California small businesses on a mission in Mexico

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Anjo Nava lives in Mexico City and fell in love with Los Angeles on a recent trip.  To remember his time in Southern California, he brought back an Obey Giant bandana, known for its stylized mug shot of pro-wrestler Andre the Giant and the word Obey.  The bandanas are the work of L.A. street artist Shepard Fairey.

For many young residents of Mexico City, an Obey bandana has become a popular fashion accessory, but it's not widely available in Mexico, unlike trendy American brands like Vans, Quicksilver, Forever 21, the Gap. Each are major California companies with a growing presence in Mexico.

“Mexico is now the No. 1 consumer of American products of any population in the world on a per capita basis,” said Raul Hinjosa-Ojeda, associate professor of Chicana/o Studies at UCLA. “The typical family in Mexico is relatively stable, healthy and making money, and they're going to be making more money over the next 15 to 20 years.”

And that developing middle class means a rising level of consumption, according to Hinjosa-Ojeda.

A new report by Business Monitor International predicts that Mexican retail will grow about 20 percent in the next three years, a potential that has attracted a California trade mission representing small and medium-sized businesses looking to export south of the border.

David Johnson, Chief Executive Officer of trade and business development firm Global 8 Partners, is in Mexico as part of the California State Trade and Export Promotion Program.  The program is being paid for in part through the Small Business Jobs Act of 2010, which gave California about $2.5 million to help small businesses export their goods and services. The arrangement is that states also chip in 25 percent to help cover the program. The mission this week is in Chihuahua in the north and Mexico City.

"Mexico is seen moving from 14th place in global Gross Domestic Product to 8th place," Johnson said. "And a prediction like that tells us a story in terms of the opportunity and the potential, and at the end of the day, that's why we're here."

The British economist Jim O’Neill — known for creating the term BRIC to highlight emerging markets Brazil, Russia, India and China — has recently popularized the term MINT to describe the next emerging economic powerhouses: Mexico, Indonesia, Nigeria and Turkey.

Mexico is more than just an export market for the United States. The two countries are partners in manufacturing, working together to build products. U.S.-made parts may ship to Mexico only to come back as finished goods. According to the Woodrow Wilson Center, 40 percent of Mexican imports to the U.S. have that trait. This process, known as production sharing, has created opportunities for logistics and shipping companies.

Tom Van Mouwerik, president of San Diego-based logistics firm Bill Hay International, traveled to Chihuahua as part of the California trade mission.

"I made a good number of contacts,” he said, “where they're looking for a partner to move some U.S. domestic freight to the border or to the final destination, and [we are] looking for partners in Chihuahua to move some local and freight within the state of Chihuahua and domestically in Mexico."

Around 96 percent of the businesses exporting from California to Mexico are small businesses; however, that has much to do with the volume of small businesses in the United States.

Molly Brogan Day, spokesperson for the National Small Business Association, said a survey of 500 small business owners revealed that while 63 percent of small businesses are interested in exporting, many struggle to get started. Others spend more than 10 percent of their annual revenue to build relationships abroad. About half of the businesses said they had to devote months or years to set up exporting relationships.

"The majority said it was either a fair amount of time or a lot of time, and we’re talking a few months to several months," Brogan said. "So it’s very difficult. It’s not impossible."

America Jimenez de Lara, artist and CEO of Global America, is a Mexican American with relatives in Mexico and traveled with the trade mission to Mexico City. Jimenez de Lara said she has seen her own family members’ demand for U.S. goods.

“My family, they like to go shopping in the U.S. because there are so many things that you don't see them here,” said Jimenez de Lara. "So I'm, like, thinking we can make things easier.” 

Easier may mean helping California small businesses build relationships for better access to the Mexican market, so people don't have to go to the States to buy things, even if they're Obey giant bandanas.

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