‘Rag Trade’ Tailor-Made for Entry-Level Capitalists

Ever since Jewish immigrants poured into garment shops on New York’s Lower East Side at the turn of the century, the “rag trade” has provided entry-level jobs for refugees.

Sewing remains equally attractive to new capitalists. It takes only about $20,000 to $30,000 to rent a shop and sewing machines and launch a garment-contracting business. Orange County has at least 400 such shops, the majority owned by Vietnamese refugees who have immigrated within the last five years.

Vietnamese-American community leaders say these immigrants aspire to open their own businesses. But unlike those who arrived shortly after the fall of South Vietnam in 1975--who tended to hail from Vietnam’s military, political and economic elite and have built flourishing businesses here--the newer refugees tend to be less-educated and have fewer resources, they said. With few exceptions, the new garment contractors are such former boat people.

“We usually work seven days a week, between eight and 10 hours a day,” said Thuy Van Tran. He learned the tailor’s trade in Vietnam, began working in a sweatshop as soon as he arrived here from an Indonesian refugee camp two years ago, and is now trying to start his own sewing business. “It certainly is hard work.”

The profit margins are razor thin.

“A lot of them in Little Saigon here, they work 12, 16 hours a day and they make $1,000 or $1,200 a month, even the owners,” said Co Dang Long Pham, president of the Vietnamese Chamber of Commerce in Orange County. “After they (the owners) pay rent and (wages) to the employees, they only make $800 a month.”

The average life span for such shops is about 13 months, according to Rolene Otero, director of enforcement for the U.S. Department of Labor in Santa Ana. The owners tend to either find specialized and better-paying work or fold, she said.

Competition is ferocious--not just among shops but among ethnic groups.

Until recently, Korean immigrants, clustered in Los Angeles, dominated the low end of the garment-contracting business. Now, they complain of being undercut by Vietnamese refugees who will work for even less.

John Y. Cho, general manager of the Korean-American Garment Industry Assn., said the 800 to 900 Korean contractors in the Greater Los Angeles area have gradually abandoned the budget market to make higher-priced clothing that requires more sewing skill and is more profitable.

As a result, Cho said, Korean shops are now able to pay their workers an average of $5 to $6 per hour, compared to about $2 an hour for the Vietnamese.

“They’re refugees, they’re new in this country,” Cho said of the Vietnamese. “Two dollars is so much higher than what they would have got in their country. They’re willing to work for those wages. Koreans are no longer.”

Unlike the Vietnamese, who often used their entire savings to buy their way out of their country and arrive here speaking little English, many Koreans spent years saving, studying and preparing to immigrate, said Pham, the Vietnamese Chamber of Commerce president. “They are immigrants. They are not refugees,” he said.