new immigrants and new businesses : the chinese and the...

Paper presented for the conference "Autrement Entreprenants",1991, Hotel Queen Elizabeth, Montréal.

~

Copyrighl81992. &ole des Hautes Éludes Commerciales (H.E.C.), Mon~al.Tous droits riserWs pour IOUS pays. Toute lroduction ou lOUIe reproduction sous quelquefomlt: que ce soil eSI illlerdJte.Les It:XIt:S pubUU tùms la série des cahiers de recherche H.E. C. n'engagenl que la responsabiUlé de leurs auteurs.LA publication de ce cahier de recherche a été rendue possible griJce à des sulm:ntions d 'aUJe à la publication el à la diffusion

de la recherche du Conseil de recherches en sciences humaines du Canada (C.R.S.H. C.), du Fonds pou,. la formation de

chercheurs el l'aide à la recherche (F.C.A.R.) ou desfonds de l'&ole des H.E.C.Dislribué por la Direction dela recherche, &ole des H.E. C., 5155, avenue DeceUes, MOnlœal (Québec) Canada HJT 1 V6.

Thursday, October 24,

New Immigrants and NewBusinesses : the Chinese andthe Haitians in Montreal

Gabrielle A. Brenner,Gérard Célas, Jean-Marie Toulouse

Cahier de recherche n° 92-03-01

Mars 1992ISSN : 0840-853X

Abstract

Acknowledging the importance of immigration in Canada, we decided to study the behaviourof Chinese and Haitians in Montreal hoping to understand why they differ in term of businesscreation.

Empirica1 data collected from bath communities indicated that :

most Chinese entrepreneurs had previous entrepreneurial experience. This is rareamong Haitian entrepreneurs;

immigrants Chinese or Haitians did not corne to Canada with the intention of(3)creating a business;

(4) govemment programs designed to help start-ups are rarely used by immigrantsentrepreneurs, specialy in the Chinese community;

Chinese create their business relying heavily on their ethnie network; Haitians aremore turned toward the host society.

(5)

New Immigrants and New Businesses:The Chinese and the Haitians in Montreal

1) The coutext of the research

ln much of the Western world, questions are continuously raised on the role of

immigrants in society. This debate has become even more pressing because of the

general aging of the population and the fears of the increasing burden of a retired

population on the tax-payers have made governments consider immigration as a

possible solution. With the immigrants being cast in this role, questions of public policy

have been raised on the additional effects of immigration on the host society, on the

net economic contributions of immigrants versus their costs to their host economy.

Canada has been at the forefront of this debate. Not only does it share the

common Western problem of an aging population and a falling birth rate2, but the

acute birth rate decline in the province of Quebec has aIso raised the political problem

1

2

The authon are respectively associate prof essor of economics, muter student in administntion and Maclean Hunter

prof essor of entrepreneurship at the École des Hautes Études Commerciales of Montreal. This study has been madepossible by the Maclean Hunter Chair of entrepreneurship and ,rants of the École des Hautes Études Commerciales. WeallO thaok Chu Yu-Haiang. Alain Tremblay and Serge Trépanier for their dedicated wort and collabontion. AIl

remaining errors are IOlely our own.

ln ils lait report on immigration for instance, the Economie Council of Canada elliimates lhal even iD the mosI ideal

conditions (nel immigralion of 200,000 per year, or 0.8 ~ of the populalion), the dependency rate, which indicates how

maDY young and relired persona will depend on 100 worlting Canadiana will grow from sixty-five in 1990 10 aevenly-lWo

in 2040. If the goal of nel immigration is noI mel il could grow 10 eighty-aeven! (1991. p. 41).

Copyrl,Ju . tcok da H.E. C.

byGabrielle A Brenner, Gérard CéIas

andJean-Marie Toulouse 1

of its weight in the Confederation. Quebec's population in 1981 was 6.4 millions (or

26.5 percent of Canada's population), which was 6.8 percent higher than in 1971.

During the period 1979 to 1983 the birth rate has fallen by 12.2 percent and the

Quebec government wants to attract immigrants to make up for the shortfall and insure

the future growth of its population 1. Quebec especially wants to attract francophone

immigrants and, in tum, is attractive to francophone immigrants, like the Haitian

diaspora. Given this background, it is not surprising that in recent years, Canada's

federal government has attempted to measure the economic impact of both its program

promoting the immigration of entrepreneurs and the impact of immigration on the

economy2, while the province of Quebec has carried out two studies designed to

measure the value of economic contributions by immigrant entrepreneurs3.

