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SMALL BUSINESS | Enterprise Zone / Lessons and Insight
on Southland Businesses

El Salvador Comes to Town, Looking for Opportunity

June 17, 1998|LEE ROMNEY | TIMES STAFF WRITER

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.

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