Latinos Explore Mexico Trade

Hilario Navarro considers himself an old-fashioned “slaughter to steak” butcher, just like his father and grandfather.

But the 43-year-old Glendale resident is sharpening his knives for a family first: Navarro wants to acquire Mexican food products to sell in the U.S. and establish a market for his meats and other goods south of the border.

Navarro, who owns Bonanza Foods & Provisions Inc. in Vernon, is among numerous Latino business owners who hope to jump-start cross-border commerce. He was part of a small delegation that recently traveled to a Mexican symposium attended by companies from the states of Jalisco, Colima and Nayarit.

Navarro had 16 interviews with Mexican business owners. Now comes the hard part -- turning talk into action. When it comes to doing business in another country, a shared language and heritage don’t ensure success, Navarro and the others in his group have found. They must contend with unexpected costs and unfamiliar bureaucracy and regulations.

Trade between California and Mexico accounted for $16.2 billion in exports and $24.2 billion in imports through the state’s three customs districts in 2005, according to the Los Angeles County Economic Development Corp. That represented 12% of total exports and 8% of total imports through those districts.

The figures understate California’s commerce with Mexico because a significant fraction of this flow of goods travels through Texas border crossings and therefore isn’t counted as foreign trade with California.

“Whenever you cross borders, you up the cost and complexity of doing business,” said Richard Sinkin, managing director of InterAmerican Holdings Co., a San Diego firm that invests in Mexican companies.

In addition, businesses often fail to follow through on plans for cross-border deals.

“I have been on many of these kinds of trips. Less than 10% of those who go follow it up with concrete business proposals,” said Jerry de los Rios, a business consultant and instructor with the Small Business Development Center at Loyola Marymount University.

But Navarro and the other California entrepreneurs have hope.

“These deals could materialize in the next three to six months and some maybe sooner than that,” said Navarro, who is preparing a list of products and price quotes and asking for the same from his Mexican counterparts. “I will probably have to go back again in the next two or three weeks.”

The businessmen have more on their side than language and cultural ties. Each is a seasoned entrepreneur, with most of them in their mid-40s. They run food and beverage, construction, information technology, manufacturing and grocery operations. Most have 15 to 25 employees and generate $5 million to $50 million in annual sales.

They also have forged their own path. Rather than work through traditional Latino business organizations, they are members of their own group -- Consejo Empresarial Mexicano de Los Angeles or the Mexican Business Council of Los Angeles. The 50-member association is headed by Javier Martinez, the Oxford University-educated owner of Pasadena tequila distributor Martinez Brands.

Each did a lot of thinking about what he wanted to accomplish. Those who already do business in Mexico, like Martinez, wanted to improve the experience.

Others, like Navarro, made connections based on a nuanced appreciation for what he believed his customers wanted. One example is the American cured ham he sells, which is too sweet for Mexican American palates.

He found potential partners who used different spices and a different curing method “to better fit the flavor profile. It’s important since so many people in Mexican American families are working and there is less time for cooking from scratch and more of a reliance now on things like hams and other cold cuts.”

Navarro expects to surpass $28 million in sales this year to customers that include big supermarket chains such as Albertsons and several independent grocery stores. He has witnessed several changes in consumer purchasing patterns in Mexico since his father’s and grandfather’s days in Jalisco.

“Before, the eye was very important. They wanted to see it fresh and unpackaged or, at most, just paper-wrapped. Now prepackaged meats are more acceptable in Mexico, and that is a market in which we can compete,” Navarro said. He is also counting on a growing Mexican preference for American beef, which is more tender and flavorful.

Not all of the companies that made the trip were small. One is Marquez Brothers of San Jose, owners of El Mexicano brand, a 3,000-employee wholesaler of chorizo, canned jalapenos, chipotle chiles, salsas and a variety of dairy products and other items. The company operates distribution centers in seven Western states.

But Francisco Lara, vice president of operations for Marquez, noted that although it had 25,000 clients in the U.S., it had only 1,000 in Mexico.

“We are looking to forge alliances in markets we haven’t explored yet there,” Lara said.

The businesses already have made important friends, including Enrique Michel Velasco, president and chief executive of Dulces de la Rosa of Guadalajara, one of Mexico’s biggest candy manufacturers. Velasco is also president of the group that hosted the forum, Consejo Mexicano de Comercio Exterior de Occidente.

“The U.S. is our primary market, but we can do more,” Velasco said.

Tequila importer Martinez joined the trade mission looking for ways to cut the cost of bringing in products from Mexico.

He received an expensive transportation lesson in 2004, when he ordered a shipment of 1,000 cases from the Mexican port of Manzanillo. He had been told the water route would cost substantially less than trucking the goods through Laredo, Texas, his usual route.

But a labor shortage that year brought the ports of Long Beach and Los Angeles to a near-standstill. By the time the tequila finally arrived, the cost had doubled.

Martinez hasn’t tried the ports again. He raised the issue in Mexico and heard a chorus clamoring for the development of a direct shipping route between Manzanillo and L.A.-area ports.

Manzanillo, with its naturally deep harbor and seed money from one of the world’s largest terminal operators, has drawn attention and investment as a potential alternative to U.S. ports on the West Coast.

“I was surprised to find it regarded with such importance,” Martinez said. The liquor importer said he’d be interested in moving products by ship if he were assured of lower costs.

The Mexican and U.S. business owners resolved to study the ports issue and make sure the three-day meeting, which ended Sept. 23, was more than a one-time event. They agreed to meet every three months, with the next gathering planned for California, Martinez said.

In the meantime, Navarro has his work cut out for him. He’s ironing out the details of several potential deals in Mexico, including supplying beef to a string of hamburger stands looking to expand; importing organic spreads made with guava, mango and other fruit; and selling boneless chicken and pork products.

“It was an excellent trip,” Navarro said. “There are many opportunities.”

ron.white@latimes.com