Latino Entrepreneurs Looking to Mexico

At a private meeting later this week, Javier Pacheco will huddle with top Mexican customs officials in hopes of slashing permitting delays for his Inglewood-based business, which has grown more than 20% a year hauling textile and computer components, satellites and other products to and from Mexico’s maquiladoras.

Offices in El Paso, San Diego and Tijuana have helped his Mercantile Transport Inc. thrive in a competitive industry. But Pacheco holds another card that plays to his advantage: He understands the unwritten rules of Mexican deal-making, and will make his plea to Mexico City officials en Espanol.

Pacheco, visiting Mexico on a trade mission organized by the Latin Business Assn., is among a growing number of Latino entrepreneurs parlaying bilingual and bicultural skills into business with Mexico, second only to fast-withering Japan as California’s top export market. Statistics are lacking on how many of the Southland’s exporters are Latino, but analysts say anecdotal evidence points to a “major trend” taking shape over the last few years.

Mexican government officials began courting Latino entrepreneurs here shortly before passage of the North American Free Trade Agreement nearly five years ago. The successes of business owners like Pacheco, and the interest of a growing number of Latino entrepreneurs forging new trade relationships with Mexico, represent the fruits of those efforts. Latino entrepreneurs add that their business ties have remained unaffected by hostility directed at Gov. Pete Wilson’s politics--condemned as anti-immigrant in Mexico. Wilson’s positions on immigration and affirmative action chilled trade relations between Mexico and California, which lags Texas considerably in trade volume.

“You’re really talking about the ground floor of a major movement in trade that’s going to . . . reshape trade patterns for Southern California and nationally,” said Vance Baugham, director of trade development for the World Trade Center Assn., Los Angeles-Long Beach, which is helping members of the Los Angeles-based Latin Business Assn. launch into trade.

Tremors from Asia and Russia have shaken the Mexican economy and put a damper on California exports, and forecasts call for further slowing in the coming year. But NAFTA, a fledgling political openness and fundamental strength in the Mexican economy secure Mexico’s place as a crucial trading partner for California. Against this backdrop, Latinos have found themselves ideally positioned to cash in.

“Mexico is becoming much more important as an export market and . . . a big reason is we’re seeing [Latinos] in California who know a great deal more about the Mexican market” and are able to take advantage of that, said Raul Hinojosa, who heads UCLA’s North American Integration and Development Center and studies the involvement of Latinos in Mexican trade.

Latino businesses now going global differ in some key respects from other minority entrepreneurs who have tapped their roots for profit. Many South Korean and Taiwanese entrepreneurs, for example, launched businesses with global trade in mind. Even Miami’s Latinos--largely an entrepreneurial class in exile from Cuba--jumped immediately into the global arena. In contrast, the majority of Southland Latino business owners cut their teeth on domestic deals. Although data are lacking on just how many are now branching out, a recent Los Angeles Times/USC Marshall School of Business survey found that 13% of Latino respondents said they exported, just 2% fewer than whites.

In addition to Latino businesses exporting to Mexican markets, Hinojosa said an increasing number of Latino entrepreneurs are launching joint ventures with Mexican counterparts and becoming suppliers to multinational corporations that went south post-NAFTA. Also cashing in are foreign-born immigrants who maintained family networks south of the border.

Paramount entrepreneur Manuel Mendez immigrated from the state of Michoacan and built a local trucking business. After NAFTA, he forged a joint venture with melon growers in his home state and expanded his transport business. He now imports melons and trucks other products back to Mexico.

Pacheco, in contrast, began building his business before NAFTA, but has seen tremendous growth in recent years, reaching $5 million in annual sales.

Latino heritage “doesn’t entitle you to quick access to any market,” he warned, but “it helps, especially if you speak the language.”

He was among 15 Latino entrepreneurs who embarked Sunday for a weeklong Latin Business Assn. trade mission to Guadalajara and Mexico City, part of an effort by LBA Chairman Hector Barreto to help globalize the group’s membership.

While Pacheco has years of experience in Latin trade, other members are newcomers. Javier Del Valle will meet with Mexican construction companies to pitch his Monterey Park engineering firm’s latest development: a building technology for low-cost housing that is easy to erect. And Irene Esparza Portillo will try to sell the services of her South El Monte-based Health & Career Institute Inc., which provides computer and English-language training to businesses with Spanish-language employees. Her quest is part nostalgia: Her great-grandfather ran a cross-border mercado between El Paso and the Mexican state of Chihuahua, selling foodstuffs to soldiers.

Economic forecasts for California-Mexico trade have dimmed, however, and may dampen prospects for Latinos and non-Latinos alike.

Still, economists stress that Mexico’s crisis is one of confidence--symptoms of global nerves rather than a damaged economy.

As long as the California economy remains strong, “it will still show export growth to Mexico, it just won’t be the 15% or the 30% we saw earlier in the year,.” said Howard Roth, senior regional economist with Bank of America.

Latino politicians are among those reaching out. Former Assembly Speaker Cruz Bustamante (D-Fresno)--now a candidate for lieutenant governor--traveled to Mexico last fall with a delegation of legislators and business executives to end what he described as a political chill in trade relations. Current Assembly Speaker Antonio Villaraigosa (D-Los Angeles) is planning a similar trip, said Jose Angel Pescador, the Mexican consul general to Los Angeles.

Pescador said Latino entrepreneurs are not only making headway in Mexico, Mexican firms exporting to the U.S. are seeking Latino entrepreneurs here as distributors.

The Guanajuato Trade & Investment Office offers a case in point. The office representing the central Mexican state opened with fanfare last month in Los Angeles--on the heels of offices in New York and Houston. Already, several Latino entrepreneurs in Los Angeles and Long Beach have struck deals to import leather boots and textiles, said director Martha Elva Real.