February 6, 2007

Immigrant Entrepreneurs Shape a New

Economy
By NINA BERNSTEIN

Manuel A. Miranda was 8 when his family immigrated to New York from Bogotá. His
parents, who had been lawyers, turned to selling home-cooked food from the trunk of
their car. Manuel pitched in after school, grinding corn by hand for traditional Colombian
flatbreads called arepas.

Today Mr. Miranda, 32, runs a family business with 16 employees, producing 10 million
arepas a year in the Maspeth section of Queens. But the burst of Colombian immigration
to the city has slowed; arepas customers are spreading through the suburbs, and
competition for them is fierce. Now, he says, his eye is on a vast, untapped market: the
rest of the country.

In the long run, like bagels, “you’re going to have arepas in every store,” predicted Mr.
Miranda, whose innovations include a “toaster-friendly” version (square instead of
round), and an experimental Web site that offers online sales nationwide. “But I don’t
have the connections. I don’t know the people who can advise how to take us to the next
level.”

As the flow of immigrants to suburban and small-town America outpaces the growth of
bustling ethnic centers in New York, many foreign-born entrepreneurs like the Mirandas
are facing an unfamiliar crossroads. In the city, rising rents and density hamper growth,
while swelling ethnic enclaves in the suburbs generate competitors. Yet in other places,
opportunity beckons as never before, as immigrants expand the tastes of mainstream
America.

Whether these businesses exploit the new chances to break out or succumb to the new
perils, the city’s economy will feel the effects.

“Immigrants have been the entrepreneurial spark plugs of cities from New York to Los
Angeles,” said Jonathan Bowles, the director of the Center for an Urban Future, a private,
nonprofit research organization that has studied the dynamics of immigrant businesses
that turned decaying neighborhoods into vibrant commercial hubs in recent decades.
“These are precious and important economic generators for New York City, and there’s a
risk that we might lose them over the next decade.”

A report to be issued by the center today highlights both the potential and the challenge
for cities full of immigrant entrepreneurs, who often face language barriers, difficulties
getting credit, and problems connecting with mainstream agencies that help businesses
grow. The report identifies a generation of immigrant-founded enterprises poised to break
into the big time — or already there, like the Lams Group, one of the city’s most
aggressive hotel developers, or Delgado Travel, which reaps roughly $1 billion in annual
revenues.

In Los Angeles, at least 22 of the 100 fastest-growing companies in 2005 were created by
first-generation immigrants. In Houston, a telecommunications company started by a
Pakistani man topped the 2006 list of the city’s most successful small businesses.

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But even in those cities and New York, where immigrant-friendly mayors have promoted
programs to help small business, the report contends that immigrant entrepreneurs have
been overlooked in long-term strategies for economic development.

Some are doing just fine anyway. Lowell Hawthorne, the Jamaican-born chief executive
of Golden Krust Caribbean Bakery, has parlayed a single bakery, opened in the Bronx in
1989, into more than 100 franchise restaurants nationwide. The latest batch opened in
Atlanta, where Jamaican-style specialties, supplied from a Bronx plant with 130
employees, draw on a mix of West Indian immigration and crossover appeal.

Other companies, like Rajbhog Foods, which started as a mom-and-pop Indian sweets
shop in Jackson Heights, Queens, seem to be on the edge of a similar breakthrough, even
as they struggle with rising costs and shifting immigration patterns.

“Two steps forward and then back one step,” said Sachin Mody, the chief executive and
son of the founders. “That is the hardest part, to keep hurdling and keep evolving.”

Mr. Mody said the company had about 70 employees and three plants and sold its
vegetarian products to stores in 41 states and Canada. Its catering operation handles
Indian weddings and conventions for as many as 10,000. But six years ago, in recognition
of a changing market, it began opening franchise stores in places like Jersey City and
Hicksville, on Long Island, where Indians have settled in large numbers.

In Jackson Heights, where South Asians from around the region have long come to shop
for ethnic food and the latest in saris, bangles and Bollywood DVDs, business in
Rajbhog’s gleaming flagship store is down 30 to 40 percent, said the owner, Nirval Shah,
an Indian-born nephew of the founders.

“We try to reach out to every corner where there is an Indian community, so they don’t
have to drive all the way to one location to get what they need,” he explained, allowing
that such suburban shops were drawing business away from Little India in Queens, a
view echoed by other merchants.
Then he pointed to the company’s newest line: frozen Indian entrees, less spiced for
American palates.

