MEXICO: MORE TRADE, MORE CRIME

Byline: TRINA KLEIST

MONTERREY, Mexico--Part of Mexico's growing pains as a North American free trade partner is dealing with crime, ranging from kidnappings and shoplifting to industrial espionage and violation of intellectual property rights.
While Mexico, like most other countries, has long been plagued by crime, the country in the last seven months has been rocked by some high-profile violence, including two kidnappings of business leaders, one a retail executive from the Grupo Gigante grocery and mass-merchandise chain. Armed robbers in May held up one of Kmart Corp.'s two new Super Centers in Mexico City and made off with its payroll, barely two weeks after the discount chain launched itself into the Mexican market.
"Are we aware of what's going on? Of course we are," remarked security manager Karl Rock, with J.C. Penney Co., Dallas, who was attending a recent security symposium here sponsored by the Mexican Association of Loss Prevention Professionals.
Penney's plans to open seven stores in Mexico in the next five years.
"If I had 100 bullet-proof cars finished and ready, I could sell them almost immediately," said Saul Villalobos, Mexico sales representative for the International Armoring Corp., Ogden, Utah. In the last few months, the company's production has increased to 16 to 20 cars a month from two to three cars, with 85 percent of sales heading to Mexico.
Security officials say the national angst over personal security has been mounting, following the Jan. 1 peasant uprising in the country's impoverished south; the assassination of Luis Donaldo Colosio, the ruling party's presidential candidate, and frequent reports of shootouts in cities like Guadalajara and Tijuana among drug traffickers.
The two kidnappings placed well-paid Mexican businessmen on alert. While one of the victims, Alfredo Harp Helu, president of the country's largest bank, Banamex, was released after his family paid a $30 million ransom, the Gigante executive--executive vice president Angel Lozada Morales--hasn't been heard from since he was abducted in April on his way to work. Gigante, with 193 stores, is the second largest retail chain in Mexico.
Although security officials warn executives to be on alert, they say neither U.S. businesspeople nor lower-level Mexican executives are considered at great risk of being kidnapped in Mexico.
"The risk is greater for a Mexican who lives here, given the opportunity of observation, than for any foreigner," said Rogelio de los Santos Lozano, of security experts Distribuidor de Seguidad, S.A.
"It's not a panic. We simply have to prevent what already happens in many parts of the world," said Alberto Barcena, assistant director of Mexican denim manufacturer Maquiladodra Textiles del Norte, also attending the security conference.
As executives watch their backs, they are also focusing on security within their businesses, realizing that cutting losses due to shoplifting and the like is crucial to meeting increased competition under the North American Free Trade Agreement. The Mexican average for losses due to shrinkage is 4 to 5 percent of sales, according to some attendees at the conference. In U.S. stores of all types, shrinkage in 1992--the latest available figure--amounted to 1.88 percent, according to the National Retail Federation. In U.S. department stores, the figure was 2.17 percent, and in women's specialty stores, matched the average of 1.88 percent.
"The loss of [ransom paid] in a kidnapping is only a tiny fraction of what companies lose through robbery and internal theft," de los Santos said.
"We are accustomed to living with the problem, but with the free trade agreement, we have to be able to manage in equal conditions," said Armando Villarreal, security chief for Organizacion Soriana SA, a national supermarket and general merchandise store chain. Soriana has already equipped its stores with electronic surveillance equipment and plainclothes security guards.

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