Both the Canadian and the Quebec governments have especially wanted to attract

entrepreneurs4. It has long been recognized that some groups of immigrants have

been active in business creation, and govemments faced with the task of choosing

among possible immigrants have especially wanted to target the ones likely to create

businesses and contribute to growth5. The impending takeover of Hong Kong by

mainland China has a1so created a window of opportunity to attract its well-known

entrepreneurs6. This has motivated the federal govemment to promote the use of a

special category of immigration visas for the potential immigrants who declare that they

will invest in a business in Canada.

1

2

ln 1983, thcre were 16,378 immigrants to Quebec while the total immigration to Canada wes 89,157. Thus Quebec's

part of 18.3'J wu slightly inferior to its weight in the population.

See for instance Samuel and T. Conveys (1986), Nash (1987), Conaeil économique du Canada (1991)..

Sec for instance Ministirt: des commu1UlUlés culturelles, Québec, 1986.

ln his seminal work, the late Shapero has frequently mentioned the contribution of immigrants to business creation.

Sec Pyona Gap Min (1984) on the Korean entrepreneurs; Reeves and Ward (1984) on Pakistani and Indian immigrants

in Great Britain. A gencral review of the literature can be found in Toulouse and Brenner (1988).

6 ln 1985, there were 7,380 immigrants from Hong Kong out of a total immigration to Canada of 84,302. See Annuaire

du Canada, 1988, table 2,35. A recent Business Week article even attributes the strength ofthc Canadian dollar to thefacl thel Canada has welcomed more than 110,000 immigrants from Hong Kong who have brought a flow of around S4

billions a year into Canada (Business Week, 1991).

Copyrighl . École des H.E. C. 2

3

4

.5

on the likelihood of creation of businesses by immigrants suffers from a paucity of data.

A review of the literature shows that while there has been many studies of ethnie

entrepreneurs in the United States and in Great Britain, there is a dearth of

comparable studies in Canada. Besides the aiready mentioned studies of the federal

and provincial govemments, whose goal was more to assess the effectiveness of their

prograrns than to understand the process of business creation among immigrants, there

exists only seme studies of entrepreneurs in ethnie communities: Lasry (1982) has

studied business creation among the Sep hardie Jews of Montrea1, Gutwirth (1973)

among the Orthodox Jewish community of this city and Painehaud and Poulin (1988)

among the ltalians of the province of Quebec. There are no data on other ethnie

communities. Moreover, there exists no comparative studies of the different

communities' experiences in business creation that would allow to draw policy

implications. Because of the laek of data, intervention to help ethnie entrepreneurs

may often be doomed to failure, even when they succeed in reaehing their targeted

public.

It is in this context that we have undertaken a study of business creation among

immigrant communities. We have until now studied the Chinese communityl and the

Haitian community in Montreal.2 ln this paper, we ftrst expose the methodology of

the studies, then we compare some characteristics of the entrepreneurs we interviewed

and compare the experiences of the two communities. We then compare our results

with what has been found in the literature, and we conc1ude with some policy

implications.

1

2

See Brenner and Toulouse (1990).

Copyrlghl . &:oIe des H.E. C.

Sec Cé", (1991).

3

II) The methodology of the study.

The study was based on long inteIViews with open and c1osed questions. Among the

Chinese communityl, we inteIViewed thirty-five ethnic Chinese business owners in the

Greater Montreal area in the summer of 1989. To foster trust and not to miss

important elements of their responses, the inteIViews were conducted in Chinese, since

these immigrants either do not know English or French weIl enough or are wary of this

kind of research, especially of the uses of their answers. The questionnaire was filled

by the inteIViewer (a member of the community) in Chinese and translated later into

French. Because of the immigrants' fears of authorities (especially the fear of financial

information being revealed to the tax authorities), the entrepreneurs in our sample

were those that accepted to answer, because either we succeeded in reassuring them

or they knew one of the researchers personally or had received a favourable

recommendation from somebody they trusted. If a bias has been introduced in the

sample, we cannot determine its effect on our results2.

To study the Haitian community of Montreal, we learned from our first experience.

