U.S. Law, Accounting Firms Providing a Bridge for Asians Into Tijuana

As the number of Asian consumer electronics manufacturers setting up plants in Tijuana continues to grow, so does the roster of U.S. legal and accounting firms trying to grab some of the potentially lucrative multinational business.

Six of the Big Eight certified public accounting firms have offices or affiliations in Tijuana, and the nation’s largest law firm, Baker & McKenzie, has had an office there since 1986. Several other Southern California law firms are positioning themselves for what they expect to be a long-term influx of Japanese, Korean, Taiwanese and other Asian manufacturers to Baja California.

The law and accounting firms bill themselves as indispensable guides in helping the Asian firms navigate the morass of U.S. and Mexican laws governing the operation of maquiladoras --foreign-operated plants where goods destined mainly for the U.S. market are manufactured or assembled with lower-cost Mexican labor.

Perhaps more important, the firms say they provide a buffer between clashing cultures.

“Mexican businessmen are generally rugged individualists who do things very much on a seat-of-the-pants basis,” said lawyer Victor Vilaplana, an attorney with Sheppard, Mullin, Richter & Hampton in San Diego who grew up in Tijuana. “The Japanese are more consensus-driven and slow. So our job is to assure both sides that each is acting in good faith and not jerking the other around.”

Chicago Firm Dominates

Foreigners must also be coached on how certain seemingly simple tasks, such as permit approvals or telephone hookups, that take a few minutes in Japan or the United States can drag on for weeks in Tijuana. Patience is counseled to any client, Japanese or otherwise, moving to Mexico, said Rudy Fernandez, managing partner of Touche Ross & Co.’s Tijuana office.

The Pacific Rim legal business on the Mexican side of the border has been dominated by Chicago-based Baker & McKenzie since 1986, when it hired Gonzalo Gomez-Mont, a 32-year-old Mexican attorney in Tijuana.

Gomez-Mont was then made a full partner by Baker & McKenzie, one of only 20 partners in the 1,300-lawyer firm then under age 30. Baker & McKenzie got an immediate client base of 14 Japanese firms in Tijuana, a list that Gomez-Mont has since increased to 20 of the 23 Japanese companies now in Tijuana. Those clients include Sony, Maxell, Sanyo and Hitachi.

Gomez-Mont, who makes two trips a year to Japan to visit clients and absorb Oriental culture, attributes his success to the good luck of being in Tijuana at the start of the maquiladora boom and to referrals from Yasuo Sasaki, executive vice president of Sanyo in Tijuana. With Gomez-Mont’s help, Sasaki’s company set up a huge refrigerator and electric fan factory in Tijuana in 1983, one of the first Japanese plants in Baja California.

The domination of the Touche Ross accounting firm of Pacific Rim business in Tijuana is nearly as complete. Headed by Fernandez, a bilingual native of Texas, its Tijuana office handles 16 of the 23 Japanese firms manufacturing in Tijuana. The office was set up with four accountants in 1987 as a joint venture of Touche Ross’ Japanese, Mexican and U.S. operations and now has 15 accountants.

But both firms are looking over their shoulders at the competition that is sure to develop as the number of Pacific Rim manufacturers setting up in Tijuana continues to grow. Sean Doyle, a broker with Coldwell Banker commercial real estate in San Diego who tracks the maquiladora market, said at least two dozen major Asian firms are looking at plant sites in Tijuana.

Last year, the number of maquiladoras approved for the Tijuana region grew by 45%, a rate that Mexican officials say will be met or exceeded this year. Of the 571 maquiladoras in the Tijuana region now, only 23 are Japanese and one is Korean, up from a total of seven Oriental companies two years ago. But Gomez-Mont said the total could easily double in 1989.

The attraction of Mexico for Asian manufacturers is simple: cheap labor. The top hourly labor rate in Mexico, for example, including fringe benefits and taxes, is about $1.10, less than the $1.20 rate in South Korea, $1.30 in Hong Kong and $6 an hour in Puerto Rico, said Steve Donahoe, president of North & Donahoe, a management consulting firm in Del Mar and Santa Ana that assists U.S. manufacturers setting up foreign plants.

Many multinational companies with plants in Singapore, Taiwan, South Korea and Hong Kong are taking a closer look at Mexico now because those four countries recently lost their Newly Industrialized Country status under U.S. trade laws. The NIC status meant goods made there could enter the United States with minimal duty.

Grabbing Pacific Rim business headed to California and Mexico from Asia was the principal reason for Sheppard, Mullin, Richter & Hampton, a 200-lawyer firm based in Los Angeles, forming a 10-member International Business Development Committee last year. Its members include Vilaplana and Mathew K. Fong, 35, son of California Secretary of State March Fong Eu.

Formed Advisory Council

So far, the panel has made four trips to Asia to drum up business, mainly in talks with banks. “We found a long time ago that (Japanese) manufacturers are closely allied with banking institutions,” said Vilaplana, 42. The group’s efforts have garnered few major clients thus far, but Vilaplana said he expects the marketing effort to be a “long, slow courting process.”

A marketing thrust of Luce, Forward, Hamilton & Scripps, one of San Diego’s oldest and largest firms, was to help form the Pacific Rim Advisory Council in 1987, a network of firms representing 1,850 lawyers in 29 cities around the Pacific, the United States and Canada. Luce Forward’s John Brooks is chairman of the council, which is a kind of cross-referral association.

Except for Touche Ross, which owns and operates its Tijuana office, most Big Eight accounting firms in Tijuana have formed affiliations with large Mexican firms.