Making It In America

Emilio Azcarraga Jean, one of Latin America's richest men and Mexico's most favored sons, is ready to become an American citizen. That would have been heresy to his late father, Emilio Azcarraga Milmo, a larger-than-life entrepreneur who built Televisa into a global media giant famed from Nairobi to Kuala Lumpur for its maudlin soap operas. The elder Azcarraga was a red-white-and-green Mexican who kept quiet about the fact that he was born in San Antonio, Texas. Now his 34-year-old son heads Televisa, and says he's willing to do what it takes to succeed north of the border, where his family's expansion plans have been slowed by U.S. restrictions on foreign ownership in the media industry. Why not leap that hurdle by becoming an American? Rupert Murdoch did. "I have to do whatever is necessary to strengthen the company, and the United States is definitely the most important market for us," says Azcarraga. "If [U.S.] citizenship is the way to go, then so be it."

Televisa leads a small pack of elite Mexican companies that are shedding old insecurities and surging into the U.S. market. By Azcarraga's reckoning, the 38 million Hispanics living north of the Rio Grande now command a purchasing power at least equal to the $915 billion gross domestic product of Mexico, a nation of 101 million. The booming Hispanic population was officially declared the largest U.S. minority in January, and two thirds of them are of Mexican descent. Azcarraga's family-owned media empire may have dominated Mexican television airwaves for 50 years, but it now sees its future across the border.

While Mexican companies have been following their countrymen to the States for decades, the trickle of investment became a flood after the North American Free Trade Agreement came into effect in 1994. Since then Mexican investment in the United States has jumped from $146 million to more than $7 billion. "Hispanics today are the most important minority in the U.S.," says Televisa news division chief Bernardo Gomez, "and their numbers are growing far faster than is the Mexican economy."

This growing stake is controlled by surprisingly few companies. Monterrey Technological Institute economist Octavio Palacios estimates that companies in this adventurous class number no more than 50, or only 1 percent of all Mexican corporations. Leading the way is the CEMEX corporation, which pulled off the biggest Mexican purchase of an American company in the fall of 2000, when it bought rival cement manufacturer Southdown Inc. of Houston. The $2.8 billion deal transformed CEMEX into the industry's third largest global manufacturer, inspiring others to push north. The Mexico City-based fruit-drink company Jumex has tripled sales to American consumers since 1993, and its top executive looks forward to the day when its popular line of nectars and tropical juices will be bottled entirely inside the United States, thereby cutting freight costs by nearly 25 percent.

For every success story, there is at least one failure, which may explain why there are still so few who attempt the crossing. Grupo Mexico purchased the U.S. mining company Asarco and its subsidiary Southern Peru Copper Co. in 1999--just as world prices for the metal started to tank. Telecommunications magnate Carlos Slim is ranked in some surveys as the richest man in Latin America, but his legendary Midas touch abandoned him when he bought the CompUSA retail chain in February 2000, only to see sales drop steeply. Slim unloaded his stake last year.

Even the companies that are now succeeding in America got a rough start there. In 1986 a U.S. Federal Communications Commission judge ruled that Emilio Azcarraga Sr. had violated a Depression-era law limiting foreign ownership of a radio or television station to 20 percent, and he wound up selling off most of his shares in Univision, the highly profitable Spanish-language television company based in Los Angeles. (Hence his heir's musings on the advantages of a U.S. passport.) CEMEX's efforts to move into U.S. markets were slowed in 1990, when Washington slapped steep antidumping duties on Mexican cement exports. In the same year, Jumex got off to a slow start in the American market, where its juice products are typically banished to the ethnic-foods section of supermarkets. But resistance to Mexican trade began to shrink with NAFTA, says Jumex director-general Marcelo Rivero. "It promoted greater acceptance of Mexican products and made it easier to market them."