This past weekend, I drove to the City of Industry to get a hair cut from the same hair stylist that has been cutting my hair since I was 3 months old.

Vincent Chan, also known as Achan, has been a hair stylist for over 25 years. He learned how to style hair at a beauty school back in his hometown, Hong Kong. He speaks English, Cantonese, as well as Mandarin. This allows him to talk to customers of all different Chinese backgrounds.

I remember as a young child, my mother drove me to Vincent’s home to get a hair cut along with my cousins in his garage on a Saturday evening. This was the only time Vincent was free this weekend between working at the hair salon in Roland Heights and spending time with his family. Throughout the years, Vincent has upgraded from a salon chair in his garage to running his own Hair Salon in the City of Industry. Vincent has established a loyalty with his customers because his hairstyles get better with time. I have noticed throughout the years that his hair cuts may not look the absolute best after you walk out of the salon, however, after you wait a week or two, the hair grows into a natural yet carefully crafted look that I have not found with any other hair stylist.

He does have competition and I will admit that I have even personally gone to another hair cutter once before. However the reason Vincent has stayed in business for so long and attracts so many customers is this ability to plan for how the hair will grow in a couple of weeks.

One time my sister and I chose to try another hair stylist simply because we did not like the previous haircut from Vincent. Initially the new hair stylist gave us both haircuts that we loved as soon as we walked out of the salon, they looked great! However, after a few days we noticed that once our hair started growing, the hair style did not grow in a way that looked flattering and we quickly went back to Vincent after two or three weeks. He instantly noticed told us “You went to another hair cutter huh? I can tell because he’s an amateur and isn’t planning for how your hairstyle will look after your hair grows.” After that instance, I have not questioned Vincent’s skills on styling hair. I have asked to keep it shorter or longer in some areas but just as a general guideline because I trust him. Vincent has established customer base in the densely Chinese populated cities in Orange and LA County. The two cities he currently works out of are Irvine and City of Industry.

When the economy hit, he did feel a hit so he had to drop his prices a bit to accommodate for it. He has worked out of salons that charge him for renting the space as well as just hair cutting for commission. The revenue Vincent generates is contingent upon how much the salon charges him for using the space as well as how much he choses to charge his customers for a haircut. The recession did affect his business but not in the way one would traditionally expect it to. More interestingly, his customers asked if he could drop his price rather than them not showing up at all. The request was being triggered by the Chinese’s culture of upholding positive face or status. Many Chinese wives still went to Vincent to get their hair done extravagantly in order give off a false perception that the recession was not as detrimental to their family as it was to others, when in reality it may have been just as bad if not worse. He told me “I guess its just the Chinese culture of wanting to save face, but hey at least that meant I still had some business”. The frequency of visiting customers did not drop but instead the price he charged did because they asked for discounts.

Vincent’s business is actually relatively casual. There are no set prices. After the hair cut is over, you simply ask him how much you owe him and he gives you a number. My haircuts have ranged from $15-30$. It really just depends on how his family is doing or how the economy is doing. While this does seem quite absurd to some individuals, this is quite typical in Chinese culture, or at least what I’ve experienced in my 20 years of growing up in a Taiwanese family. Because my family has known Vincent for so long and has always gone to see him for our hair styling needs, he has kept the price relatively consistent. The only time prices increased was between the years of 2008-2010 and he admitted that he did charge us slightly extra because he knew we were loyal customers and would not mind pitching in a little more which we did not. However since then, he has not increased the price with us as he does with other customers or new customers. With that being said, because we have established that relationship my family along with myself still tip him rather generously. As a result, Vincent has always welcomed walk-ins for us because of how many years we have been going to him for hair styling.

In the past couple of years he has opened his own hair salon called Achan Salon. Achan is his Chinese name translated to English, personally I recognize him through that name as well. He had to get a loan to buy this salon. He got his loan for a relatively how interest rate however he asked me not to include the name of the bank as well as the interest rate because well it is relatively true stereotype that Chinese people are very careful with their money regardless of how trusted of a customer you may be. I can say that the bank is a widely used bank among the Chinese community in the San Gabriel valley area.

