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For businesses in Manhattan's Chinatown, inflation is a tough economic hurdle

Many businesses have relied on high sales volume to make a profit, but higher costs for wholesale goods and dwindling inventory because of supply chain disruptions are forcing them to raise prices.

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Alice Liu, a second-generation owner of Grand Tea and Imports.
Alice Liu, a second-generation owner of Grand Tea and Imports. Camille Petersen for NPR

Inside Grand Tea and Imports, a cultural store in Manhattan's Chinatown, there are glittering floor-to-ceiling shelves of tea, incense and goods for Buddhist holidays — such as paper shoes left at ancestors' tombs during the annual grave-sweeping festival.

"We usually sell this at $3.99. It's increased a little to $6 now," says Alice Liu, a second-generation owner of Grand Tea and Imports.

Though inflation is touching every part of the economy, it has created a particularly difficult puzzle for businesses in Chinatown.

Many of them rely on selling a lot, at a low price, to make a profit. But buying and shipping inventory costs much more now, so stores like Grand Tea and Imports have had to raise prices.

"You can't rely on the old model anymore," says Alice Liu.

The store has had to put up a sign by the register telling customers it can't offer discounts or negotiate on prices anymore, because the cost of doing business is just too high.

Storefronts in Manhattan's Chinatown.
Storefronts in Manhattan's Chinatown. Camille Petersen for NPR

Part of the challenge for the neighborhood's businesses is that many of them source their products from Asia. COVID-19 lockdowns and closed ports there are limiting supplies and delaying shipments, which increases prices.

Liu says she's found creative ways to obtain inventory, such as asking her sister, Karen, to bring suitcases of tea and incense from Hong Kong when she visits.

"It's just more reliable, because you know when Karen will come and when she'll arrive. Whereas like with the mail, we mailed a bunch of tea from China a month and a half ago, and we're still waiting for it."

Liu says what's especially frustrating is that supply is so hard to get, just as demand has finally started to return.

At Golden Diner, a restaurant in Chinatown, owner Sam Yoo says he's had to raise prices too. From canola oil to limes, almost every ingredient is more expensive. He used to be able to keep prices lower by working with neighborhood suppliers instead of big distributors. But those suppliers have limited inventory now, so their prices went up.

Sam Yoo, owner of Golden Diner, a restaurant in Chinatown.
Sam Yoo, owner of Golden Diner, a restaurant in Chinatown. Camille Petersen for NPR

"Those competitive advantages don't exist anymore because they need to make their ends meet," Yoo says.

Even though businesses in Chinatown are navigating an international economic puzzle, many still feel guilty about raising prices.

"Chinatown's median income is about $34,000. So these price increases make a difference," says Vic Lee, co-founder of Welcome to Chinatown, a community nonprofit organization.

Businesses owners know residents rely on products to be affordable. But Lee says inflation on goods isn't the only thing putting pressure on prices. Rents and labor costs are going up too. The rise of anti-Asian hate has made businesses limit their operating hours — and their revenue — because employees are scared for their safety at night.

"How much more can these businesses sustain? Because the community is extremely resilient and these business owners have put so much grit into it, but there are times where it feels like the odds are stacked against them," says Lee.

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Transcript :

RACHEL MARTIN, HOST:

Inflation has hit small businesses in Manhattan's Chinatown especially hard, just as they're starting to recover from the pandemic. As Camille Petersen reports, many of them rely on an international supply chain to stock shelves and keep prices low.

UNIDENTIFIED PERSON: (Non-English language spoken).

CAMILLE PETERSEN, BYLINE: Grand Tea and Imports is a cultural and tea store in Chinatown. There are glittering floor-to-ceiling shelves of tea, incense and goods for Buddhist holidays. There's also a new sign by the register for regular customers, who are used to negotiating prices.

ALICE LIU: We can't give discounts anymore. We can't haggle because the cost of doing business is just so high.

PETERSEN: Alice Liu is a second-generation owner of Grand Tea. She says the store has always relied on selling a lot at low prices.

LIU: You can't rely on the old model anymore.

PETERSEN: That's because buying and shipping inventory costs more now. To make any profit, the store had to raise prices on everything from tea to the paper shoes left at ancestors' tombs during the annual grave-sweeping festival.

LIU: We usually sell this at 3.99.

PETERSEN: Yeah.

LIU: And it's increase a little...

PETERSEN: Yeah.

LIU: ...To $6 now.

PETERSEN: Like many Chinatown businesses, Grand Tea sources their products from Asia. COVID-19 lockdowns and closed ports there are limiting supplies and delaying shipments, which increases prices. Liu says she's found creative ways to get inventory, like asking her sister Karen to bring suitcases of goods from Hong Kong when she visits.

LIU: It's just more reliable because, you know, you know when Karen will come and when she'll arrive.

PETERSEN: (Laughter).

LIU: Whereas, like, with the mail - we mailed a bunch of tea from China a month and a half ago, and we're still waiting for it.

PETERSEN: Do you give her a list? Are you like, hey, we need these things?

LIU: Yeah. Yeah. There's, like, certain incenses. There is - a few teas that we really desperately need.

PETERSEN: But Karen's visits can't stock the entire store. And Liu says what's especially frustrating is that supply is so hard to get just as demand has finally started to return.

At Golden Diner, a restaurant in Chinatown, owner Sam Yoo says he's had to raise prices, too.

SAM YOO: We were seeing huge deficits.

PETERSEN: From canola oil to limes, almost every ingredient is more expensive to get. Yoo says he used to be able to keep prices low by working with neighborhood suppliers instead of big distributors. But those suppliers have limited inventory now, so their prices went up.

YOO: Those competitive advantages don't exist anymore because they need to make their ends meet.

PETERSEN: Even though businesses in Chinatown are navigating an international economic puzzle, many still feel guilty about raising prices. Vic Lee, co-founder of Welcome to Chinatown, a community nonprofit, says businesses know residents count on them to be affordable.

VIC LEE: Chinatown's median income is about $34,000, so these price increases make a difference.

PETERSEN: But Lee says the inflation of goods isn't the only thing putting pressure on prices. Rents and labor costs are going up. And the rise of anti-Asian hate has made businesses limit their hours and their revenue because employees are scared for their safety at night.

LEE: How much more can these businesses sustain?

PETERSEN: She says it can feel like the odds are stacked against them.

For NPR News, I'm Camille Petersen in New York.

(SOUNDBITE OF KORESMA'S "CLOUDS") Transcript provided by NPR, Copyright NPR.