Ties That Bind

For nearly two decades, Salvadorans in Southern California have sent dollars and goods home to relatives by wire, mail and courier, shoring up the economy of the war-torn country they fled and feeding a consumer boom there.

Now, six years after peace accords ended the civil war, Salvadoran officials are eyeing the $1.2 billion in yearly remittances with discomfort. The money has distorted the country’s economy. Aware that the lifeline from abroad will only fray with time, the Salvadoran government is turning to its emigrants to forge more lasting economic ties.

This month, a delegation of Salvadoran officials and 120 entrepreneurs eager to export everything from coffee to construction supplies will come to Los Angeles for a two-day summit with the burgeoning Salvadoran business community here.

For El Salvador, the First Business and Trade Conference El Salvador-Los Angeles offers a forum to troll for investors, learn about U.S. regulations and markets, and seal export deals with businesses here willing to market products to the region’s Salvadoran community--the largest outside El Salvador.

For the emigrant community, it could bring franchise opportunities, a chance to invest in El Salvador’s privatizing telecommunications and power industries and a promise of a better relationship with historically unreliable Salvadoran exporters.

The conference also signals a coming-of-age.

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Long fixated on El Salvador’s 11-year war, the relatively young emigrant community is now turning its attention to economic development, transforming strong ties to the homeland into opportunities for trade. Estimated by some at more than 700,000, the Southland community comprises 70% of Salvadorans in the U.S.

“The community is accelerating its role from one of dealing with immigrant rights to one that’s part of the mainstream, focusing on economic development and political participation,” said City Councilman Mike Hernandez, a conference speaker. “I see the trade fair as part of that development.”

The June 25-26 conference in Los Angeles is the most concerted effort yet by a Central American government to tap its resources abroad. A Guatemala Expo at the Los Angeles Convention Center in October promoted tourism and sought new markets for exports, but it did not focus on Guatemalan emigrants as the vehicle for growth.

This month’s conference stems from a larger effort by El Salvador’s National Competitiveness Program to promote participation in international trade. The program last year hired Boston-based Monitor Co. to select four sectors of the Salvadoran economy for development. The emigrant community was among those chosen because its contributions account for more than 10% of El Salvador’s gross national product and generate three times the hard cash of its principal export, coffee.

“Entire towns have become oases of consumption but completely devoid of any industry,” said Lauren Pressman, a consultant in El Salvador for Monitor. The consulting firm was founded in 1983 by Harvard Business School professors Michael Porter and Mark Fuller and has a division that works to improve the economies of developing countries.

“Instead of sending money to their families, the emigrant community could invest in small businesses for them,” Pressman said. “Also, we’d like to encourage Salvadorans to use their enormous competitive advantage--more than a million compatriots living in the U.S. who are looking to buy Salvadoran products, willing to help import products and be potential business partners.”

Commercial links between Salvadoran emigrants and their homeland are already strong.

Alex Vanegas owns several businesses that help Salvadorans purchase real estate back home, send money to relatives, and buy long-distance phone service. Several El Salvador-based courier services have offices here, ferrying a high volume of money and goods back home. Other emigrants have turned to imports.

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Nuria Finch co-owns a restaurant chain in El Salvador and in 1990 launched Bravo Enterprises Inc. in Commerce. Bravo manufactures Kolashampan Bravo, a copy of a popular Salvadoran soft drink. The company’s powdered horchata--a traditional rice drink--is made in El Salvador for export to Southern California.

Finch plans to expand her line of imported Salvadoran products to include honey and beans. She is also negotiating with El Salvador to produce a private-label beer for export.

Finch has her share of complaints about imported Salvadoran goods--they often arrive late or damaged--but says efforts to formalize business ties can only help.

“It’s useful to me because I’m looking for products, and it’s very good for them because I like to help them,” she said.

The mere fact that a product is Salvadoran does not ensure its success with the U.S. emigrant market, she warned. But demand for authentic products is clearly high, as demonstrated by the success of markets that cater to the Salvadoran community.

The aisles of La Tapachulteca on South Vermont Avenue brim with everything from imported machetes to underwear, Rinso laundry soap, and frozen fruits and vegetables such as loroco and chipilin. Kolashampan (both Bravo’s product and the imported variety) outsells Pepsi, Diana-brand Salvadoran chips outsell Frito Lay.

“People are every day asking for new products,” said General Manager Wilfredo Reyes.

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The store, which opened in early 1996 and employs 62 people, is the first U.S. branch of a major El Salvador supermarket chain founded 36 years ago. Its owners are scouting for a San Fernando Valley location, which they hope to open by year’s end. The trade summit will promote the interchange of information necessary to improve imports, Reyes said.

The event--to be held at the Hyatt Regency--will feature El Salvador’s minister of the economy, Eduardo Zablah-Touche; ambassador to the U.S., Rene Leon; and representatives of Mayor Richard Riordan’s L.A. Business Team. A Web site for business owners in both places was recently launched and a Los Angeles clearinghouse for information on U.S. regulations and Salvadoran products is planned.

Casa de la Cultura of El Salvador organized the events here. The nonprofit cultural center, affiliated with the Salvadoran government, was founded in 1996 and seeks to preserve Salvadoran culture by promoting regional dance and art, but also sees economic development as part of its mandate.

“Our intention is to develop the community here, but we see the interdependence with El Salvador,” said Dagoberto Reyes, a sculptor and the center’s director. “The country needs the technology transfer that we can provide.”

Also helping stage the event is the Salvadoran Chamber of Commerce in Los Angeles. Carlos Aguilar, a business and tax consultant who serves as the chamber’s auditor, said the conference signals recognition of the local community from his former government.

“Our community has made a great contribution to our country’s life--especially during the 11 years of war,” he said. “It’s our goal . . . to have the government recognize that fact and help our business community benefit.”

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While the community remains somewhat fractured--internal competition and jealousies abound--there are signs of a new maturity. The chamber was launched as a social organization by the former Salvadoran consul general, but it now provides training and assistance to 80 active members and is organizing a census of the local business community, said Executive Director Victor Hercules.

In November, the Salvadoran-American Leadership and Educational Fund sponsored the Los Angeles visit of San Salvador’s mayor. The group also is promoting legislation by state Sen. Tom Hayden (D-Los Angeles) to make California a sister state to San Salvador, said SALEF Executive Director Carlos Vaquerano.

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“We’re the second-largest Latino community in [California]. We’re creating a lot of businesses. We’re developing a political capacity,” Vaquerano said. “Eight years ago we never talked about developing local businesses. We had to deal with the war.”

Added Roberto Lovato, a marketing consultant retained by Monitor Co. to help plan the event: “I like to think we’ll come out of this with a better sense of how we leverage our resources for the betterment of the whole Salvadoran diaspora.”