If you want to join Britain’s thriving cocaine smuggling industry, Arctotherium notes, you have to be Albanian:
There’s no a priori reason why this should be the case. Albanians do not have a racial, cultural, geographic or political affinity for Colombian narcotics. A reasonable and informed observer in 2000 would not have predicted that they would come to dominate the industry. Yet such an obsever would have predicted that some ethnic minority would because organized crime is almost always organized along ethnic lines. This is true even when the ethnic minority is less criminal on average than society at large, as with the Jewish mafia in early 20th century America.
This phenomenon isn’t unique to criminal enterprises. Chaldeans control 90% of the grocery stores in Detroit. 40% of the truck drivers in California are Sikh, and about a third of US Sikhs are truck drivers. About 95% of the Dunkin’ Donuts stores in Chicago and the Midwest are owned by Indians, mostly Gujarati Patels. In New England and New York, 60% of Dunkin’ Donuts stores are operated by Portuguese immigrants. 90% of the liquor stores in Baltimore are owned by Koreans.
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The key point is that immigration fractures national markets. Once a niche is taken over, outsiders can no longer compete in that niche.
There is still competition within ethnic groups inside the niches, but these groups are tiny fractions of the population and often have informal institutions and kinship structures that allow them to act as cartels.
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Cambodians run about 80% of the donut shops in Southern California (despite being only 0.17% of the state’s population). The Cambodian donut empire got its start with refugee Ted Ngoy, who first learned the trade thanks to an affirmative action program to increase minority hiring at Winchell’s Donuts. The Cambodians were able to completely dominate this traditional American culinary sector through a mix of extended family credit and the use of tong tines, an informal lending club.
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This ability to borrow money cheaply made financing much easier for them than for their American competitors. Once the business was purchased, Cambodians could also keep operating costs down through informal employment of family labor, allowing them to get around expensive income taxes, not to mention labor laws and regulations — including ones around child labor.
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Gujaratis, mostly with the surname Patel, run an estimated 42% of the hotels and motels in the United States — despite being only 0.3% of the US population (and an even lower percentage back in 1999 when this was first noticed). Their dominance rises to 80–90% of motels in small town America. The Patel motel cartel got its start with an illegal immigrant, Kanjibhai Desai, in the 1940s. The initial attraction for Patels was that motel ownership did not require English proficiency, and as with the Cambodians, Patel motel owners were able to use informal ethnic loan networks and immigrant family labor brought in via family reunification to undercut their American competitors. Patels now totally dominate the hospitality industry in the US outside of the big chains.
Over half the nail salons in the US are run by Vietnamese, which rises to more than 80% in California (they are only 0.7% of the US population). Just like the Patels and the Cambodians, Vietnamese immigrants were able to finance nail salons more easily than American competitors because they had access to below-market credit from family and friends.
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After the ethnic network was established, Vietnamese owners gained another advantage over non-Vietnamese competitors: better access to workers and training. The language barrier is part of this; once most salon owners spoke primarily Vietnamese, prospective workers had to as well, and cosmetology schools began teaching courses in Vietnamese rather than English.
Is “tong tines” a real term or a good joke?
When I visited Denver several decades ago, I walked down the main street looking for a Denver shirt. I noticed that all the stores had similar (but not the same) merchandise.
I decided on something that I wanted, but the store that I happened to be standing in didn’t have that exact item. The Korean lady in charge of that store asked what I wanted, and walked across and down the street to another store, got it and came back.
That’s when I figured out that every one of those stores were not just owned by the same immigrant ethnic group, but by the same extended family. All employees were family members.