Beyond Ethnic Enclaves: Location Strategies of Chinese Producer Service Firms in Los Angeles

Abstract

Ethnic enclaves are often not only the main residential areas for ethnic populations but also the prime locations for their businesses. As more and more ethnic enterprises locate outside such enclaves, the spatial pattern of ethnic business becomes more complex. To understand the spatial pattern of ethnic business, I argue that we need to go beyond treating “ethnic” as the only adjective. Drawing from the literature on industrial networks and territorial agglomeration, I examine the location patterns of ethnic producer services and their interfirm transaction networks. Chinese-owned firms in three types of producer services of Los Angeles County were selected: accounting, banking, and computer distribution. I collected information on networks and locations through surveys, interviews, and directories. This research found that location strategies are extremely important for ethnic entrepreneurs to exploit their market niches in all three sectors. While Chinese firms show markedly different spatial patterns from their non-Chinese counterparts, each type of producer service also differs from the others in spatial pattern. Accounting offices and bank branches concentrate in the Chinese central business district because of their Chinese-client-oriented network. A number of larger bank headquarters find downtown Los Angeles a favorable location because they are seeking international recognition and closer integration with mainstream financial institutions. Computer firms locate at the fringe of Chinese-concentrated areas and cluster with other Chinese computer distributors to participate in a product pool so that parts can be exchanged faster. I conclude that the spatial organization of ethnic business needs to be understood as the outcome of interaction between cultural and industrial identities of enterprises.ethnic enclaves,