At his new salon, he is able to hire an assistant that helps with washing the customer’s hair before they get the hair cut. I was originally planning on asking him when I first visited him but kept in mind the Chinese culture of social respect so reframed form asking him when his assistant was there. When I went back home for the weekend, I made a short visit just to ask how much he was paying his assistant. Vincent explained that the assistant is more interested in learning the hair cutting trade than making money which is why he hired him in the first place. Technically, Vincent doesn’t need an assistant, he can wash the hair himself or not wash it at all if they don’t need it, however his assistant came to him and asked if he could simply work for minimum wage to shadow Vincent while he was styling people’s hair. Vincent agreed and is paying his assistant 12$. He started by paying him 8$ an hour because it was before they raised the minimum wage, however the assistant has done good work and Vincent has naturally raised his wage to 11$ in just a couple of month.

Achan, or Vincent Chan has not only survived the economic recession but has thrived and established a loyal customer base ranging from the southern ends of Orange Country to the northern tips of Los Angeles County.

I met Allan Allaf at a small auto insurance company located near USC. I introduced myself and somewhat desperately asked if I could meet the owner of the company for my assignment.  By this point, I was already denied four times by other small businesses due to different reasons and was extremely exhausted by the triple-digit weather. I think Allaf saw how desperate I was to get the interview. He told me he was the sales manager at the company but thinks he could offer me some help since he runs a boutique shop in downtown Los Angeles.

The first question that came to my mind was “why is he here if he has his own business?” But I didn’t want to seem too rude. I wanted to hear his story first.

So this is how the story goes. Allaf is the owner of “Treasurer Boutique” located inside the grand Millennium Biltmore Hotel in downtown Los Angeles. His fiancé currently is in charge of running the business. He used to have two more employees but had to let them go in order to cut to the bear essentials due to sluggish economy.  He first jumped into the business with $5,000, which he had paid his friend who used to own the boutique. The rest of the money came from loans, which, he is still paying back little by little. “I come here (insurance company) to work just so that I can sleep better at night.”

When I asked him if his business has been impacted by cyclical or secular shifts, he told me both factors impacted him. Then interestingly enough, he started talking very cynically about the media. “The media is a big problem from all aspects. It wouldn’t shut up about the economy and puts fear in people’s hearts. As a result, consumers become very aware about their money and refrain from spending. As long as the media keep making negative forecasts about the economy, I must keep coming here to work as a sales manager.

Mr. Allaf personally believes there is nothing wrong with the economy whatsoever. This doesn’t mean he didn’t have to change the way he runs the business. He had to stop buying smaller quantity of products from the regular vendor he used to purchase from. He began ordering larger quantity items from wholesaler to get a more discounted rate, which ultimately results in cheaper retail price. Nonetheless, despite the cheaper retail price he has to offer to consumers, there are discounts going on at pretty much all the time going anywhere from 10 to 60 percent and even 70 at times.

Interest rates or access to capital do not play a significant role in his business since people do not have to rely on third party to finance any of the items sold at the Treasurer Boutique nor the customers must be qualified by a third party to buy the products from his shop. Nonetheless, online market is a huge threat to him. “The online market is probably our biggest competitor that affects us the most. Unfortunately, small businesses like mine cannot buy in huge bulks of products as Amazon does to sell at those prices. Plus it is a lot easier to buy stuff from home than actually going into the store to purchase goods,” said Allaf.

Another challenge he faces as a small business owner is the huge amount of tax he must pay. “Small business runners pay more taxes than big corporations. I don’t mean in terms of numbers and figures but in terms of percentage,” said Allaf. Even though he did not see an increase in the fees he needs to pay, people’s spending has dropped by a significant amount. He feels that it’s unfair that only big corporations get the government’s advantage of having their tax cut while small business people are struggling more and more to pay their taxes. He is therefore currently thinking about getting more loans for his business. “It’s hard for us to decide whether people like us should get a loan or not. I think it’s almost impossible for small businesses owners, especially nowadays, to excel without the help of loans.”

Then he added, “we are constantly facing predicament. It’s a matter of whether we should build up slowly or make a fast leap.

Nonetheless, he seemed quite casual about these challenges. He said his business is quite easy to run because it pretty much runs itself. He was also very optimistic about the U.S. economy. “I believe there is nothing wrong with the economy whatsoever. It’s not a factor about the economy, it’s the media play,” explained Allaf.  He gets annoyed of how the press puts false fear in people everyday, which makes people spend only 10 dollars when it is totally fine to spend 20 dollars instead.

“I really hope the media can do their job right. In the end, it is them who makes the difference in the economy.”

Carol He is a 32-year-old Chinese female, who has been living in America for 25 years. She is the boss of a “fashion company.” After deducting all costs, including wages, production cost, operation cost and all the other necessary spendings, the “company” makes about $150,000 net profit every month – and mounting. There’re 12 people in her “company” now, including her. You may be wondering: how can such a small company earn so much? Well, what I haven’t told you is, Carol’s “fashion company” sells faked luxuries. From my interview with Carol, I knew that if we only consider about profitability, this is indeed a great business.

