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Black Products. Black Shoppers. Black Workers. But Who Owns the Store?

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The crowd was growing impatient as Crystal Holmes fumbled with the keys to the store.

Dozens of people were swarming the street around Western Beauty Supply, the Chicago shop where Ms. Holmes works. She had persuaded some of them to let her open the store so they could rob it without breaking the windows.

“She’s taking too long,” someone yelled. “Let’s go in and get it.”

Western Beauty Supply sells products like wigs, hair extensions and combs mostly to Black women. Most of the employees, like Ms. Holmes, are also Black, but the owner is a Korean-American man, Yong Sup Na.

When a few young men appeared outside the store earlier that evening in May, Mr. Na went out to speak with them. He offered some of them cash, and they walked away. At that point, Mr. Na told Ms. Holmes that he felt confident his business was safe. “They are not going to break into the store,” he told her.

A few minutes later, though, a larger group showed up. A woman snatched Mr. Na’s keys, but Ms. Holmes persuaded her to give them back. Then she ordered Mr. Na, her boss, to leave. “You don’t know what could happen,” she told him.

Even as Ms. Holmes tried to save the store from ruin that evening, when protests and looting followed the police killing of George Floyd, she understood what was causing the turmoil roiling Chicago and dozens of other cities.

“I understand where the rage is coming from,” Ms. Holmes, 40, said in an interview. “We don’t have any businesses in the community and we are getting killed by the police and killing each other, and we are just getting tired.”

In the years she has spent working for Mr. Na, customers have constantly told her that she should open her own store. But she has watched some Black women struggle as owners in the industry, and her priority has been keeping a steady job to support her family.

Outside the store, people in the crowd kept pushing for Ms. Holmes to let them in. But she couldn’t get the keys into the lock. Her hands were shaking too much.

Mr. Na, who is 65, grew up in South Korea in a home with an outhouse. He watched television by standing outside a neighbor’s window and peering in at the set. Mr. Na was in his late 20s when he arrived in the United States. He knew only one person, a friend from his village who had moved to Chicago.

Not religious but seeking to meet other immigrants, Mr. Na soon joined a Korean church. A few years later, a friend from the church bought a shoe store on Chicago’s South Side from a white man who wanted out.

“This man was upset that the Black people were moving into the neighborhood,” Mr. Na recalled in an interview. “Koreans didn’t care. This was an area that they could afford.”

ImageMr. Na with his daughter Jenny in 1994. His first store once belonged to a white man who wanted to move out of a diversifying neighborhood.
Credit…via Sandra Na

With no access to a bank loan, Mr. Na bought the store from his friend by using proceeds from the shoe sales. He paid $5,000 a month for 13 months. The business was straightforward.

“You were buying cheaply made goods at a low cost from a wholesaler,” Mr. Na said. “The customers were not snobby.” He also owned businesses that sold pagers, cellphones and clothing. The endeavors allowed him to pay for private school and then college for his two daughters.

Over the years, other Korean retailers told Mr. Na that beauty sales were a steady proposition, even in recessions. In 2007, he started his first beauty shop. He opened Western Beauty in 2014, on the city’s West Side, and started Modern Beauty in the South Side neighborhood of Bronzeville two years later.

The portion of the beauty industry that caters to Black women generates about $4 billion in sales a year. Much of those sales are rung up in small beauty supply stores, which are ubiquitous in predominantly Black neighborhoods. The stores seem like a natural answer to the numerous calls from policymakers and corporate America to create more Black-owned businesses after protests over systemic racism broke out this spring.

Yet fewer than 10 percent are owned by Black women, said Tiffany Gill, a history professor at Rutgers University. Instead, many of them are owned by Korean immigrants. Korean Americans also lead some of the largest wholesale distributors that import the hair products from China.

“These are two historically marginalized groups fighting over the same small slice of pie when there is so much more of the pie that neither has access to,” said Ms. Gill, the author of the book “Beauty Shop Politics: African-American Women’s Activism in the Beauty Industry.”

