Monday, Jul. 25, 1988

Do-It-Yourself Financing

By Christine Gorman

When Do Van Tron escaped from Saigon to San Jose in 1982, no bank would take a chance on his business prospects. Do lacked a credit history, had no money and spoke no English. Today, however, the 31-year-old refugee publishes a Vietnamese-language newspaper, tools around town in a silver Jaguar and has started plans to build a shopping center. The reasons for his rapid rise: long hours of work, plenty of thrift and $4,800 in start-up capital from an unconventional source. Like thousands of other immigrants, the budding entrepreneur tapped an ethnic loan club for his seed money.

Such clubs amount to informal, small-scale banks organized primarily by immigrants to help one another. Though the loan clubs are not legally prohibited, they operate outside regular U.S. banking laws and safeguards. Even so, they have nurtured fledgling businesses from the barrio to Chinatown in cities as diverse as Houston, Los Angeles, Chicago and New York. With loans ranging from a few hundred dollars to $20,000 or more, Vietnamese hui (associations) in Texas played a crucial role in reviving the moribund shrimping industry in the Gulf of Mexico by financing the purchase of dozens of boats. An estimated $10 million in Korean keh (contracts) has financed the purchase of houses, restaurants and small grocery stores in the San Francisco Bay Area. "This is Horatio Alger all over," says David W. Engstrom, a research associate at the University of Chicago who studies immigrant merchants. Thanks to loan clubs, he adds, "most of these people open their businesses in three to four months after arriving here."

Most of the clubs operate on the same basic principle: a group of people, often ten or 20, contribute the same amount of money each month to a kitty, which is immediately loaned to one of them. All club members, including the borrower, continue to make the monthly payments until everyone has received the purse once. By that time, each participant has borrowed and repaid the entire loan. The organizer, who is typically female, keeps a record of payments and vouches for newcomers until the club disbands. "It's like Weight Watchers," says Ivan Light, a professor of sociology at the University of California, Los Angeles. "If you want to be in the group, you have to save money."

In one type of West Indian su-su (among us) in Brooklyn, for example, ten people contribute $200 a month for ten months. Though many clubs assign the pool by drawing lots, each $2,000 collection in this kind of su-su goes to the person who everyone agrees needs it most urgently. After ten rounds, each member has contributed ten $200 installments and received one lump-sum payment of $2,000.

In many of the more elaborate loan clubs, participants bid for the privilege of taking the pool. Whoever offers the highest interest rate wins, although each member can take the pot only once. The entire interest payment is immediately deducted from the fund and paid out to the other members. Rates can run as high as 20%, vs. about 14% for an unsecured bank loan. But the loan club may be an immigrant's only source of funds. "I would have spent months convincing a bank that my expansion plan made sense," says a New York City printer from Jamaica who wanted to add a color-lithography machine to his business. Instead, he borrowed $18,000 at 15% interest from a loan club to buy the equipment. As a result, his annual revenues have more than doubled, from $27,000 in 1986 to $59,000 last year.

The loan clubs are descendants of communal arrangements that originated centuries ago. In many countries, groups of people have long pooled their cash to allow members to bury their dead or to celebrate marriages. Modern-day clubs retain much of that social flavor. In a 1981-83 study of 50 people in Mexican and Mexican-American tandas (turns), Carlos Velez-Ibanez, an anthropologist at the University of Arizona, found that 17% cited family obligations such as weddings, baptisms and funerals as reasons for their participation. Each gathering of a keh, notes Sungsoo Kim, president of the Korean-American Small Business Center of New York, is a "great party with food and drinks and everything." Says Aurora Lares, who owns a Mexican restaurant with her brother in Santa Monica: "A tanda is for helping people and for making good friends."

No hui, tanda or keh can be successful without a great deal of trust. Individual members may not be acquainted with one another, but they must all know and believe in the organizer, called a keh-ju in Korean or a chu-hui in Vietnamese. She covers any defaults. As compensation, the first pool is traditionally hers; in a bidding club, she receives it interest-free. Even so, the organizer benefits from strong community ties. When a new Chinese immigrant asks to join a hui, for example, "it does not take much effort to establish his life history," says Tom Tai, director of the Chinese Business Association in Queens, N.Y. As a result, notes Chicago's Engstrom, the vast majority of loan clubs prove quite solid. Says he: "No one wants to risk their reputation in the community by refusal to pay."

People who have lost money in a loan club rarely complain to the police, but that may be changing. Last year 23 South Korean immigrants filed a class- action fraud suit in California to recover more than $407,000 lost in four keh organized by Soon Duk Cabling. Court documents show that Cabling partly financed several small businesses in San Francisco with money from the keh. When her stores started losing money and word of her financial problems spread, the loan clubs disintegrated. If the court decides to protect the keh deposits by ordering Cabling to pay up, the case, which is expected to come to trial later this summer, could set an important precedent.

Whatever the outcome, hard-pressed immigrants will go on joining ethnic loan clubs. For many, the informal banks represent a leg up on the American dream. Someday the language and cultural barriers that hold back immigrants may start to crumble. Until then, the loan clubs will no doubtprosper.

With reporting by Raji Samghabadi/ New York and Dennis Wyss/ San Francisco.

NEW BLOSSOM IN VALLEY OF THE GOLDEN FLOWER

Pat Dillon

Movie Director Oliver Stone has replaced baseball legend Joe DiMaggio as a celebrity guest. An econo Van, belonging to the new owners has taken the spot of the former owner’s burgundy Jaguar.