Carol started selling faked goods 8 years ago. Back in 2006, she just graduated from university and found her first job in an airline company. When working there, she happened to get to know a Chinese handbag factory manager, Wang, who told Carol that his factory manufactures faked Chanel Classic Flap handbags, and that they’re exactly the same as the authentic ones, but with a much lower price. Carol told her friend. Her friend bought one and said to Carol that she walked in the Chanel store with the counterfeit, and no one recognized it. Since then, more and more people asked Carol for pictures of the bags by email or cell phone. Carol then created an account on MySpace to upload photos of newly manufactured handbags. People ordered by commenting or sending messages to her. By the end of 2007, Carol was able to sell about 10 bags every week, and earned around $3,000 monthly. At that time, the price of medium Chanel Classic Flap in lambskin was $2150, and the faked one was $300.

At first, Carol sold counterfeits just to make some extra money. “However,” she said, “soon I had a feeling that I was the only one in this business, and people were all asking me for bags.” According to her, most of her customers were Asians at the very beginning. But in the first half year in 2008, the number of people contacting her suddenly increased dramatically. In August 2008, she sold 128 Chanel Classic Flap handbags in different sizes and colors to customers all around the U.S., and her customers expanded from only Asian to Hispanic, Caucasian, Africa American, etc.

I asked her if she think the boost in her business has something to do with the Great Recession in 2008, she smiled and said:” Well, I don’t know much about economy, but thank god recessions never happened to me.” Carol decided to focus on the business and quitted her job at the end of 2008. The faked Chanel sold so well that she had to quit her job to take care of the business – she even hired an assistant to help her with customer service.

Though the Great Recession didn’t impact Carol’s business directly, there was indeed a huge change – which she didn’t realize till now – that was emerging in 2008. “I remember it was in that year that a large number of competitors began to appear in the U.S. and China out of a sudden, to the extent that in 2009, the U.S. Customs had been very strict about import packages from China for quite a while, even non-business ones” – and that was when Carol officially started her “company.”

Carol went back to China in August 2009, and stayed there for six months. During that time, she realized that there was much more demand for faked luxuries in China than in America. “There were so many people, they had so much money, yet they didn’t know where to spend.” At that time, Chinese economy was developing rapidly and led to dramatic rise in the population of millionaires. Luxury brands noticed the potential in China and were all trying to take a place in the market. Together with the emergence of various kinds of social media, such as Weibo – the Chinese Twitter – people got to know more brands. More importantly, they had the ability to make a purchase.

The number of luxury products is always limited – the more “luxurious” it is, the more limited it will be. Therefore, even if people have the money to buy a product, they’re not necessarily getting it. “So I wondered, what if I can sell various brands’ counterfeits that are identical as the authentic ones? Besides, the number of people who can’t afford to buy luxuries but still want one is always larger than that of people who can arbitrarily buy whatever they like.” Therefore, Carol met Wang again in China, and negotiated with him about expanding their production from only Chanel flap bags to all famous international boutique brands, such as Hermes, Christian Dior, Bottega Venetta, Celine, and so on. Carol buys authentic products from stores in America and sends them back to China, and Wang’s factory will take care of disassembling and dissecting them, in order to make identical counterfeits.

Carol decided to change the way she sells as well. She still took care of the American market, but she became a supplier in China. As I’ve mentioned, there’re 11 people working for her directly. One of them is in Los Angeles helping Carol. Four are in charge of recruiting “sales associates (SAs)” in China – these “SAs” do not work for Carol; they simply purchase from her and sell in their ways. These four people in Carol’s group are responsible for communicating with SAs and making orders. Each of the four people has a staff who takes care of sending products to SAs.  Of the rest 2 people, one bookkeeper, and one who transports goods from Wang’s factory to Carol’s warehouses in China.

“We have 2 major problems now,” Carol said, “The first is that we’re short of staff.” Each SA recruiters now has to take care of more than 30 SAs, which is too many for them. Therefore, Carol might nominate one SA recruiter as the team leader, and he will be in charge of keeping necessary staff on his team. “The second one is more crucial – competitors are getting stronger.” Carol told me she didn’t feel any pressure competing with others even just a year before. But now, some “companies” are targeting higher quality, some lower price, while Carol’s marketing strategy has no obvious feature except for the mature distribution system. “Since I have a relatively large business in this field, I’m wondering segmenting the SA recruiters into different lines. For example, some recruits SAs whose customers are looking for better styles, others can be about lower price, rare products, etc.” Carol is also considering creating a new line exclusively for Hermes, since it’s the most profitable products that many people – from normal consumers to resellers who claim to sell authentic goods – are looking for.