We modified the questionnaire used for the Chinese study to adapt it to the specifie

eharacteristies of the eommunity. Moreover, in this last group we wanted to have a

sample not only of the business owners but also of the non-entrepreneurs. This would

enable us to compare the eharaeteristics of these two populations. Using the phone

directory of businesses that serve the Haitian community in Montreal (le Bottin de la

Liberté), we mailed the questionnaire to 150 doctors and other professionals (or sixty

percent of the population advertising in the directory). We used a member of the

community as interviewer, and he used his own network to reaeh teaehers, entrepre-

neurs, students and unemployed people of the community. The interviewer also went

to diverse businesses and spoke with their owners. ln aIl we succeeded in having 130

filled questionnaires on a total of 400 given. ln this community too there were fears

about the use of this study that the interviewer had to assuage. People on unemploy-

1

2

We beaan wilb Ibis community by accident, as we had a Chinese rese8rch aaailltaDl. For such atudies, we need a member

of the community to provide entry and truat.

WC IDUM mention that most studics of immigrant

Copyrl,IIl . &ole da H.E. C.

Businesses

hlve such 1 dl'lwblck.entrepreneurs

4

New Immigrants and New Businesses : The Chinese and the Haitians in Montreal

ment and welfare were especially fearful, questioning the use of the research and

doubting it could have an impact on their problems. We obtained

fifty-three entrepreneurs and seventy non-entrepreneurs.

When comparing the two communities in their attitudes toward entrepreneurship

and the businesses created, one must be reminded of a crucial difference among them.

The Chinese in our sample, while coming from different countriesI, mainly corne from

entrepreneurial familles and from a commercial culture that values entrepreneurship.

One of them even commented that Chinese from Indochina are "accustomed to have

their own business. .. So, when they save money, they open a business." Moreover,

most of the Hong Kong Chinese came under the program of fostering the immigration

of entrepreneurs. These immigrants came with money and a plan to start a business.

The Haitian immigrant experience is different. The Haitian immigration in Quebec

may be divided in two phases. Up to 1971, Haiti was a limited source of immigrants

for Canada and the Haitian immigrants were mainly professionals who fled the

repressive Duvalier regime. The sooies was a period when the expanding Quebec

economy was able to absorb Haitian doctors, nurses and teachers (Déjean, 1978).

Bastien (1986) says that up to 1971, more than fifty percent of the Haitian immigrants

had a schooling level of thirteen years and more. Mass immigration only started in the

seventies when the worsening economic conditions forced the Haitian peasants to look

for a haven2. These immigrants had much less schooling than their predecessors, some

did not speak French and had more problems integrating.

The attitude of these two waves of Haitian immigration toward entrepreneurship

is different. The profession ais who arrived in the sooies did not have any problems

fmding work in their chosen field and were not interested in business creation. On the

other hand, the poorly educated immigrants of the second waves, who mainly work in

precarious conditions, did find that their dreams of a better life could not be fulfilled

1 Seven came from Taiwan, aixlecn from HOOI Kong, five from mainland China, four from lndochina and two from

Malayaia.

2 Bcrœcbe and Manin (1984) mention that from 1974 to 1978 Haiti was one of the tirst source of immigrants for Quebec.

Copyrlglu . &:ole des H.E. C. 5

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by their jobs. They are the one who had recourse to business creation as a way out of

their situation. But they suffer from poor schooling and lack of skills and especially

lack of business experience. Moreover, they harbour a suspicion toward business born

in Haiti, which only slowly disappear: indeed one of the respondents in our sample

said that " business is only for the younger generation. For the older people,

businessmen are exploiters." For in Haiti, business is mainly done by foreign

communities (mainly Syrians, Lebanese, Italians and Palestinians). The only Haitians

in business are either former expatria tes who came back or disadvantaged people who

create informal enterprises to survive. Traditionally in Haiti, the way of success goes

through education that open the way to get a job in the state administration and not

through business., while the political situation has fostered a deep suspicion of

business and businessmen. Let us now look at some characteristics of the entrepre-

neurs and their businesses.

III) The immigrant entrepreneurs: Who are they? What are their

businesses?

