Mexicans Expanding Businesses To Texas

[houstonsemipro]

Jan. 22, 2005, 10:08PM

Money also flows north

Many Mexicans turn to Texas when expanding their businesses

By JENALIA MORENO

Copyright 2005 Houston Chronicle

It's become an annual ritual.

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Every January, Mexican investors stop by Texas' NAFTA office in Mexico City to ask trade specialists how they can open businesses in the Lone Star State.

"At the beginning of the year, people start to make their plans for expansion," said Monica Sanchez, director of the state's North American Free Trade Agreement office, with its windows facing the U.S. Embassy in the Mexican capital. And often those plans include expanding north of the border.

Each year between 2000 and 2003, Mexicans have invested between $6.6 billion and $7.6 billion in the United States.

And much of that money flowed into Houston from Monterrey-based corporations such as cement company Cemex, airline Aviacsa and steel maker Villacero Group.

Cemex, for example, bought Houston-based Southdown in 2000 for $2.8 billion, and the company now employs more than 700 people here.

But recently, more individuals from Mexico are investing their small fortunes in starting new companies here or expanding their existing businesses.

Houston, Laredo and San Antonio are all popular destinations for Mexican money, Sanchez said. That's because business owners are familiar with them after visiting relatives, shopping and vacationing there.

But many investors prefer Houston because Aviacsa, Aero-mexico and Continental Airlines offer flights from Houston to a variety of Mexican cities.

"Houston has become a nice haven for Mexican nationals just because of the connections," said Armando Valdes, owner of Houston-based Tu Casa Realty.

Language instructor Ramon Malpica is one Mexican businessman considering opening an office in Houston.

By April, the Mexico City resident hopes to open a Spanish language school catering to executives who travel across Latin America. He plans to teach business people Spanish in a Galleria-area classroom and in Mexico, atop the pyramids of Teotihuacan or on the golf courses of Mexico City, for example.

"It's a platform for doing business all over the world," Malpica said of Houston on a recent visit to scour the Galleria-area for office space. "It's a very cosmopolitan city."

Other rich Mexican business owners decide to expand into Houston because they want to one day leave Mexico City, which they view as an overcrowded metropolis plagued by kidnappings, robberies and murders of middle-class and rich business people.

"They come here and tell us this is paradise," said Antonio Grijalva, chairman and chief executive officer of Houston's G&A Partners, a consulting firm. "In Mexico City, most of my clients have a driver, but he's really a bodyguard."

Some business owners also want to capitalize on the growing Hispanic population in the United States by selling them everything from airline tickets to tortillas.

Salvador Delgado is a good example. The Mexican trade show coordinator plans to open an office here and run three shows catering to the Hispanic market. The shows later this year will feature Latin American art, decorations and food and beverages.

"We're seeing that a lot of companies are opening offices or branches here in Houston and San Antonio to sell Mexican products," said Delgado, president of Trade Show and Marketing Group in Houston.

Others believe their money will multiply faster in the United States than in Mexico, where business owners often face what they see as bureaucracy, corruption and an inadequate judicial system.

"I think they're doing it because in Mexico, there's been three years of very little growth and very little opportunities," said Mexico City-based economist Rogelio Ramirez De la O. "It's logical."

The majority of people in Mexico live in poverty, and the richest 20 percent of the population control more than 59 percent of the wealth, according to the World Bank's latest distribution of wealth survey.

So, the upper middle class and wealthy in Mexico have plenty of money but sometimes feel they have few investment opportunities in their own country.

Mexican builder Ricardo Chelala is one investor who saw a more promising economy in Houston compared to his native Mexico City.

A few years ago, he began to build houses in Houston, targeting the Hispanic market.

The president of Adobe Builders once ran textile factories as well as a home construction company in Mexico. But his textile business suffered when cheaper Chinese imports flooded the market, and the Mexican government didn't do enough to defend the industry, he said.

"There comes a time when you're not competitive," Chelala said as he directed subcontractors on a construction site in northwest Houston.

[tamtagon]

The state should aggressively negotiate with the Mexican govt to imporve conditions along the Rio Grande. The Trans Texas Corridor should extend into Mexico.