For years, Mr. Na worked seven days a week, from 7 a.m. to 9 p.m. His daughter Sandra, 33, remembers one night when her father didn’t come home. He had been rushed into emergency surgery to remove a shard of glass from his face after a scuffle with someone who tried to rob the store.

The Na family lived for a time in a Latino neighborhood and eventually moved to a largely white suburb north of the city. Ms. Na said her parents had insisted that she spend her summers learning Korean, working as a tutor and taking academic enrichment classes. Ms. Na and her sister, Jenny, visited the store only rarely when they were growing up and played with the register.

She said her father never talked about the “social and racial impacts” as a retailer on the South Side. Her father came from a generation that experienced poverty and hardships, Ms. Na said, and didn’t have the time to focus on much else except taking care of his family, which included sending money to his siblings back in South Korea.

As part of a younger generation faced with fewer of these pressures, Ms. Na said, she has had opportunities to think about issues of race from a different perspective.

“But everything for my dad was about survival,” Ms. Na said.

Credit…Danielle Scruggs for The New York Times

Crystal Holmes grew up a world away from South Korea, in Chicago’s East Side. But like Mr. Na, she faced challenges from the start. She was raised mostly by her grandmother until she was a teenager.

“I knew I wanted better,” she said. “I always said I would never put my kids in the situation I was in.”

Ms. Holmes, a mother of two, worked for a time for a fried chicken chain, but switched to beauty supply stores when she found that many pay every week.

At the first store she worked in, the owner, a Korean man, was so impressed with her sales skills that he said he would help her open a store one day, Ms. Holmes said.

Then things soured. The owner accused her of stealing from him after he discovered the register short of cash, she said. She told him how one employee, who was also Korean, had insisted on taking turns on the register and had a gambling problem. But the owner didn’t believe her.

“I just walked out of the store,” she said. (A security tape later showed that she did not steal anything, according to Ms. Holmes.)

Many beauty supply stores have a reputation for being demeaning places for the Black women who shop in them. Ms. Holmes said she had been in numerous stores where employees followed customers or required them to check their bags at the door.

Credit…Danielle Scruggs for The New York Times
Credit…Danielle Scruggs for The New York Times

It’s not just small retailers. Until June, Walmart kept its Black beauty products in locked display cases. “You can’t treat everyone like a thief,” Ms. Holmes said.

Mr. Na’s stores are different, she said. Women are allowed to shop without being watched. She likes to walk the floor talking to the customers about their hair and offering them advice.

Ms. Holmes sometimes accompanies Mr. Na on trips to the wholesaler to pick up inventory. She is usually the only Black person in the warehouse. Once, she encountered another Black woman from a beauty shop in Wisconsin.

“I said, ‘What the hell are you doing here?’” Ms. Holmes recalled. “And she said, ‘What the hell are you doing here?’”

Still, there is tension. Some customers ask Ms. Holmes why she works so hard for a Korean owner. One woman said she was like a “slave.”

Ms. Holmes, who earns $14 an hour, was able to pay for three years of her son’s college tuition but could not afford his final year. Her son, now 26, plans to go back to school. But he lost his job at a downtown restaurant during the pandemic and has a baby on the way, so college may be further delayed.

Ms. Holmes also hopes her 20-year-old daughter, who has a 9-month-old son, can attend college eventually.

Mr. Na has been encouraging Ms. Holmes to start her own business one day and offering her advice on how to get started, like how much money she will need to save.

For now, Ms. Holmes appreciates the small perks of the job. How on a good day, the store can feel like a gathering place where women talk about their lives and swap beauty tips.

On many Sundays, Ms. Holmes opens and closes the store on her own. “Some customers see me by myself and say: ‘Where are the Koreans? Are they in back?’” When she explains that she runs the store on Sundays, “they are shocked,” she said.

“It’s mind-blowing to them that a Black woman is in charge.”

Credit…Haruka Sakaguchi for The New York Times

Sandra Na has also wondered why Koreans dominate the sale of Black women’s hair products.

She acknowledges that Korean immigrant communities can be “insular,” and that her father, who speaks limited English, prefers to do business and associate with other Koreans because it is easier.