Otherwise, the place once the South Bay’s preeminent restaurant looks as it has since it opened 34 years ago. The name is La Seine now and no longer Paolo’s, which has chased business farther downtown in San Jose.

But more than a change in the name, it is an event, the passing of an institution from one generation of immigrant to another.

You meet a sophisticated woman by, the name of Kim Nguyen, the manager. She is Vietnamese, well educated, fluent in French and English. She’s worked in Paris, London, New York, San Francisco. The term “boat person” doesn’t seem to apply.

But 17 years ago, when she, her brother, two sisters and parents climbed into a boat to escape Saigon, “there were 1,000 people in a space for perhaps 200” she recalled. “If you moved, you gave up your space. I looked so bad people mistook me for my mother’s mother.”

She steered me into a dining room, into the den that the former owner, Giacchino Paolo Aiello, an Italian immigrant who changed his name to Jack Allen, presided over as a personal trading post of business influence and political gossip.

Do Van Tron, a 32 year-old entrepreneur, owns the place now. The cuisine has gone from sophisticated Intalian to sophisticated French-Vietnamese.

He laughed when I told him his restaurant was once a drive-in burger joint.

“We Vietnamese call this Valley of the Golden Flower,” he said during a sumptuous dinner that included roast quail and braised sea bass. “When you look at the lights at night, it looks like a field of golden flowers.”

A new generation. A new blossoming of this valley.

Do Van Tron is one of 18 children who grew up in Pleiku, in Vietnam’s Central Highlands. His father was a prosperous businessman and, therefore, a declared enemy of the communists, who took over in 1975.

“We tried 13 times to escape,” he said. “Finally, in 1981, I and two younger brothers escaped to Thailand in a small boat.”

The details of his escape, including a shootout with Thai pirates, Tron hopes to make into a motion picture.

“I want to tell the story of many Vietnamese and the terrible things they went through to get here,” he said.

His Friend Oliver Stone also wants to try. He was in San Jose recently casting for a movie project based on the stories of Vietnamese refugees. It is scheduled to be shot in Thailand late this year or early next.

“One day, I will make this movie in Vietnam,” Tron said. “That is my dream. To truly tell of these painful experiences, it can only be made  by Vietnamese.”

In the meantime, he’s helped a dozen family members relocate. He’s written two books, founded a Vietnamese language monthly newspaper with a circulation of 10,000, founded the Vietnamese Yellow Pages with 70,000 copies in circulation and produces a Vietnamese-language television news show on Channel 38.

“This restaurant will be first class,” he vowed quitely. “ It will be the business behind all the others. It will be a success.”

There was no disguising his determination.

To wish him well was all that was due. To say “good luck” would have been trivial.

S.J.’s media mogul in a strange land

T.T.NHU

Driving along the freeway while fiddling with the radio dial, I found a Vietnamese music station at 1500 AM (KSJX), with schmaltzy ballads interrupted by high-pitched frenetic advertisements. I’ve also been watching Vietnamese television news on KCNS (Ch.38) from 6 to 6:30 p.m. and picking up “Yeu”, a magazine filled with sentimental stories and fattened by ads.

            I recently met the man behind this mini-communications empire at his new Franco-Vietnamese restaurant, La Seine, which replaced Paolo’s on Santa Clara. The ubiquitous Do Van Tron also stages numerous literary, cultural and musical events, along with beauty pageants and fashion shows.

            Tron is the 11^th of 18 children, which is not considered an unusually large family in Vietnam. All of his life, he’s wanted to be somewhere else. Now 32, he’s been on the road since he was 16. His father was a merchant in Pleiku, which is in the highlands of Vietnam and was the first city to fall during the fateful spring in 1975. After 13 attempts, Tron finally escaped from Vietnam. Although the ultimate journey was successful, it was so harrowing that he was propelled into a frenzy of work to put distance between that nightmare and his hard-woon new life.

            Penniless, he arrived with two younger brothers in Orange County in 1982. He supported himself by writing for various publications, but quickly realized that a fortune could be made catering exclusively in the Vietnamese community. One of his first publications was a “Guide for Newcomers” written for refugees still in camps in Asia, which, he admits, contained a lot of misinformation. Unfamiliarity with America did not deter Tron from publishing the first Vietnamese Yellow Pages in San Jose in 1986. Sleeping out of his car, he solicited advertising, designed, printed and distributed them himself.

            Now he drives a Jaguar XJ6, owns real estate and business in multiplying. His only failure so far was not being able to promote cai luong, a Vietnamese version of country and western opera AE- a twangy, down home music that I find inexplicably wonderful.

            Tron’s enterprises are build on an extremely romantic notion of love, which can be said in 50 different ways in Vietnamese. Like Danielle Steel, he hasn’t gone broke underestimating his clientele’s sentimental taste.

            Quiet and soft-spoken, he is an anomaly in the Vietnamese community. Because of his financial success, he is something labelled as a communist dupe since he makes no secret of his desire to eventually live and work in Vietnam. But Tron manages to make a profit without antagonizing his rivals. Having secrets is essential for survival in the Vietnamese community, and Tron is frank without being especially revealing about what he does.

            Although he considers himself primarily a literary and artistic person whose entrepreneurial talents are secondary, his talent for making money taking over. “I had to get out of Vietnam because the horizons were too narrow”, he says, his voice hushed and urgent. “I needed to experience the outside world. In Vietnam everthing is handicapped by poverty and political oppression, but here we work like machines.”

            Tron’s American adventure – perspiration, inspiration and dedication – is emblematic of the immigrant success story. He came, he made it, but he’s still restless. It is the enigma of the exile who had to leave home and is working his way back to spiritual fulfilment.

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