expansion, those that have good management, large companies, and those doing business in regulated areas (i.e., energy, insurance and bonding, banking and securities, and so on). Some ten to fifteen percent of the companies seek consulting services (we must keep in mind that Mexico has many small- and medium-sized companies).
Could you give us some examples of companies that you have advised in their privatization process?
We advised TELMEX and BANCOMER, and other companies in the financial sector, such as SAINT PAUL,LINCOLN NATIONAL, YAZUDA DE MEXICO, ING, and
CHUBB. In the energy sector, we advised GAZ DE FRANCE, and in the airport sector, the winning group, AEROPUERTOS DEL PACIFICO Y DEL CENTRO. We have ample experience in this matter, and enjoy excellent prestige in the government sector.
What place does Mancera/Ernst & Young occupy among the Big Five in Mexico?
After the Price/Cooper merger, we occupy the third or fourth place.
What does Mancera/Ernst & Young have to do to occupy first place?
Continue to invest in people and technology, while maintaining the quality of the services we provide to our clientele, to guarantee their continued satisfaction with our work. We must instill our values and principles in our people, and continue to provide a service that enhances our clients' progress. We must grow to high percentages, without neglecting the quality of our services. More than growth, our goal is to be the best in added value.
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How does Mancera/Ernst & Young envision the future of investments in Mexico?
I am very optimistic in this regard; I feel that the deficiencies and limitations in Mexico provide opportunities for progress; I am aware of Mexico's evolutionary process, and of the fact that we still have social and political problems that must be overcome. I believe that Mexico offers enormous advantages over other countries, and that these same advantages will permit us to succeed in the future. One of the most important aspects that Mexico has achieved in recent years is a macro-economic stability that will permit us to avoid the problems we have had every six years (during the Presidential elections) in the past. We have achieved improved credibility from the international community, in view of the excellent economic performance obtained since enacting the Free Trade Agreement with U.S. and Canada Our level of exports surpasses that of all other Latin American countries, and the extraordinary opportunity of entering the European Union, the world's largest market, will place us in a privileged strategic position with respect to other developing countries, for the reception of investments . All of foregoing, in addition to a genuine political stability, will result in an economic growth in Mexico, that will be the driving force in getting the attention of the foreign investor.
What do the next ten years have in store for Mancera/Ernst & Young?
The next ten years will be of the utmost importance, because we are about to join the Global American Firm, as another of its areas; we will work under one sole Global Branding – Ernst & Young . We will function as one sole operative and financial Firm worldwide, and will take advantage of the enormous opportunities for growth, derived from a growing economy and from the signing of the Free Trade Agreement with Europe. The tax services specialized in international commerce, mergers and acquisitions, security systems auditing and Internet transactions, corporate finances, and foreign trade will be extremely important, and will be the areas with the most growth.
What role does the "trend" strategy play for Mancera, in capturing clients?
Understanding and actively participating in the globalization processes is essential, and of course, large investments in technology must be made, to successfully confront the new Internet economy. Supplying integral services as one sole Firm at the worldwide level is fundamental in an increasingly competitive world that essentially no longer has any discernable borders.
What concept does Mancera/Ernst & Young have of itself?
We are a prestigious Firm, at the forefront of the rendering of professional services in certain specialized sectors such as finances and insurance; in the latter, we audit 85% of the insurance premiums written in Mexico. There are other sectors, such as the telecommunications or energy sectors, in which we are the leading Firm, with clients of the stature of TELMEX and PEMEX. We are leaders in the agriculture and food sectors . We have been able to maintain a long-term relationship with our clientele; NESTLE has been our client for fifty years. Relationships such as these can only be obtained by keeping the clients fully satisfied. We are truly in a good position, and we believe that our perception is shared by several sectors of Mexico's economy. In the integration and globalization with Ernst & Young, we offer our clients and our personnel better services and opportunities. Ernst & Young's mission is very clear – to combine with firms throughout the world, that enjoy great prestige and that have a thorough penetration in the local markets.
Could you tell us something about your personal background in Mancera?
I have worked at Mancera for the past thirty-five years. I was chairman its audit and its insurance departments before becoming its Country Manager Partner five years ago. Of course, I did not begin to practice my profession directly in Mancera; I have worked for forty-
three years, and have been related to companies both as their auditor and as their controller, as well as their independent auditor, permitting me to become familiar with their problems both from the inside and from the outside.
What motivates you the most?
Success ... the changing environment ... my affection towards the Firm and my profession. I was president of the Mexican Institute of Public Accountants and of the Accounting Principles Commission. Seeing the progress of this Firm and the large number of young employees that work with us also encourages me – they incite me to innovation and change.
What message would you like to leave with our readers?
Mexico is a country of unsurpassed opportunities – it is a growing and strategic market that offers extremely attractive returns in the near future.
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© World INvestment NEws, 2000.
This is the electronic edition of the special country report on Mexico published in Forbes Global.
July 3rd 2000 Issue.
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MEXICO
