SUCCESS OR JUST SURVIVAL

because children are brought up with business ownership in the blood. From an early age they are willing to pitch in and help out."

The sentiment of a young

5 1

community. This view is by no means

confined to Asians them- selves. Asian enterprise is seen as a tough competitor, drawing on resources not often available to white firms.

"Paradoxically, the first barrier to Asian enterprise

devezo?'ment is that there is achraZzy

much of it"

r (New 1 Economy

y-

MCEVOY & GlLES BARRETT

Science at Liverpool John Moores University. Barreit

the project that this article Our image of Asian businesses is

not necessarily the right one isresearrhassistanton

isbsedupon

Indian woman shopkeeper

sian entrepreneurs in Britain have a from the Indian subcontinent are in some reputation for flourishing where way culturally programmed for en- white-owned firms wilt. They are trepreneurial self-employment.

Second, she is suggesting that the key to known for hard graft and a head forbusiness. But have they really been as successful as the their success is hard work. She herself works popular image suggests? And are we meas- in excess of 80 hours a week, more than twice uring their success in terms white entrepre- the norm for British employed workers, but neurs would be happy with - or is there a by no means uncommon among self-em- racist doublespeak at work? ployed Indians, Pakistanis and Bangladeshis.

A

A white clothes shop owner in

Culture club As well as individual hard graft they can draw on the labour power of extended fami-

1070-3535/94/010051 + 06 S08.00/0 a THE DRYDEN PRESS

52 NEW ECONOMY

shops and shopkeepers in deprived inner- city areas are frequently the target of arson and robbery. Any commercial success is won at high personal costs.

The Look Of Success When members of an ethnic minority are forced into unemployment, they are called spongers. When they try to improve their lot by some strategy such as self-employment, they are stealing 'valued' resources from the majority. The truth is that many of the busi- ness lines typically acquired by Asians are anything but valued by whites.

Nevertheless a lot of people still believe Asians have pulled off a remarkable en- trepreneurial success and, objectively, there would seem to be considerable evidence to support this view. By the late 1980s, figures showed Asians to be 1.75 times as likely to be self-employed as members of the general population, and there is every sign of the gap continuing to widen.

The bulk of the first wave of Asian immi- grants entered Britain as manual workers restricted to low-level jobs, so their current high representation among the en- trepreneurial middle class is all the more striking. As is the finding that there are now over 200 millionaires of Asian origin in Brit- ain, most of whom became rich through business ownership.

Considering that this has been achieved from a low initial capital and skdls base and in the face of discrimination by banks, insur- ance companies, customers, suppliers and even agents of the state, it is difficult to be unimpressed by the dynamism of the Asian enterprise economy.

Blessings from on high On the face of it then, official policy in Britain towards ethruc minority business develop- ment looks unproblematic. Ever since Lord Scarman exhorted 'black people' to partici- pate fully in the emergent enterprise culture,

ethnic minority business ownership has been vigorously promoted by the state.

Practical support has been given to the creation of enterprise agencies targeted at the special needs of ethnic minority entrepre- neurs. Almost every locality in the country with a significant Asian or Afro-Caribbean population is now home to such agencies, often funded by a mix of central government, local authority and private money. They offer counselling, training and funding services geared to ethnic minority groups. The Brad- ford Enterprise Centre, for example, where Asian staff occupy prominent positions, of- fers potential business owners a comprehensive package.

By and large research into ethnic minority business has supported the official line, 'eth- nic minority business good, more ethnic minority business better'. Quite correctly, re- search has highlighted the contribution made by Asians to local economies, emphasising their capacity to survive in the hostile busi- ness environment of inner-cities.

Asian enterprise has revolutionised re- tailing and service provision. Retailers have been in the vanguard of Sunday trad- ing and late-night opening, and in centres such as Leicester, Asian entrepreneurs now play a leading role in textile and clothing manufacture, once thought doomed by sweated competition from the Third World.