Speaking of Hermes, Carol laughed and said, “If I know anything about economy, it should be that scarcity prints money, and Hermes is the best example.”

$6 Dollar Standoff

As a 20 year old college student I’ve just started my journey into the working world. On top of being a student, I work part time in the music industry. Like most industries, you start at the very bottom and that comes with a cents on the dollar paycheck known as minimum wage. My own minimum wage paychecks, however, weren’t my first experience with the low dollar amount. Growing up I watched my father start a company that employed many minimum wage workers. Coming from a upper class family, I have never had to put a value to my time, and money has never been something that was a daily worry. While I was living comfortably though, many people that worked for my family’s business were living pay check to pay check. Starting my first job made me look at that business from a different perspective. My job made me ask, was I only worth $9? This new evaluation of myself made me take a second look at what minimum wage meant and the difficulties it presents.

This debate is very relevant to me, as the minimum wage increase has both positive and negative effects on my life. On one side, my check could definitely use the boost as just the commute to work itself eats up a third of the money. If I needed to solely live off my pay check it would be nearly impossible, especially in LA. On the other side, however, business owners like my father see the minimum wage increase as a threat to their company. With the city of Los Angeles looking to increase the wage to $15 it’s not just a dollar here and there, but a substantial new cost a company must undertake. With a personal interest in myself, and a deep interest in the success of my family business, this issue has become one to make me think deeper into why the minimum wage exists.

The most obvious claim is that we must value our workers more than the national average wage of $7.25. Many recent strikes have workers demanding wages that support their families, something more than a “starvation wage.” I can resonate with their frustration and the disappointment when opening the checks in the mail. If I was in a minimum wage situation indefinitely and it was my only source of income, I would need more money, but there is a lot more to this issue.

In small businesses that employ minimum wage workers, the wage allows them to be successful through competitive prices for their customers. Raising that wage by $6 more means huge new costs that must be shifted somewhere. I discussed this issue with my father who blatantly put it, there’s only two places for the new costs to come from, raise prices or cut jobs. In this situation companies will be forced to raise prices by potentially 50% to 60% just to compensate. The other option, firing workers, from my father’s perspective means the first to go will be those with the fewest skills, the current workers at or near minimum wage. Wages are set by supply and demand for labor. Using a minimum wage artificially influences that balance. So now you will have minimum wage workers making more money, but they have to spend more to live because they purchase goods and services from places that use minimum wage labor. The LA Times put the numbers into perspective “overall unemployment at the height of the Depression was about 25%. Especially for low-skill workers and for young workers, the two groups of workers who will be disproportionately hit by a minimum-wage increase, ours is a labor market in crisis.” The minimum wage is a struggle for business across the board as low production costs are top priority, and affordable labor is a necessity for operations.

The minimum wage increase doesn’t just effect the bottom line workers pay in a company it also affects company moral. As a minimum wage worker I do feel less valued than other employees because I make the least amount possible. While many people think raising the minimum wage would help workers feel more valued, it in fact has the opposite effect. There is a negative psychological effect with raising the minimum wage. When people earn raises and their pay goes up from the minimum wage, they feel good that they are now more valued. I myself would love to be able to say that I make more than base pay. When the wage goes up and workers are again making just minimum wage then they aren’t happy, and they want even more. Why should someone that has taken 10 years to earn $15 now be happy that someone brand new to the company at an entry level will make just as much as them. They will want a $6/ hr raise too. So the domino effect happens and it destroys companies and workers moral. Raising the minimum wage affects salaried managers as well. To be salary you must make at least double the minimum wage, so when the minimum goes up not all managers are making enough and now they are reclassified as hourly workers. This lowers their moral as they are no longer in this higher category of management. This just happened at our family business when the minimum wage increased from $8 to $9 as a lot of the front line managers were making $16 to $17.

This debate certainly isn’t easily answered as it is a complex issue with two very different sides. The minimum wage increase is a perfect case of putting oneself in the others shoes, it is a debate with each side having very little experience with the others circumstances. This lack of understanding is what has created a standoff in Los Angeles over $6. My unique situation has allowed me to gain some insight into the differing perspectives and see why each side is willing to battle so hard.