We never knew Chinese immigrants can be so valuable says Spain

Chinese New Year in Spain

When **** Jia Jia’s parents first moved to Barcelona from China in the 1990s, they had no working permit and spoke no Spanish. The family ate eggs to survive. Her mother and father worked 12-hour a day at a Chinese restaurant. After five years, they bought a restaurant by compounding their own money and money borrowed from relatives. She and her brother washed the dishes. Her parents slept on a mattress in the bathroom of their cramped apartment so that the children could study at night in the other room.

Today, crisis-laden Spain has the second worst unemployment rate in Europe (after Greece) at 25 percent, with the Spanish youth particular hit hard with 53 percent. That effectively means more than half of the country’s young people are jobless. Ms. ****, 24, who studied economics at Harvard on a one-year fellowship, however, have four jobs: teaching Mandarin, advising Chinese investors in Spain, running a publishing house and writing romantic novels. As a university student, she sends home €1,000, or about US$1,300, every month to support her parents.

Her family’s story is telling of the ways many of Spain’s 170,000 Chinese immigrants have managed not only to weather a tough economy but thrive, aided by intense labor and a strong Confucian model of family loyalty, at a time joblessness and budget cuts to government services left many other Spaniards struggling.

“The Chinese family is less dependent on the government. For Chinese people who lived through hardship back home, working 16-hour a day is nothing, and that has made us more resilient during the crisis,” Ms **** said.

The Spanish government itself seems to have recognized the importance of this success. So determined is it to attract Chinese immigrants that in November last year it passed a law offering residency permits to foreigners who buy homes worth more than €160,000, with the specific aim of drawing Chinese and Russian investment, lawmakers said.

As hard-hit Spaniards struggle to keep both their jobs and their homes, Spain’s Chinese immigrants in Barcelona and Madrid are starting new businesses and buying distressed properties from the bursting of Spain’s housing bubble. Of the 8,613 foreigners who started businesses in the past 10 months, 30 percent, or 2,569 of them, were Chinese, according to the National Federation of Self-Employed Workers.

That is a 10 times economic amplifying magnitude considering that the Chinese only accounted for 3 percent of Spain’s foreigners or 0.3 percent of the total Spanish population.

More than half of the young people in Spain now jobless

The crisis in Spain was triggered by the real estate meltdown and building market crash in 2008. From 1996 to 2007, Spain was booming, and the country saw its real estate prices rose by 200 percent. At that time, property was considered the best speculative investment, and Spaniards frenziedly took out mortgage loans to buy homes. Spanish indebtedness tripled in less than 10 years, the construction industry borrowed heavily for expansion, and private debt hit $832 billion.

In 2008, the global financial crisis devastated Spain and the housing market crashed. As of 2012, real estate prices have fallen 25 percent from their peak in 2008, but that isn’t over yet. “If they’re going to show the same kind of behavior that US and UK house prices did, they’d have to fall another 20 or 25 per cent,” said Gayle Allard, of the IE Business School in Madrid. “But it looks like Spain’s bubble was bigger, so prices would have to fall even further than that.”

Housing sales plummeted, and ghost towns surfaced all over. For instance, the town of Valdeluz was constructed for 30,000 people, but had a population of only 700 people in 2011. The €1.1 billion Ciudad Real Central Airport, Castellón-Costa Azahar Airport and others built during the boom time, are now ghost airports.

Spaniards looking at poster detailing the benefits of learning Mandarin

Many Spanish households now find themselves “under water” as their property worth far less than the loans. This led to mass defaults and disruption to the Spanish banking system. President of the Chambers of Commerce of Spain, Javier Gómez Navarro, said financial entities never recover more than 30 percent of the debt owed to the housing sector.

The gigantic bad debts no doubt crippled Spanish banks. As of June 2012, Spain’s public debt stood at 72.1 percent of GDP, still less that the Euro-zone average of 88 percent, but if Spain uses the €100 billion credit line required to bailout its banks, the debt will approach 90 percent of GDP. To avoid this the EU has pledged to lend to banks directly, although the Spanish government must guarantee this lending.

To make matters worse, Spain has a two-tiered work force where privileged labor gets wage increases as unprivileged labor is thrown out of work. The privileged two-thirds have “armor-clad permanent contracts” that shields them from the ravages of recession while the non-privileged, generally temporary workers, are dismissed. Rigid labor laws prevent wage reductions, encouraging dismissals instead. Dismissals are costly and companies are hesitant to hire new workers prompting many to seek jobs abroad.

Lost generation? Spanish youth fast losing hope

During the boom decade, Spain’s unit labor cost rose 40 percent relative to German unit labor cost changes making Spanish labor uncompetitive at the current wage scale. Its powerful unions organized a general strike whenever labor privileges are threatened. When the crisis hit, companies laid off employees en masses and refused further hire. As a result, Spain’s youngest generation, who is considered the most educated that the country has ever had, faces the greatest rate of unemployment in Europe.

