Dancing to the beat of a different drummer: Mexican companies successfully learn how to adapt products to tastes of markets abroad.

The Mexican restaurant chain Sushi Itto has appealed to local tastes with its fusion cuisine blending Japanese sushi with Mexican twists like spicy chipotle sauce. But when the chain began to expand outside Mexico, it needed to tone down the heat of that sauce to appeal to foreign palates.

"If you think you can take your business model to another country without adapting it, you're not going to be successful," Monica Duarte, the company's marketing director, told BUSINESS MEXICO.

Mexican companies of all sizes that have found success overseas said their secret is adapting their business strategy for the local culture while retaining the quality--and, in some cases, the "Mexicanness"--of their product.

From tortilla giant Grupo Maseca to the telecommunications empire of Carlos Slim, many Mexican companies are rapidly expanding in foreign markets. And as the global economy seems to be recovering, more Mexican companies will likely push ahead with globalization strategies, analysts said.

"If companies are thinking of expanding, it's an excellent time to be making plans," said Richard Marston, a professor at the University of Pennsylvania's Wharton School of Business.

Mexican beer maker Grupo Modelo is certainly making global plans. The company, which began exporting beer in 1980, now sells at least one of its 10 brands in 150 countries. For six years, its Corona brand has been the most-imported beer in the United States. Modelo takes in US$1 billion per year in export revenues, said Jose Pares, the company's director of corporate communication.

"The worldwide market is growing, and we have quite an aggressive expansion program now," Pares told a group of Mexican and U.S. MBA students during a March seminar at the company's headquarters organized by Mexico City's IPADE business school.

AN IDENTITY CRISIS

But Grupo Modelo is careful to maintain its identity as a Mexican brewer. Even as the company builds a malting facility in Idaho--which will transform barley to malt when it opens in 2005--its leaders vow to continue brewing and bottling their beer in Mexico.

"We want to be 100% Mexican," Pares said. "We don't want to start brewing in other countries at this time."

Modelo's foreign markets require a different approach than in Mexico, where beer sales are concentrated in mom-and-pop stores, and only 3.5% of beer is sold in supermarkets. In the United States, where more than 35% of beer is sold in supermarkets, Modelo alters its Mexican sales model, concentrating more on presales than on-the-spot sales.

Also in foreign countries, Modelo must adapt its distribution model. In Mexico, the company has its own distribution system with a fleet of 12,000 vehicles--including trucks, cars and, in remote areas, donkeys. But outside Mexico, the company relies on independent distributors.

"In Mexico, we know the market, but in other countries, we don't know how things are done," Pares told BUSINESS MEXICO. That's a lesson Grupo Bimbo learned the hard way.

The Mexican bread giant now has a presence in the United States and in 12 Latin American countries. In the past few years, the company has acquired foreign brands such as Mrs. Baird's. Oroweat, Entenmann's, Thomas' English Muffins and Boboli pizza dough. But as the company

expanded, its debt grew and its net profits shrank.

"I believe that we paid the price of operating in a country with totally different rules," Grupo Bimbo financial director Guillermo Quiroz told Reforma last fall. "You take a model of clear functional and operational success in Mexico and the logical thing is to try to do things the same, but it doesn't work like that there."

LEARN FROM EXAMPLE

A good example of a Mexican company that has succeeded in its international strategy is Cemex, Wharton's Marston said. The cement and ready-mix concrete company operates in 30 countries on four continents. It is North America's largest producer of cement, and its net sales topped US$6.5 billion in 2002.

"They have expanded very aggressively, even in areas of the world where you wouldn't think they would be competitive, Asia in particular," said Marston, who was in Mexico City in March to speak at IPADE. "They pick markets where they think they can be competitive and they very carefully expand."

On a smaller scale, Sushi Itto is attempting to do the same thing.

The chain, which was founded in 1988 in Mexico City, now has 70 franchises, including 54 in Mexico, 11 in Central America, 3 in Spain and 2 in the United States--both in San Diego.

As it expands internationally, the company has adapted its labor model, Duarte said. In the United States, where labor is much more expensive than in Mexico, Sushi Itto has created more multi-functional jobs.

The company's very identity is based on its willingness to adapt, Duarte said. When the restaurant's first location opened, it did not feature fusion cuisine at all--just traditional sushi. But as customers sitting at the sushi bar suggested that the chefs add ingredients such as chilies and avocado, the chefs listened.

"If we had said, 'No, no, no, we're just going to be a traditional Japanese restaurant,' we wouldn't have discovered these combinations of ingredients that have turned out to be so successful," Duarte said.

Small-business owners must also consider adapting when expanding into foreign markets.

Jewelry-maker Rolando Cano Carlin owns Galeria Carlin in Mexico City's Zona Rosa. he sells his beaded necklaces, earrings and bracelets in a San Francisco store and has plans to open a London gallery this summer. He said he considers local culture when deciding which designs to send to each city.

"In San Francisco, the taste is the same as in Mexico City, so I send pieces with bright colors and large stones," he said. "But in London, the style of clothing is more serious, so I will send pieces that go with that--pieces with a lot of gray, black and silver."

Dipak C. Jain, dean of the Kellogg School of Management at Northwestern University, said that one of the biggest challenges of globalization is cultural compatibility.

Mexican companies, he told BUSINESS MEXICO, should take advantage of the large number of Mexicans and Mexican Americans in the United States to help them learn cultural intelligence.

"These people are the real change agents," said Jain, who, like Marston, was in Mexico City in March speaking at IPADE. "Mexicans and Mexican Americans still have Mexican culture in their genes, but they also understand American culture."

Corrie MacLaggan is an assistant editor at the Mexico City edition of The Miami Herald.