Many economists believe that a dominant force of the 21st century
will be how low-end globalization brings goods and technologies to
the world's poor.
As he leaned against a display case filled with gold-plated and
sterling-silver jewelry, Shappy Mehta listed his prices (necklaces,
$3 and up; watches start at $1 if you don't need a battery), and
then he detailed the miseries of his business.
The store, M.K. Sterling & Watches, takes up half a storefront on
29th Street, just east of Broadway, in the center of Manhattan's
wholesale district. Within a few blocks, there are dozens of other
stores that import low-cost products from Asia, like watches, hair
extensions and perfumes, and sell them to store owners visiting from
all over the northeastern United States, as well as much of the
developing world.
Business has been awful lately, but Mr. Mehta does not blame the
lousy global economy. Instead, he blames a hotel across the street.
"Because of the hotel, things got bad," he said. "They want
everything high end."
In 2009, the Ace Hotel took over a derelict single-room-
occupancy hotel on the southeast corner of 29th and Broadway. Rooms
at the Ace cost $500, and the hotel sells a kind of lifestyle that
is at odds with its neighbors.
I saw it up close when I sat in the lobby with Chris Sacca, a
venture capitalist and Twitter investor, who explained that places
like the Ace have become central nodes in what he referred to as the
global-ideas economy. They cater to a new generation of workers, he
told me, "who decamp from home to establish themselves in coffee
shops, lobbies and foyers."
The battle over 29th Street may seem familiar -- new wealth
pushes aside older, poorer neighbors -- but what is going on here is
not just the latest Manhattan gentrification story.
The neighborhood is the front line in a conflict between two
enormous economic networks: high-end globalization -- intellectual
property, yuppies, laptops -- versus its low-end counterpart -- low-
cost mass production and a complex supply chain. Amazingly, this is
a battle in which the small businesses catering to the world's poor
have a real shot.
Kemi Alao, whom I met in a discount emporium on Broadway,
exemplifies the old 29th Street's hope. Ms. Alao, who owns Lasting
Impressions, a boutique in Jos, Nigeria, is a successful
entrepreneur in a poor country. She sells all kinds of off-brand
items, including fragrances and clothes, but she does not trust her
local Nigerian wholesalers.
"There are lots of fake things," she said of Nigeria's discount
market. So every three months or so, she or her husband flies to the
United States with a wad of cash and empty suitcases. She said she
had no choice. Ms. Alao recently flew to China, where most of these
goods are made, to eliminate her middleman cost. As in Nigeria,
however, she did not trust the salespeople there.
At any moment, the wholesale district is teeming with shopkeepers
like Ms. Alao from Africa and South America, as well as from poor
neighborhoods in Baltimore, New York and Philadelphia.
These entrepreneurs come because it is one of the few places in
the world focused on their needs. They want to buy mixed lots of
decent-quality items at extremely low prices. They also want to pay
cash.
According to Mr. Mehta, the district thrived in the 1980s and
