Area businesses finding opportunities south of the border
By Danielle Douglas,
Reselling used shirts, pants and skirts is the crux of B-thrifty’s
business model. But when it came time to swap out unsold clothing for fresh inventory, the owners of the Woodbridge thrift store were uncertain of what to do with the excess merchandise.
With 103,000 square feet of sales floor space brimming with apparel for men, women and children, the company needed every inch of its 30,000-square-foot warehouse.
Donating the extra goods made the most sense, especially after customer Natasha Prakash suggested a place to send them: Guyana. She had just started a nonprofit, Helping U Guyana (HUG), to aid children in the South American country, and was seeking contributions.
“We had a lot of clothes for kids left over, and HUG seemed like a great cause,” said Alonso Zamora, one of four owners of B-thrifty.
Shortly after the clothes arrived in Guyana at the beginning of this month, Zamora learned that a local vendor was interested in selling the merchandise on a regular basis. Zamora was intrigued by the offer, and the possibility of another source of revenue.
Now, he and his partners are in negotiations with the vendor in Guyana to begin operations by this summer. “We know there is a market for what we sell, now it’s just a matter of working through the logistics,” Zamora said.
B-thrify is one of a growing number of locally based companies finding business opportunities in Latin America. Thriving regional economies are attracting area businesses eager for new markets to peddle their wares. At the same time, entrepreneurs in the D.C. area are using their ties to the region to import and distribute goods within Hispanic communities.
At least three of the top 25 countries receiving exports from, and importing to, D.C., Maryland and Virginia are located in Latin America, according to the Census Bureau. Combined exports to those countries rose 8.1 percent to $2.6 billion in 2011, thanks to a surge in trade to Brazil and Mexico. Imports from the region, meanwhile, shot up 39 percent to $6.1 billion last year.
Trade on either side of the coin comes with its share of challenges, from navigating bureaucracy to financing operations. Municipalities, however, are ramping up efforts to assist local companies, mainly in the process of exporting. The moves come as newly minted free-trade agreements with Colombia and Panama stand to ease duties on products.
“Having the agreements coming into play will swing open these markets for U.S. interests to explore,” said Enrique Gomez-Pinzon, a partner at law firm Holland & Knight in Bogota. “Whatever you produce that’s competitive in the U.S will be competitive in places like Colombia because of the thriving middle class.”
A competitive advantage
At the recent Greater Washington Hispanic Chamber of Commerce Expo in D.C., April Redmon of the U.S. Export Assistance Center told attendees Mexico is a good entry point into exporting because of its participation in the North American Free Trade Agreement.
“Your products are going to be duty-free overnight ... it puts you at a competitive advantage over companies from other countries that do not have a free trade agreement with the market,” she said.
Education software provider Blackboard made its foray into Latin America 12 years ago, when it struck a deal with Tecnologico de Monterrey, a university in Mexico. Today, more than 120,000 students use the online software at the university, according to Juan Lucca, Blackboard’s vice president of Latin American and Caribbean sales.
“In the last 10 years, education has been a priority for local governments, which has created a gap between demand and offerings,” he said. “These governments want to deliver high quality education and are eager for sophisticated platforms.”
Blackboard’s products are now available at 100 universities throughout the region. About 15 percent of the company’s international business, which represents roughly 20 percent of its operations, is conducted in Latin America today. Blackboard is expanding operations in Peru, Paraguay, Chile and Uruguay.
Lucca recommends companies research the culture and customs of countries in the region prior to entering any market. Teaming with a local partner, he said, is a good way to navigate legal and financial requirements, especially in countries without trade agreements.
Brazil, for instance, is notorious for its complex taxes and tariffs. Which is why Blackboard partnered with Brazil Grupo A, a locally based education company, to launch its Portuguese platform.
With its mushrooming middle class, Brazil has become a prime market for consumer products, making it a key stop on Export D.C.’s upcoming trade tour. Director Martha LaCrosse is leading a delegation to the country in August.
Export D.C., an arm of the D.C. Department of Small and Local Business Development, started this month with $800,000 in grant money from the Small Business Administration and D.C. government. The new office is to offer technical assistance and provide support for small businesses to participate in trade missions.
“Businesses that are new to exporting really need assistance with making contacts, and we can provide help through the U.S. embassies overseas,” LaCrosse said. “We do some pre-qualifications to make sure they are meeting the right business partners and buyers.”
Importers score big with Latin American food
Having business relationships in Latin American markets can be equally beneficial for exporting and importing, as Melissa Berthier can attest.
Her husband, Alfonso, not only had family connections in Mexico, but had developed business contacts while working in sales for Mexicana Airlines. That gave the Chevy Chase couple a running start when they began importing tortillas from Mexico in 2009 to sell to Hispanic grocery stores in the Washington area.
By the following year, demand was so strong that the couple began selling items online at LatinBag.com. Now, there are more than 1,000 grocery items from all over Latin America sold on the Web site. Goods are housed in warehouses in Landover and Rockville, where four workers manage logistics.
“We sell products that remind people of their childhood in Peru or Mexico or Bolivia,” Berthier said. She estimates Latin Bag takes in 1,500 orders a quarter, and obtains goods from 30 distributors across the United States.
While Berthier would not disclose figures, she said sales are up and the company is profitable. Revenue from the business is being used to grow operations.
Pastor Payllo had to hire more people at his facility in Vienna to fulfill orders for El Ciebo products last year. The number of stores carrying the Bolivian chocolate bars and drinks nearly doubled from 40 to 75 in nine states in 2011.
The El Ciebo brand already had cachet when Payllo and his wife, Carmen Segales, began distributing the products of their home country in the United States and Canada two years ago. The chocolate company has been run as a cooperative for more than four decades, with products only available in exclusive boutiques.
Now, Payllo is negotiating a distribution deal with Whole Foods, after a chance encounter with a representative at the Hispanic Chamber Expo. He anticipates needing about $500,000 in financing to keep with orders, if the deal goes through.