Elastomer: Selling in Mexico without a Sales Office

Client Story

Elastomer: Selling in Mexico without a Sales Office

Elastomer: Selling in Mexico without a Sales Office

In 2015, Elastomer had turned to Entrada Group to enable them to enter into the Americas market by establishing its Mexico operations at Entrada’s manufacturing campus in Zacatecas, Mexico. Being present in North America enabled Elastomer to be closer to customers in the region, supporting its “Triple A” growth strategy – a manufacturing footprint in Asia, Americas and Africa.

But to expand further in the Americas, Elastomer needed to sell directly to key customers in Mexico, such as major Tier Ones like Delphi and automotive OEMs themselves. To do so, customers mandated Mexico Invoicing, which would require a physical U.S. or Mexico entity – something Elastomer lacked. Entrada’s traditional shelter structure didn’t enable the Mexico invoicing that Mexico-based customers would require. A creative solution to a complex problem was needed.

A Six Month Deadline
To enable Elastomer to generate invoicing for Mexican customers and process in-country sales, Entrada Group would need to create a tailored solution that enables Elastomer to piggyback onto Entrada’s existing corporate infrastructure. This would give Elastomer a Mexico sales office and satisfy compliance requirements of the Mexican government, without obligating Elastomer to set up their own corporate sales entity in Mexico, known as an IMMEX sales company. On top of it, Entrada had to deliver the sales office in under half a year, to meet Elastomer’s timeframe.

Plenty of Issues to Resolve
To bring Elastomer’s sales capability to life, Entrada had to solve a raft of challenges. Before Elastomer could generate a Mexico Invoice for customers, Entrada would need to:

  • Establish a Mexico Invoicing company that would generate income for Elastomer. However, Elastomer didn’t want to incur the extra cost and complexity that would accompany their own IMMEX sales company. They would need to launch it under Entrada’s existing Mexico corporate presence.
  • Further, once a corporate entity in Mexico was established, Elastomer didn’t want to staff and manage the company themselves, which would result in yet another new cost. Instead, the staffing and management functions would also need to be handled by Entrada.
  • Finally, because Elastomer was going to execute sales in Mexico, they would be showing profit that would be taxable by the Mexican government. Thus the IMMEX company that Entrada established for Elastomer would also need to have costs allocated against it and be administered by Entrada as the legal entity of record in Mexico, minimizing Elastomer’s Compliance burden and tax exposure.

The Outcome
Within six months, Entrada and Elastomer developed a unique Mexico Invoicing partnership, unlike anything Entrada had ever managed for a client before. Now Elastomer has a Mexico sales company that generates invoices for customers in Mexico. Entrada Group is responsible for managing that company’s Invoicing and Compliance. The entire sales company, technically a separate entity in Mexico, is indemnified by Entrada Group, further mitigating Elastomer’s risk. Due to the presence of the Mexico Sales company, Elastomer can deliver product directly from Entrada’s manufacturing campus in Zacatecas, Mexico to their clients.

A Winning Formula
At the end of the process, Elastomer had gained new clients in North America who they previously would have been unable to service, by virtue of their new sales office in Mexico. Now Elastomer is able to quote on global projects with their customers by partnering together, such as working in tandem with a well-known Tier One supplier, and no longer having to go through a subcontractor in order to compete for business. They have won new clients in North America’s automotive sector, both Tier Ones and OEMs.

Paula Dias, Elastomer Solutions

„Our customers made it clear we needed to set up in Mexico to better serve them. To us, the benefits of central Mexico, in particular, were obvious, including proximity to the US market, a skilled labor force and competitive labor costs. Entrada provided us with a solution that made it possible for us to be up and running in Mexico quickly, and we look forward to years of ongoing support from Entrada in the region.“