Even Without NAFTA, U.S. Goods Are a Hit in Mexico
Though Juan Torres, a 19-year-old used-clothing vendor, lives in one of this city’s poorest neighborhoods, he buys whatever U.S. goods he can.
Here he was Wednesday morning, for instance, in the neighborhood’s booming Wal-Mart--the one Vice President Al Gore had referred to in his debate with Ross Perot the night before.
More prosperous Mexicans are making newly opened Price Club and Sharper Image stores a success. And even Mexicans like Torres and his wife, Lorena, who can’t afford the Libbey glassware and Rubbermaid shelf paper that Wal-Mart sells, splurge occasionally on imports.
Beside the Mexican milk and batteries in Torres’ cart was a bag of U.S.-made sugar. “It’s so nice and white,” he said.
Even without the proposed North American Free Trade Agreement, U.S. retailers are drawing Mexicans of all economic levels to stores with wide aisles, helpful stock clerks and friendly cashiers--foreign concepts of service that these merchants are importing along with shelves of mainly U.S.-made goods.
The stores cater to the same appetite for things foreign--especially American--that packed audiences into this week’s back-to-back Madonna and Michael Jackson concerts.
Their customers are many of the same people who patronize the ever-growing number of U.S.-based franchise restaurants, from young professionals having dinner out at the Hard Rock Cafe to maids who stop at McDonald’s for an order of French fries that makes them feel momentarily chic.
In practical terms, these stores are the result of Mexico’s decision to slash duties on imported goods as part of the country’s free-market economic reforms, which have spread since 1986.
Mexican imports of consumer goods reached $7.7 billion in 1992--nearly 10 times the 1987 level. As Gore noted during the debate, 70% of those imported products came from the United States.
Levi Strauss & Co. says its exports to Mexico have climbed sevenfold since 1986. Minnesota Mining & Manufacturing Co. has boosted its sales to Mexico ninefold, creating at least 300 3M manufacturing jobs in the United States.
But what makes U.S. retail stores work in Mexico is cachet. Intellectually, some Mexicans may fear an invasion of U.S. products and culture. But even they are drawn to the little piece of America that U.S. retailers represent.
Wal-Mart epitomizes the trend. Employees are easily identified by their red smocks and name tags. They are genuinely helpful, greeting customers and pointing out sale items. Aisles are cleared of the boxes that are ever-present in Mexican supermarkets.
And the checkout lines feature racks of U.S. magazines--Good Housekeeping, Prevention, GQ and both Cosmopolitan and Reader’s Digest in English, even though Spanish editions are published here.
Only about half the store’s 52 cash registers were open early Wednesday afternoon, but there was no waiting in line.
When a bar code failed to register a price, the cashier summoned a clown on roller skates who went to check it.
Five minutes later, the clown returned, the cashier rang up the sale and actually apologized for the delay--a concept almost unheard of in Mexican stores.
Customers like Berta Buenrostro are delighted. The 34-year-old housewife was shopping with her two grade-school-age sons, looking at Dunlop and Spalding tennis racquets. “The store is really well stocked,” she said. “The prices are excellent. And I love imported goods: The quality is so much better.”
Looking up from her loaded shopping cart, she was puzzled--then offended--at Perot’s debate assertion that Mexicans cannot afford to buy U.S. goods because wages here are so much lower.
“It’s mean to make those kinds of comparisons,” she said. “Of course, there are differences, but we still buy things.”
There are caveats, of course. It’s true that the Mexican minimum wage equates to 50 cents per hour. And the per capita domestic product of Mexico is $3,902--versus $22,645 for the United States.
And not everything with a U.S. brand name sold in Mexico is truly a U.S. export. Much of the increase in Rubbermaid’s Mexican sales stem from the company’s purchase last year of a Mexican plastic-goods manufacturer, according to spokesman George Thompson.
Still, as Buenrostro and Torres attest, the combination of imported goods and U.S.-style service has been a smashing success for U.S retailers in Mexico.
Price Club, one of the pioneers in the latest wave of U.S. retailers moving into Mexico, sold $170 million worth of goods from a single store in its first year of operations.
Sears and Woolworth--both highly respected retail names with long histories in Mexico--have changed drastically, stocking far more imported goods.
“Mexican customers are like other consumers. They want value,” said Thurmon Williams, president of Sears in Mexico, which opened its 47th store two weeks ago. “American products--for example, Levis and Dockers and our Kenmore appliances and Craftsman tools--are very popular. Many U.S. products have a reputation for having greater quality in Mexico. If a product has an American label, it will get attention in Mexico.”
More U.S. retailers, most recently J.C. Penney and Dillard Department Stores, are venturing into Mexico, with or without partners.
And staid Mexican department store chains, such as Liverpool, have teamed up with foreign partners--K mart, in Liverpool’s case, to try discounting.
The same hunger for U.S. goods draws huge numbers of Mexicans to shopping centers on the U.S. side of the border.
A UC San Diego-sponsored study, released Wednesday, of Mexicans passing through San Diego County’s two border crossings found that the visitors accounted for purchases of $2.8 billion in goods and services annually.
That amounts to about 5% of the county’s gross regional product, according to Abi Barrow, research manager at San Diego Dialogue, a public-policy group.
Even with liberalization, Mexico continues to put unaccustomed obstacles in the way of U.S. merchandisers.
The government continues to impose price controls on apparel and some other products--controls that will remain even if NAFTA goes into effect. And the tariffs that NAFTA would phase out over 10 to 15 years add as much as 20% to the cost of U.S. goods sold in Mexico.
Then there are such practical problems as advertising.
“Marketing information doesn’t exist,” said Sears’ Williams, “and there is no demographic information on income levels in Mexican cities.”
Times staff writers George White in Los Angeles and Chris Kraul in San Diego contributed to this story.