But other forces are also at play. Ms. Na said her father had been shaped by his parents’ experience living through the Japanese occupation of Korea and then the Korean War. That left him with a shared feeling of grief and loss, which Ms. Na said is often referred to as Han.

It helps explain, she said, why her father typically hires Korean managers in stores where most of the employees are Black.

“Han creates a level of trust among Koreans,” Ms. Na said. “That trust goes back decades.”

Since the protests, many business leaders and public figures have sought to address racial disparities with more investment. Square, the payments company led by Jack Dorsey, the billionaire founder of Twitter, has pledged $100 million to financial firms supporting Black communities. Senator Elizabeth Warren, Democrat of Massachusetts, has proposed a $7 billion federal fund for Black entrepreneurs.

But the struggles of Black women in the beauty supply industry show that some barriers to success are more complicated.

In interviews this summer, Black women who own beauty shops in Dallas, Buffalo and Sacramento said they were consistently denied accounts with major Korean-owned suppliers. One of the women said that as soon as she had sent over a copy of her driver’s license, the supplier stopped returning her calls.

These rejections, the women said, prevent them from stocking the most popular hairpieces, forcing their customers to shop elsewhere.

While Mr. Na is a retailer, not a distributor, he said he was aware of some of the challenges Black women proprietors faced in obtaining products.

He said Black owners are often unable to rent or buy stores that are physically large enough to allow them to work with the big suppliers.

“It has nothing to do with racism,” Mr. Na said. He acknowledged that if Black women gained a larger footing in the beauty supply industry they could seriously challenge Korean businesses.

“It is competition,” Mr. Na said. “Eat or be eaten.”

Credit…Danielle Scruggs for The New York Times

In the end, the group didn’t wait for Ms. Holmes to let it in. The looters smashed the window and barged inside.

Mr. Na walked across the street, sat in his car and looked on as his store was ransacked.

Like many Americans, Mr. Na had watched the footage of a Minneapolis police officer kneeling on Mr. Floyd’s neck in horror. He wondered if the unrest would ever stop and whether he should bother to rebuild.

“I feel like racism is something that will never go away,” he said.

After the looting, Ms. Holmes returned to the store to clean up. Some people from the neighborhood were surprised to see her helping Mr. Na. A few customers were angry she would not let them take some of the products that had been knocked off the shelves.

“Why are you on their side?” she remembers one Black person asking her. “Why aren’t you riding with us?”

Ms. Holmes said some people were too quick to judge. “They are on the outside looking in. They don’t know the person I work for. He’s a good man.”

Credit…Sandra Na

When Sandra Na drove to Chicago from Brooklyn, where she lives with her husband, she was struck by the level of destruction at Western Beauty Supply and Modern Beauty. A cash register that contained no money was smashed, the glass in the display case had been shattered, and dozens of bottles of hair solutions had been dumped on the floor.

She believes most of the looters were seizing on the chaos wrought by the protests over the killing of Mr. Floyd to steal desirable products, she said. A range of businesses across the city were destroyed that day, including pawnshops, grocery stores and Walmarts. Some of the damaged stores were Black owned.

Ms. Holmes said she agreed that the crowd wanted only to steal merchandise from Mr. Na — not to make a statement that his store was not Black owned.

Still, Ms. Na said she recognized that some people might begrudge small businesses like her father’s stores. “I have a hard time thinking there isn’t resentment there,” she said. “You see an outside ethnic group capitalizing on your people.”

As painful as it was to see her father’s shops destroyed, Ms. Na said she was heartened that the broader protests had spurred efforts to address systemic racism. “The attention is there,” she said.

Video

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The moments when a crowd broke into Modern Beauty in Chicago.

Mr. Na was able to reopen his business with insurance money, government grants and more than $94,000 in donations from a GoFundMe page his daughters set up. In August, though, he temporarily boarded up his stores after a police shooting in Chicago set off a fresh wave of protests and looting.

Back at work, Ms. Holmes said a few customers had told her again that she should open her own store.

She’s hoping Mr. Na will help her get started. Mr. Na, who is planning to retire in the next few years, said he had been considering ways he could do so.

“One day I’ll have a store, and you come shop with me,” Ms. Holmes tells customers. “Just wait.”

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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