Among the Chinese entrepreneurs, the youngest is twenty-three while the oldest

is sixty- one, with most of them being in their thirties and forties. They are on the

average fairly well educated, only one having a primary education level. The others

either have completed their secondary education (nine), their collegial studies (six) or

have some degree of university education, either undergraduate or graduate (eighteen)

(see figure 3). Most of these entrepreneurs are recent immigrants to Canada. ln this

we may see the secular increase in ethnic Chinese immigrants into Canada. Among

the Haitian entrepreneurs, most are also in their thirties and forties (thirty-nine out the

fifty-one who answered this question). Four entrepreneurs had a primary education

level (either complete or incomplete), eighteen had a secondary education level (both

complete and incomplete) and the rest either had attended colleges (ten) or some

Sec Buçhanan (1983) who shows that amolli Haitiana in New York, the people whiçh in Haiti where members of the

higher çlaases çomplain thatthe lower çlassea are "Ameriçanized" quiçkJy by whiçh they mnn materialistiç. See allOGerdes (1913), PresIoir (1951), Wingfield and Vernon (1964). This altitude is typified by one of the entrepreneursinterviewed. who told us that he did not want bis çbildren to go ioto busineu but wanted them to çomplete their university

studies to find a job.

1

Copyrighl . É'.cok des H.E. C. 6

degree of university education (twenty) (see figure 4). It is noteworthy that among the

Haitian entrepreneurs a greater proportion of entrepreneurs than non-entrepreneurs

has dropped out of school, in each category of studyl. This may reflect the fact

aIready mentioned that in the Hait~ business is not considered as a channel of upward

mobility. Qnly the one that cannot succeed through the usual ways tum to business.

This hypothesis is farther supported by the fact that only nine of the entrepreneurs (or

seventeen percent) in our sample came before 1970, with the first wave of immigration,

which was mainly composed of professionals, while twenty six or 33.7 percent of the

non-entrepreneurs belong to this wave.

While there is no c1ear pattern among the Chinese entrepreneurs whether or not

they came from entrepreneurial familles, twenty-two entrepreneurs had previously

owned a business, nineteen had parents who at one stage in their lives had owned a

business and only six entrepreneurs neither had entrepreneur parents, nor had once

owned a business. The picture is somewhat different for the Haitian entrepreneurs:

only six acknowledged a past entrepreneurial experience while thirty-one had

entrepreneur parents. Figures 1 and 2 show a comparison of the two communities in

this respect: it shows very c1early that a somewhat higher percentage of Haitians than

Chinese does not corne from familles of entrepreneurs.

The existing immigration preferential treatment of potential entrepreneurs raises

the question of whether or not the immigrant came to Canada with the intention of

creating a business. Out of thirty-five Chinese entrepreneurs who answered this

question, sixteen or 45.7 percent answered "no" and nineteen or 54.3 percent answered

"yes" while among the Haitian entrepreneurs, only twelve of the fûty-one who answered

this question answered "yes" (see figures 5 and 6). Thus, people who start a business

are not always those who tell the immigration authorities that they wanted to do so.

ln consequence, government programs whose purpose is to single out potential

immigrant entrepreneurs may miss Most of those who ultimately do so. We a1so must

1 For inlUnCe nine entrepreneurs out of fifty-three, or leventeen pel'l:ent, did !lOt complete their lecondary studiea while

only five non entrepreneurs out of leventy-eeven, or 6.5 pel'l:ent did ROt complete their leCondary education; Sixentrepreneurs, or Il.3 pel'l:ent of thi. group did !lOt complete their collegial atudiea againat none of the non entrepreneurs;and six entrepreneurs, or Il.3 pel'l:ent of the entrepreneurs, did ROt complete their undergnduate atudiea againal two,

or 2.6 pel'l:ent of the non-entrepreneurs.

Clpyrl,m . &ole da H.E.C. 7


note that only five Chinese and seven Haitian entrepreneurs consulted any govemment

agency before they opened their businesses. Thus, govemment agencies whose goal is

to help the entrepreneurs do not seem to reach the immigrant entrepreneurs.

AIl but two of the Chinese entrepreneurs who have employees in our sample

employ other Chinese, and mostly they constitute either all of their employees or the

bulk. This is less true for the Haitians where only seventeen of the thirty-two who

answered the question and had employees had Haitian workers (see figures 7 and 8).

Moreover twenty-four Haitian entrepreneurs answered that they do not prefer to hire

members of their community.

