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Companies delivering products across the border
International trade targets immigrant buyers in U.S.
Peter Prengaman

The Associated Press
March 17, 2006

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LOS ANGELES - Odilon Hernandez recently bought a television for his parents back home in Puebla, Mexico. But he didn't intend to ship it or even load it in his car for his next trip across the border.
Instead, he took advantage of one of the growing number of U.S. retailers that sell products to immigrants here then deliver the items directly to relatives back home.

For Mother's Day, Hernandez bought a refrigerator and stove at the same La Curacao store where he shopped for the TV. Both kitchen appliances were delivered to his parents' house from well-stocked warehouses in Mexico.

"This service is great," said Hernandez, who has worked as a janitor since moving with his wife to Los Angeles five years ago. "More and more people are sending this way."

Immigrants have long sent money to relatives back home through wire-transfer services. But as the remittance market explodes - Latin American and Caribbean immigrants in the U.S. sent an estimated $40 billion home in 2005 - stores and financial institutions are rushing to create new services to capitalize even more.

The result is a plethora of options for immigrants looking to spend money on goods and services.

Immigrants can now send everything from flowers to dining room sets. Many stores give them credit, even if they are in the United States illegally. They can even finance a house in their native country and make payments here.

Companies such as Los Angeles-based La Curacao determine credit eligibility for illegal immigrants based on how long they have been in the U.S., statements from relatives or employers about their financial situation, copies of bills paid consistently, and other information.

"We are basically financing people who often don't have a Social Security number or legal residence," said Mauricio Fux, La Curacao vice president for corporate development. "With billions of dollars going home to Mexico, we always ask ourselves, 'What can we do that is different?' to capture some of it."


Fux said competition to sell products has increased so much that La Curacao now guarantees delivery to almost any location in countries where the chain operates.
That sometimes means using donkeys, small boats or other unconventional methods to make deliveries to remote locations, he said.

Conservative groups opposed to illegal immigration often complain that undocumented workers are a drain on social services, but retail plans that allow them to buy products here for relatives back home have not drawn criticism.

Many of the firms involved are American-owned, and the purchases are akin to U.S. citizens using a catalog or the Internet to order products abroad.

Dozens of U.S. and Mexico-based companies - from chain-store retailers to mom-and-pop operations - offer their products and services through distribution deals with companies in Latin America. Relatives on the receiving end don't have to deal with customs or import taxes.

The heaviest demand for the retail products comes from Mexico, Guatemala, Nicaragua and El Salvador. Some companies also cater to other Latin American and Caribbean nations.

There are no statistics on immigrant spending on goods and services sent to their home countries. But it could be as much as $10 billion a year on top of cash remittance, said Donald Terry, multilateral investment fund manager for the Inter-American Development Bank.

The scale is so large that the bank has identified money for goods and services, along with traditional remittances, as tools for development in Latin America, especially to build houses.

"People move north by the millions, and the money moves south by the billions," Terry said. "The key is harnessing the money for productive activity" like property investments.

Construmex, a U.S.-based unit of Mexican cement giant Cemex, helps Mexican immigrants find materials and contract with firms back home to have homes built. Construmex also provides financing to buy existing houses.

Immigrants must first have a down payment of 12 percent of the value of a house, which generally cost about $35,000, said Luis Enrique Martinez, Construmex's U.S. general manager.

The dwelling can be paid off using a payment plan lasting as long as 10 years. In a way similar to a bank, Construmex will foreclose if payments stop.