These successes have been achieved against the odds. Ethnic minority entrepre- neurs face discrimination from a range of sources. A central purpose of much research has been to pinpoint the barriers which handicap minority firms and the means to eradicate such obstacles.

One common proposal is that local authorities take the lead by cleaning up their own act - for example, by tendering from ethnic minority firms, opening access to premises and evaluating how planning pro- visions might impinge on such firms.

SUCCESS OR JUST SURVIVAL 53

A Dissenting View The optimism surrounding Asian business may strike some observers as suspiciously glib.

The cynic might see the frantic drive to- wards self-employment as a means of mopping up the mass of immigrant-origin workers now surplus to the labour market. In the current unemployment crisis, black and Asian workers are heavily over-represented among those at the sharp end. This stems from the combination of discrimination in the job market and the fact that many of the low-level jobs for which New Common- wealth immigrants were originally recruited have disappeared through de-industrialisa- tion and public sector cuts. In effect, the cynic would say, Asians are doing the state a fa- vour by managing their own unemployment crisis internally.

Such a bleak interpretation may be ex- treme. But a wholly positive view of Asian business accepts uncritically the Thatcherite representation of entrepreneurialism as a curative so powerful that it will work for even the most disadvantaged sections of so- ciety.

What about the 80 per cent or more of the Asian population who are not business own- ers? While the Asian propensity for self-employment is greater than that of the British population as a whole, this still leaves four in five reliant on the labour market as employees. And for this majority prospects are mixed, to say the least.

Official figures indicate that there has been accelerated entry into professional employ- ment. But even this progressive development is uneven between ethnic communities. Indi- ans stand out as more professionalised than either Pakistanis or Bangladeshis, both of which groups are under-represented in pro- fessional jobs and over-concentrated in manual work.

Unemployment and underemployment

are rife. The low proportion of these commu- nities officially participating in the labour force is a striking feature, most notable among Pakistani and Bangladeshi females. Islamic traditionalism is still operative here.

While unregistered homeworking is being carried out by women, it is unlikely to make a significant dent in the idle labour force. In any case, such work is generally ill-paid and irregular and, as such, symptomatic of the absence of viable job options.

Entrepreneurial self-employment is clearly no panacea for such a situation. So great is the mountain of Asian unemploy- ment and underemployment that enterprise growth would have to take place on an un- precedented scale to compensate for the jobs lost elsewhere.

Two further question marks need to be placed against the one in five Asians who do currently own businesses. How successful are they really? And at what cost is their success won?

Uneven success at high cost Our survey provides an excellent opportu- nity to distinguish fact from myth, rumour and hype. Key findings are set out in the Table overleaf, representing a profile of Asian and white small business in the early 1990s. It quickly becomes clear that many standard assumptions are questionable, if not downright wrong.

On the question of a cultural propensity for entrepreneurship, items 1 and 2 sug- gest that when it comes to motives for going into business, Asians are actually similar to whites. Virtually identical pro- portions in each group have been lured into business by the 'positive' motives of money, independence, the desire to use a skill and so forth. But in both groups a distressingly high proportion consider themselves forced into self-employment by unemployment, job-dissatisfaction or some other hazard of

54 NEW ECONOMY

the labour market. This supports the no- tion that much of the post-1980s growth in small firm formation was a 'negative' re- sponse to the collapse of jobs in large firms and in the public sector. It also suggests that for all their differences in origin and culture, whtes and Asians were similarly affected.