While many of the businesses created are smaIl businesses (with an initial

investment of less than $100,000, 5Ome are not 50 smaIl: nine of the businesses created

or acquired by Haitian entrepreneurs needed an initial investment of more than

$100,000, and one of the businesses created by the Chinese needed a million dollars

initial investment. Thus it is not correct to say that immigrants only created very smaIl

businesses. They create businesses of aIl sizes and 5Ome try to expand by going out of

their communities toward the host community. Nevertheless a comparison of figures

9 and 10 shows that on average the Chinese created more "bigger" businesses. This

reflects the fact that more Chinese arrived in Canada with the resources needed, while

the Haitians did not. Haitians are "catching up" : twenty-six of the entrepreneurs

interviewed had annual sales of $100,000 and more, while the number of Chinese with

sales of more than $100,000 was fifteen (see figures 11 and 12).

No Chinese entrepreneur in our sample used government grants to provide the

start-up money for his business and only fIve Haitian entrepreneurs did. The

government programs to help start-ups do not seem to reach these communities of

immigrant entrepreneurs.

Copyrlglu . teole lin B.E. C. 8


IV) The role of the ethnie network.

Since Bonacich and Light c1assic studies of Korean entrepreneurs in Califomia,

there have been several attempts to explain the rise of the immigrant entrepreneur1.

One of the factors noted as relevant to the rise and the success of the immigrant

entrepreneurs is the existence of a strong intra-ethnic network that supplies the

fmancing, the workers and often aIso the customers of the immigrant entrepreneur.

This factor appears in different degree in the two communities studied:

The Chinese entrepreneurs rely mainly on their familles and the intra-ethnicnetworks to fmance their business ventures. They very rarely use the formaifmancing sector: in our sample only four entrepreneurs borrowed from the bankto finance their venture. The Haitian entrepreneurs on the other hand borrowmore: sixty-five percent borrowed from banks part of their initial capital. Itmust a1so be noted that they complain more than the Chinese of being victimsof racism in their dealings with banks.

The entrepreneurs in our sample rely on their familles and the ethnie networksto find workers for their businesses, more for the Chinese, less for the Haitians.

Some immigrant entrepreneurs in our sample have created businesses to servea perceived need of their ethnic group (a Chinese florist, a Chinese druggist,Haitian stores selling special products, hairdressers catering to the Haitiancommunities etc.), but others chose to serve a wider public, using special skillsthat they had from their own background.

The relatively small amounts of money needed to venture in their businesses (only

in seventeen percent of the cases did the declared sums exceed $100,000 for the

Chinese as well as for the Haitians) suggest that money may not be the obstacle to the

wish of becoming an entrepreneur.2 On the other hand, some Haitian entrepreneurs

complained that they did not start the business they really wanted because of lack of

funds and a negative answer from banks.

1

2

Sec Toulouse and Brenner (1988) fOI' a critical review of the lileralure.

This evidence is consistent with evidence from the distant past <as summarized by Schumpeter, 1919), and more recent

one (sec Brenner and Brenner, 1987).

Copyrl"" 8 &ok dG H.B.C. 9

the role of immigration, the way of attracting entreprene

immigration. We have a1so noted that programs

immigrant entrepreneurs. Our prelirninary

may miss their goal. They aim at attracting

entrepreneurs in our sample did not corne

business. Also, government programs designed

financing, did not reach this population.

Moreover, our studies show the vital role the immigrant entrepreneur plays in bis

community: he creates jobs for this community as weIl as for the Iarger community

around, serve the needs of the community and creates wea1th. Immigration th us is an

asset for the host community.

Copyrl,1tl . ÉctM da B.L C. 10


Copyrl,hI . tctJk da B.E. C.

Figure 1

Figure 2

11

New Immigrants and New Businessu : The Chinue and the Haitians in Montreal

0Ipyrlp. . .. dG H.E.C.

Fiaure3

Figure 4

12

Flgure 5: ChÏnese immigrants who came with the idea ofcreating a business.

Figure 6:business.

0IpyrI"" . &ok da R.E. C.

Haitian immigrants who came with the idea of creating a

13

New Immigrants and New Businesses : The Chlnese and the Haitians ln Montreal

CDpyrl"" . taw da BLe. 14

Figure 7

Figure 8


Cop)Ti,h. . t.cole dn B.E. C.

Figure 9

Figure 10

15


Copyright. tcole des H.E. C.

Figure Il

Figure 12

16

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BONACICH, E.US. Capitalism and Korean Immigrant SmallBetween Class and Ethnicity. Working paper, University of Califomia at Riverside,undated.

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BRENNER, Reuven and Gabrielle A Brenner."Who Are the Entrepreneurs", in R. Brenner Rivalry: ln Business, Science, AmongNations. Cambridge: Cambridge University Press, 1987: 28-45.

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