People are beginning to fear the transformation of this generation into one referred to as a “Lost Generation” in which they are constantly looking for work and in the future end up being closed off from good careers. The higher this number rises, the more strain it will put on the Spanish economy.

As the economy falters, Chinese immigrants in Spain are opening new businesses and creating jobs. Not only that, they are providing relief to the badly-hit Spanish housing market. InfoChina Gestion, a real estate company based in Madrid that focuses on Chinese investors, said the number of houses sold for €70,000 to €100,000 to Chinese nearly doubled last year. Mr. House, a real estate company in Madrid, said many of its customers are now Chinese, most of whom paid at least 80 percent in cash.

Spain’s Chinese communities thrive in tough economy vs immigrants from other nations

The types of work many Chinese immigrants gravitate toward helps explain their success as much as their work ethic. In a time of economic crisis, ubiquitous low-margin Chinese-owned bazaars, hairdressers and supermarkets have become a lure for cost-conscious Spanish consumers.

“If it wasn’t for the Chinese shops, it would be harder to scrape by,” said Ester Maduerga, 30, a saleswoman at a sports shoe store, as she scanned the notepads, leather belts and plastic alligators at One Hundred and More, a Chinese-owned bazaar.

Xi Li He, 26, the bazaar’s manager and cashier, said the businesses is flourishing, in part because he had reduced prices by importing inexpensive goods from China. That kind of success by Chinese immigrants has provided a beachhead of sorts for further investment from China that has pumped some life into an otherwise moribund Spanish economy.

Isla Ramos Chaves, an executive at the Chinese computer maker Lenovo, said that even with the crisis, Spain – the fourth-largest economy in the euro zone – remained a market that Chinese companies were eager to tap. She added that Chinese multinationals in Spain were proving robust, in part because they were supported by a huge domestic market back home. Chinese companies expand while most Spanish businesses are scaling back their operations.

Executives at Haier, the Chinese-owned appliance maker, said the economic crisis, rather than being a deterrent, had provided an opportunity, as Spaniards were willing to consider competitively priced washing machines and air-conditioners, even if their brands were less well known. “I am not sure we would have been as successful if the market was stable and growing,” said Santiago Belenguer, the general manager of Haier’s Spanish operations.

The success of Chinese immigrants to Spain has not spawned the kind of anti-immigrant backlash seen in some hard-pressed parts of Europe like Greece. Immigration experts said Spain’s relatively welcoming attitude reflected its new openness after the repressive years of Franco’s dictatorship (1939-1975), when the country was a nation of emigration. Since the crisis, the return of thousands of Latin American immigrants to their home countries from Spain has also relieved pressure on the work force.

That however, does not mean everyone has championed the success of the Chinese. In October, the police arrested 80 people in a nationwide crackdown on Chinese criminal triad gangs engaged in money-laundering and tax evasion. The police said the low price of Chinese products was being abetted by some importers not declaring shipments from China, thereby avoiding taxes.

In Barcelona, Spaniard Jose Rodriguez, the owner of A Porta Galega, a traditional tapas cafe in the hip neighborhood of Eixample, said cut-rate prices for everything from beer to shampoo at Chinese-owned shops are beginning to make it impossible for Spaniards to compete. For instance, there are at least a dozen Chinese-owned tapas bars scattering along his block. Still, he added, he would sell his own restaurant to Chinese buyers “for the right price.”

As the crisis mounts, Chinese merchants have faced accusations from local businesspeople that they cheat on taxes to compete unfairly. Spain’s 171,000 legal Chinese residents are a rare case of economic success in a country that is in its fifth year of economic crisis and facing unemployment above 25 percent. Even though politicians and mainstream commentators have largely avoided stereotyping Chinese entrepreneurs, concerns of backlashes persist.

Spain’s economy experienced positive growth since last year

Racist incidents in Spain however, are nowhere near the levels seen lately in Greece as a consequence of the rise of the neo-**** Golden Dawn party. Instead, Arabic and Romanian migrants are the most-frequent victims in Spain. But as in Italy, the Chinese community in Spain has faced growing criticism from local merchants during the economic crisis as Chinese traders began taking market share from local shopkeepers and traditional textile businesses.

In Madrid, Barcelona, Milan and Rome, Chinese stores have replaced those run by locals in many neighborhoods. Spain’s largest association of self-employed workers, ATA, estimates that Chinese nationals account for almost half of all foreign residents who became self-employed in the country in 2011. Their numbers have grown 74 percent since 2008, and the number of Chinese nationals residing in Spain has quintupled in the past decade.

In Spain’s depressed real-estate market, housing deals conducted by Chinese nationals almost doubled last year from 2009, leading to some Spaniards accusing them of taking advantage of the crisis to buy in cheap.

Spaniard José Antonio Mateu, whose family-owned company leases warehouses to Chinese businesses in Cobo Calleja, said he was concerned that potential hostility toward the Chinese would hurt his business. “Of all the foreign communities in Spain, there is nobody more trustworthy and harder-working,” he said.

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Source: Info4TV/AfricaMetro

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