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Mexico offers risks and rewards, meeting told

BY DEBRA HAZEL

MEXICO CITY — Mexico continues to provide opportunities for foreign retailers and investors, said speakers at ICSC’s third annual Mexico and Central America Business Forum & Exhibition, held here Sept. 29-Oct. 1. But for now, they are holding off on making any commitments.

Mexico, which has become increasingly stable economically, does have an appetite for branded U.S. goods. So one major question raised at the conference was why more American chains have not chosen to open stores south of the border. Surely, the maturity of the U.S. market limits expansion opportunities and would seem to plead the case for investment abroad. But U.S. companies are still researching the market, including its legal, tax and currency differences, the speakers said.

“It’s becoming more challenging to invest in the United States,” said Alan Billingsley, a vice president and director of research at San Francisco-based investment advisory firm RREEF. “You will see more norteamericanos like myself poking around in coming years. But we haven’t gotten to the point where we understand it enough to invest in it.”

Many retailers remain leery too, said Ana Maria Buenfil Gómez, a director at Mexico City-based developer Grupo Danhos. The reasons include comparatively low profits and high start-up costs versus the United States, as well as the need to adapt to local tastes. Piracy of branded goods is another problem, as is dealing with the government.

“Retailers find a nightmare in the number of regulations, the huge disorder in governmental organizations and, of course, corruption,” Buenfil said.

Even so, there is hope. Mexico’s proximity to the United States can be seen as an opportunity for growth at more reasonable cost than in regions farther away, Buenfil said. What is more, today’s mass media ensure that international brands are as well known in Mexico as in the United States. And there is always the option of partnerships with local companies to help minimize and share risk.

About 150 real estate professionals from North and Central America attended the meeting.