0 According to items 3 and 4, Asians are more likely than whites to be making a satisfactory return from their businesses. The contrast is particularly marked for profits. This could support the popular belief in the competitive success of the Asian small business economy. But item 5 shows that this success is won at the cost of inordinately long working hours on the part of Asian proprietors, almost one in five of whom work a stag- gering 85 hours a week. The comparable figure for whites is one in twenty. The conventional explanation of Asian re- tailers' competitive success is their will- ingness to suffer a gruelling work regime they can capture custom during unsocial hours. Yet equally, many of these business owners are forced into long working hours by the need to survive in crowded markets with low profit margins. Items 6 and 7 confirm that those who work the longest hours are actually less success- ful than those who work a 'normal' week. Here is a lesson in economics so elemen- tary that it should hardly need s p e h g out: true entrepreneurial success in a mod- em economy is not a matter of labour-in- tensiveness but of substituting labour with more productive factors such as capi- tal and expertise. The most successful Asian owners are those with access to sufficient capital to set up a viably funded concern, or those with a relevant qualification. Pharmacy gradu- ates, for example, can realistically hope to make a decent living from a 40-50 hour week.

Asian and white firms compared on twelve measures

(All figurns in per cenf except ifem 9)

Asian White

1. Owner's business entry motive positive 2. Owner's business entry motive negatie 3. Permal incomes satisfactory or better 4. Profits satisfactory or better 5. Owners average weekly working hours 6. Working over 80 hours, profits unsatisfactory 7. Working less than 50, profits unsatisfactory 8. One or less full time employee 9. Unpaid family workers per firm 10. Using informal sources for more than 75%

start-up capital 11. More than 50 per cent Asian custom 12. Food retailing and CTN

57.6 56.2 29.1 30.1 71.8 62.9 77.0 60.8 60.4 47.3 27.5 na 20.0 na 48.3 48.3

29.4 41.5

26.0 na 34.9 19.8

0.41 0.25

0 The rest of the profile continues the theme of widespread business underdevelop- ment. It is carried out on a very small scale (item 8); there is a heavy reliance on family (9), on informal sources of capital outside the banking system (10) and on fellow Asian customers, a restricted market base which inhibits the growth of many firms (1 1). There is also a heavy concentration in food retailing and confectionary-tobacco- news (CTN), which are characterised by low returns and labour-intensiveness.

None of this is to be read as a criticism of Asian business people themselves. On the contrary, their motives and practices display adaptability and resilience, and are a mark of a vigorous community refusing to play the victim.

Rather than the entrepreneurs, it is the structural ccnditions in which they have to operate that need scrutiny.

Broadening the horizons The most immediate lesson is that sheer numbers of ethnic minority firms created should not be a yardstick of policy success. Paradoxically, the first barrier to Asian enter- prise development is that there is actually too much of it. Large numbers of Asians have

SUCCESS OR JUST SURVIVAL 5 5

been propelled towards self-employment by their deteriorating position in the labour market and the lack of viable alternatives. This situation is aggravated by high rates of population growth in recent years, leading to a rapid influx of Asians to the jobs market.

The scramble to enter business has three effects.

First, potential business owners include many who, in less straitened employment conditions, would never have considered self-employment. They may be unsuited to it and destined to early failure.

The policy implication is straightforward: government urgently needs to stimulate the supply of jobs. Since the 1980s this task has been left to new independent entrepreneurs, but firms in our sample, white and Asian, have created fewer than two full-time paid jobs each, a rate which makes no real dent in a mountain of demand.

Second, excessive entry into business satu- rates the markets. It is easy to overlook the economic truism that a swiftly expanding population of suppliers may outstrip de- mand for their goods and services. True, the Asian enterprise economy has been able to put off this day of reckoning by creating new demand for 'exotic' goods and by undercut- ting incumbent firms. But a continuing proliferation of firms means a declining mar- ket share for all.

This has been acutely manifested in the recession of the early 1990s and is one of the reasons many small retailers need to work such long hours. Nothing less than survival is at stake here. Again, the evidence warns against encouraging the indiscriminate pro- liferation of micro-businesses.

Third, the tendency towards market satu- ration is exacerbated by the very narrow range of entrepreneurial activities open to most Asian business entrants. In the absence of adequate capital and expertise, they have headed for branches of the economy which make relatively modest demands on such

resources. This helps to account for the over- dependence on food retail and CTN, which are not only heavily labour-demanding but also offer comparatively low profit margins. The effects of the rush into self-employment point to a need to encourage diversification into new areas of manufacturing and serv- ices, which could be undertaken only with realistic financial support, training and mar- ket research. It would also require more ef- fective measures against racially discriminatory resource allocation, whether by direct legislation or by negotiation with parties such as banks and insurance compa- nies.