In some ways, New York may have a head start on the growing pains of immigrant
businesses. The nation’s recent surge of newcomers started earlier in the state and peaked
by the mid-1990s, when immigration was still growing rapidly elsewhere. About 90,000
new immigrants still arrive each year in New York State, the vast majority still settling in
the city, but that is down from about 168,000 in 1990.

Now, some children of the early influx are trying to build on their parents’ success —
success that itself has increased the cost of doing business, by driving up rents and
creating congestion.

One example is Jay Joshua, a Manhattan company that designs souvenirs and then has
them manufactured in Asia and imported. Jay Chung, who arrived from South Korea in
1981 as a graduate student in design, started printing his computer-graphic designs for
New York logos and peddling them to local T-shirt shops. His company is now one of the
city’s leading suppliers of tourist items, from New York-loving coffee mugs to taxicab
Christmas ornaments.

Mr. Chung’s son Joshua, 26, who was 3 when he immigrated, joined the company after
studying business management in college, and recently helped land orders for a new line
of Chicago souvenirs. But frustration mixes with pride when the Chungs, both American
citizens now, discuss the company’s growth.

“It’s really hard to conduct a business over here as a wholesaler,” Mr. Chung said in the
company’s West 27th Street showroom, chockablock with samples. “We get a ticket
every 20 minutes, no matter what. We need more convenient places with less rent, less
traffic.”

Thirty years ago their wholesale district was desolate. Now hundreds of Korean-
American importers are there, said Jay Chung, who is a leader of the local Korean-
American business association. They face a blizzard of parking tickets and high
commercial rents — nearly $20,000 a month for 1,400 square feet, he said. Many
merchants have had to subdivide and sublet their space, he added, shrinking just when
they need to grow.

The association’s efforts to find an alternate wholesale site have a checkered history that
underscores the importance of partnerships with the city — and the pitfalls. Responding
to the city’s request for redevelopment proposals for the College Point section of Queens,
more than 50 Korean merchants pooled $1 million to draw up the winning proposal, Mr.
Chung said. At a news conference in 2004, Mayor Michael R. Bloomberg said it would
create hundreds of new jobs. But the city backed out eight months later, after protests by
older, white Queens residents and their representatives.
“They said they didn’t want the area to become like Flushing, like Chinatown,” Mr.
Chung recalled. “It was a disaster for us — not only financially, but our image.”

Apologetic city development officials offered five other locations, he said in an account
that the city confirmed, and the group is negotiating for a private project in Jamaica,
Queens, that could yield a 13-story center in about four years. Meanwhile, however,
some merchants have already moved to New Jersey.

At a time when cities woo biotechnology firms and sports arenas to jump-start local
economies, the economic potential of immigrant entrepreneurs has remained largely
under the radar, says the Center for an Urban Future. Though there are no precise figures
to measure their economic contributions, the report said, these businesses create jobs in
good times and bad. They offset the cyclical slumps of more high-profile sectors like
finance in New York or energy in Houston. And they have created ethnic markets that
draw shoppers into the city, balancing the loss of retail trade to the suburbs.

The report credits the Bloomberg administration for small-business initiatives that have
helped some firms, but calls on public, private and nonprofit agencies to do more to
connect immigrant entrepreneurs to the expertise available.

Kara Alaimo, a spokeswoman for the city’s Small Business Services Department, said it
now deployed a staff speaking six foreign languages who aided almost 13,000 businesses
in the five boroughs last year. “We are incredibly proud of our achievements in this arena
and look forward to doing even more to provide resources to this vital community,” she
said.

Immigrant entrepreneurs seem ambivalent about getting more attention from the city.
Some are leery of red tape, though they would welcome, say, a municipal parking garage.
Others cite concrete help they have received from city agencies.

When Mr. Miranda’s arepas company, Delicias Andinas, was struggling with high trash
bills two years ago, he said, a city agent in an industry retention program referred him to
a recycler. Now much of the company’s garbage — mostly corn leftovers — is sold to
hog farms.

“They helped us out to a win-win situation,” said Mr. Miranda, now an American citizen
who calls himself “a dyed-in-the-wool New Yorker.”

“For us, it was a big deal. Right now, I don’t need money. I need knowledge.”

Adam B. Ellick contributed reporting.