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Latino Entrepreneurs Looking to Mexico

Trends: A major shift is taking place as business owners tap their bilingual and bicultural roots to trade south of the border.


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.

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