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Small Business: Luring Mexican Shoppers

4 minute read
Jeffrey Ressner/San Diego

Sam Marasco is a character straight out of an early David Mamet play: a smooth-talking real estate kingpin whose boyish enthusiasm is at war with his gray-flecked hair. For more than two decades, Marasco, 46, has erected shopping centers and sports arenas throughout the Southwest. He never had global ambitions. But then he had a crazy dream: a huge open-air shopping and entertainment complex located in the San Diego suburb of San Ysidro–but connected to Tijuana, Mexico, by its very own 525-ft. pedestrian bridge. Marasco says he wants “to make the whole border-crossing experience full of color, light and energy.” And in pursuit of that vision, he is getting quite an education in international business.

It’s tough enough these days, as any American builder can attest, to comply with regulations of the EPA, EEOC, OSHA and a Scrabble board of other U.S. agencies. But when Marasco proposed his International Gateway of the Americas–$225 million worth of shops, restaurants, offices and hotel rooms spread over 67 acres–he also had to deal with U.S. Customs, the U.S. Immigration and Naturalization Service and the federal, state and city governments on the Mexican side. Marasco observes that “it requires a great deal of, um, flexibility.”

From the start, Marasco–an Italian American who speaks little Spanish–didn’t know whether to giggle or weep at the frequent miscommunications. Whenever his team mentioned a border crossing that they knew as Virginia Avenue, Mexican officials suddenly began discussing a route they called El Chaparral. It took nearly a year before Marasco realized they were talking about the same port of entry.

Protocol issues have also been thorny. Initially Marasco concentrated on local approvals. But before mounting any project in Mexico, especially one involving the border, he learned, it’s imperative to move first through federal channels. “The U.S. grants more local authority,” says Hector Lutteroth, former deputy mayor of Tijuana. “Here you need a padrino, a godfather, in Mexico City to speed things along.” Chris Green, Marasco’s chief financial officer, says, “I’ve done multimillion-dollar deals completely on the phone with some companies in the U.S. before the lawyers papered it and we signed it. That would never happen in Mexico. The businesspeople there want to get to know you, go out to dinner, meet your family.”

While Green says the Gateway group never bribed anyone, it did find it helpful to include in the deal a Mexico City business partner with strong political contacts: Jose Antonio Garcia Contreras, an oil and auto magnate. The Gateway group met with dozens of candidates before choosing Garcia. “The real decision makers in Mexico are a relatively small group,” Green says. “It is truly a club, in the same way the U.S. was during the 1900s when Morgan and Rockefeller ruled American business. They’re wealthy men who went to the same schools, belong to the same clubs and are involved with politics and government.” Such partners usually don’t receive fees, and their salaries are modest, but if they deliver the required government approvals, they qualify for a cut of the profits.

The Gateway group can only wish that things were so straightforward in dealings with U.S. Customs and the INS, which have security questions and whose approvals are needed for the footbridge, the centerpiece of Marasco’s vision. (A 50[cent] toll will be collected from pedestrians passing in each direction.) Marasco expects it will take another year or more to receive the needed approvals from both the U.S. and Mexican governments. But the developer is confident. Ground was broken on the shopping plaza in April, and doors are expected to open in November. Marasco hopes it’s the start of more endeavors in Mexico. “It’s a growing market,” he says. “The needs are many, the opportunities more plentiful.”

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