Minority power balance shifting
By Jim Hopkins
USA Today
SAN FRANCISCO — David Chu came to New York City from Taiwan when his family chased the immigrant dream of a better life in the United States.
He studied at the Fashion Institute of Technology, then returned to Taiwan to start an export company.
Although the venture failed, Chu, 48, was bit by the entrepreneurial bug. He returned to New York and in 1983 co-founded Nautica, an apparel maker that now employs 3,500 workers.
Nautica was one of nearly 600,000 U.S. companies started by Asian and Pacific Islanders who immigrated during the past two decades. That wave of immigration is having a profound impact on the status of the U.S. minority-owned business community and the U.S. economy.
Twenty years ago, blacks were No. 1 in U.S. minority business ownership. Now, Hispanics are first, Asians second and blacks third, a USA Today analysis of new government data shows.
Asian firms tend to be larger than the others. They have an average annual revenue of $336,200 compared with $155,200 for Hispanic companies and $86,500 for black-owned companies. That has helped make Asian households wealthier, with an annual median income of $55,521 — higher than all others, including whites.
The rising clout of Asian entrepreneurs is changing the balance of power among minorities, experts say. As Asians amass more wealth, they're better positioned to influence politics and social priorities. But the increasing economic gap between Asians and other minorities is creating tension, too.
Korean shopkeepers, for example, were singled out for looting by blacks in the 1992 riots in Los Angeles after the Rodney King verdict. Similar tensions have surfaced in New York City.
Black leaders are taking note of the shift in power.
Jesse Jackson, pushing for equal access to loans and investment dollars for African Americans, concedes the growing clout of Asian entrepreneurs. But he defends black entrepreneurship, saying the Asian immigrant route to the United States was fundamentally different.
"They landed on the ground," Jackson says. "We landed in chains."
Millions of start-ups began in the past 20 years. But the number of minority-owned companies is growing 17 percent a year — twice the rate of all companies. Minorities own 15 percent of all private U.S. companies — up from less than 7 percent in 1982, the U.S. Small Business Administration said this month.
Asia was the biggest source of immigrants during much of the past 20 years. This was especially true during the 1980s, when Vietnam, Laos, China and other Asian countries accounted for about 43 percent of the 6.3 million U.S. immigrants.
There are 10,561 Asian companies in the United States for every 100,000 Asian adults — nearly twice the rate for Hispanics and more than three times the rate for blacks, USA Today's analysis shows.
Asian advantages
How long the explosive growth of Asian-owned companies will last is unknown. Latin America replaced Asia as the biggest source of immigrants by the end of the 1990s. But, for now, Asian immigration is altering the face of the minority business because of:
• Better education. The most recent census surveys show that 45 percent of Asian immigrants have college or advanced degrees compared with 11 percent of Latin American immigrants. It isn't known whether those degrees were achieved in the immigrants' home countries or after they got to the United States.
The higher level of education clearly gives Asians a leg up in their U.S. lives. Bouaseng Daranouvong, a beauty shop owner in Stockton, Calif., studied nursing in Laos. Economic and political upheaval forced her to leave. She followed family members to Stockton in 1984, hoping to continue nursing. She couldn't because she didn't have proof of her studies.
So Daranouvong, 38, picked cucumbers and cherries on local farms. She studied English at night. Her familiarity with school work and study habits helped her learn the language quickly. In 1994, she opened the Paris Beauty Salon with her sister.
• Special financing. Many Asian immigrants sometimes finance startups through informal loan associations. They work this way: Twelve established Asian U.S. business owners will contribute $1,000 each to a fund. That $12,000 is loaned to a new entrepreneur. Loans are often interest-free and agreements are sealed with a handshake, says Greg Fairchild, a professor at the University of Virginia.
"It's a new version of what people have negatively called the good old boys' network," he says.
These associations go back in the United States to the early 20th century. There are no direct equivalents in other minority communities, experts say. Harry Alford, president of the National Black Chamber of Commerce, wishes there were. Asians don't form loan pools "because they love each other," he says. "They see it as a necessity for business growth. We African Americans have a natural dependency on waiting for government to do something."
Jackson notes that blacks continue to be discriminated against by lenders. "Access to capital — not desire for entrepreneurship — remains the big issue," he says.
• Niche development. Asians have found success by concentrating on certain industries. Koreans own 29 percent of Asian food stores. Vietnamese own 37 percent of Asian nail-care salons, laundries and other personal-service companies. Chinese own 54 percent of Asian restaurants, SBA data show.
Asian Indians own more than 17,000 hotels and motels, representing more than half of all economy lodging in the United States, according to the Asian American Hotel Owners Association.
During Silicon Valley's recent tech boom, 25 percent of enterprises were started by Asian Indians or Chinese entrepreneurs, according to the Milken Institute.
New tensions
Inevitably, the shift in minority entrepreneurship has created tension. The black community, in particular, faces more competition for government and corporate contracts set aside for minority firms.
While the overall value of Defense Department contracts to minority companies fell between 1997 and 2000, the decline for black firms was steeper — 26 percent.
It was 15 percent for Asian companies and 3 percent for Hispanic companies, says the Greenlining Institute, a nonprofit economic development group.
Economics and politics
As income gaps widen between Asians and other groups, so will political heft, experts say. Hispanics, about 13 percent of the U.S. population, and blacks at 12 percent, dwarf the number of Asians at 4 percent. But wealthier Asians may start to outspend other minorities in political donations, which may give them more access to power.
For example, the Committee of 100 — founded in 1990 by Chinese American entrepreneurs and other professionals — helped raise money to defend Los Alamos, N.M., nuclear scientist Wen Ho Lee against espionage allegations in 1999.
Asians also have made big gains in winning elected posts, especially in California. They hold more than 500 city council, legislative and other seats. While Hispanics control about 790 offices and legislative seats, their growth has been less than half that of Asians.
Alford notes that economic clout and political power are linked. While blacks have gained political rights as a result of the Civil Rights movement, this, he says, "means nothing unless you have some economic wherewithal to hold elected officials accountable."