Even so, it is possible that Asian diversi- fication would lead merely to the displace- ment of incumbent white firms. In this case the net gain would need careful examina- tion.

Pol icy implications No useful policy can be formulated without a reappraisal of what ethnic minority busi- ness actually is and does.

Many of the Asian firms in the survey should not be judged by orthodox commer- cial criteria. Small shops are by nature frequently unviable in pure market terms and can hardly be expected to be responsible for some great rejuvenation of the British economy.

Indeed, if all Asian small shopkeepers be- haved 'rationally' according to the laws of the market, many of them would not exist. It is only their willingness to accept sub-rational returns that enables them to survive.

Integral to these sub-rational returns is the intensity of labour which keeps many immi- grant-origin businesses going.

Labour intensiveness is a regressive rather than progressive factor, and ought not to be applauded. To do so would be to encourage a racist double standard, applying criteria to ethnic minority businesses which would not be applied to the economy as a whole. In

56 NEW ECONOMY

effect we would be encouraging the use of Asian sweated labour to perform vital tasks regarded as too low-yielding and onerous by anyone else. The Asian role in enterprise is coming to duplicate their original role in the labour market - the performance of low-level tasks shunned by indigenous entrepreneurs.

Another skewed aspect of the situation lies with an educational mismatch. The Asian sample in our survey is remarkably highly qualified in academic terms, no fewer than 24 per cent being university graduates or the equivalent, compared with 7 per cent of the whites. But in most cases there is a mismatch between degree and occupation. In one case a History PhD is running a corner grocery. Such mismatches comment eloquently on the labour market blockages facing the Asian community.

Supporting what is valuable But such 'irrational' enterprises do have great community value, especially in deprived ur- ban areas. Their dynamism has positive re- percussions for job and wealth generation, the revitalisation of derelict land and the pro- vision of consumer services in areas which might otherwise be under-provided.

Official support for these activities is therefore justifiable on two grounds: they of- fer a social service and they create employment. As they relieve the burden on social security and other benefits, state fund- ing for such firms could be seen as self-financing.

When the small inner-city retailer is judged in terms of actual - as opposed to purely commercial - costs and benefits, a powerful argument can be made for fund- ing to ensure Asians and other participants are not penalised for their contribution, as is the case at present. Such funds could be targeted at upgrading premises in run- down areas and/or at job creation through wage subsidy.

State involvement In manufacturing and producer services Asian entrepreneurs are less likely to be mo- tivated by personal considerations and more by conventional market goals, such as profit and growth. Even here, however, the market should not be the sole arbiter, given the dis- advantages faced by small firms in an econ- omy still dominated by the giants.

Intervention, that thoroughly discredited pre-Thatcherite strategy, is needed urgently to establish a more level competitive playing field. It is particularly important to ensure that small entrepreneurs gain access to the venture capital they currently lack.

Contrary to the rhetoric, interventionism never really went away. Enterprise promo- tion is a highly interventionist procedure. Takmg into account public funding of firms and enterprise agencies through the Urban Programme, together with fiscal and other measures designed to help small and new firms, the enterprise culture appears as just another form of subsidised individualism. State intervention, at national and local lev- els, is a vital prop for the enterprise economy, but its role has been disguised and blurred.

It is high time that role was acknowledged and extended to ensure two basic conditions: that the small proportion of entrepreneurs with genuine growth potential - about one in twenty - are adequately trained, equipped and, above all, capitalised; and that the ethnic minority component of these is freed from all discriminatory barriers to access to vital busi- ness resources.

These criteria would offer a much more cost-effective, targeted and socially just alter- native to the present convoluted arrangements.