Survival as Bottom Line : Narrow Escape Basis of O.C. Refugees’ Success

Rose Hwang learned her survival skills when she became a leader among refugees fleeing Communist-held Vietnam.

“Just by the escape, I learned tremendous lessons that will stay with me for life,” said Hwang, now in her mid-30s and chief executive officer of Alpha Systems Lab, an Irvine company that designs computer components for multimedia computers.

“It took determination, faith, planning and guts. We had unity. While there were heroes and cowards, that unity mattered the most.”

By applying that knowledge to business, Hwang and her husband, Mitchell Phan, have built Alpha Systems Lab in just four years into a company with nearly $40 million in annual revenues and a nominee for one of Orange County’s annual small-business awards, Entrepreneur of the Year.

Hwang and Phan, an engineer whose family escaped Vietnam two days before Saigon fell in April, 1975, recognize that their success is against the odds.

Southeast Asian immigrants--Vietnamese, Cambodians and Laotians--have high poverty and welfare rates, based on a UCLA report released in May. And, while many Asian Americans have managed to start their own businesses, they have generally focused on low-margin, low-profit businesses, the UCLA study found.

The couple give credit to their special mix of talents--Hwang’s knack for managing business operations, Phan’s technical savvy--a shared dream, determination and a bit of luck.

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Hwang and her family of seven slipped out of Saigon in 1976 on a river boat. But on the high seas, out of gas and water, they were captured by a Communist patrol ship.

The Communists brought the refugees aboard and tied the boat in tow. They told everyone to sit still on the journey back to Saigon, where the refugees believed they would be condemned. But the captors left Hwang unguarded.

“They didn’t think a 17-year-old girl could do them any harm,” she said. “That was their mistake. I was not a boy, but I was the oldest daughter and had a boy’s heart.”

She crept through the ship, whispering a plan to her comrades. The refugees then banded together, seized control of the ship and sailed to safety in Thailand.

From there, Hwang and her family came to the United States, settling in Orange County.

Hwang enrolled at Cal State Fullerton and eventually earned a degree in music. Her first job was as a pianist. She also worked as a court reporter and in marketing for a small high-tech company. She met Phan in 1979, and the two married in 1984.

The couple formed their own company in 1990 with $50,000 in savings. It generated $1.2 million in sales in 1991.

“In Asian cultures, men usually do all the business, and women stay behind at home,” said Phan, who is vice president of Alpha Systems Lab.

“We think that women can do a lot more,” he said. “To men, I say put your ego down a little bit, and you’ll find the best kind of partnership.”

A stroke of good fortune came in 1992. Electronic Data Systems, a multibillion-dollar computer consulting firm, gave the fledgling company part of a $700-million contract to supply computer equipment to the Army, the Navy and the Pentagon.

EDS also financed its first orders from the small company with prepayments, allowing Alpha Systems Lab to expand without venture capital. Sales at Alpha Systems Lab mushroomed to $38 million that year. For 1993, Alpha Systems reported sales of $40 million.

“They’ve done good work for us, and we’ve enjoyed working with them,” said Randy Dove, spokesman for EDS. “Most of the contract work has been done now.”

Alpha Systems Lab now has 60 employees at its headquarters in Irvine. The company subcontracts its work to local assembly houses, which take a set of chips and mount them on circuit boards that can be installed in personal computers.

“Everybody else is shipping work offshore,” Phan said. “We are creating jobs here.”

“This country helped us,” he said, recalling his gratitude for a government refugee payment of $300 when he first arrived in the United States. “It’s always been in my heart to do some kind of pay-back.”

Alpha Systems Lab expects its government contracts to fall to 20% of revenue in 1994. But Phan says the company can sustain its sales with its latest product, the $1,095 MegaMotion circuit board, which can convert a personal computer into a teleconferencing machine that transmits documents and images over ordinary phone lines. It can also be used as a security monitor to conduct simultaneous surveillance of up to 16 remote sites.

The MegaMotion board has brought Alpha Systems Lab into competition with an array of bigger companies, among them Intel Corp., IBM, Matrox and True Vision. But Hwang said she thinks Alpha Systems Lab has an edge because its product was five years in the making and is unique.

Doug Burger, a product manager for Northrop Grumman Corp. in Hawthorne, said he is impressed with the MegaMotion technology and Phan’s expertise. He said the aerospace company expects to install numerous boards at its government agency customers, such as the Coast Guard, in coming months.

Phan said he expects MegaMotion boards, which have been shipping at the rate of 1,000 a month since April, to account for 70% of the company’s projected $40 million in revenue this year. That helps the company offset revenue from the expiration of the EDS contract, which ends this year.

Hwang and Phan, who now have three children, say they might one day do business in Vietnam, which no longer faces a U.S. trade embargo. But they emphasize that they are American citizens now and have no wish to move back.

“We are watching the politics (in Vietnam) to see if there is a change,” Hwang said. “But first, our goal is to become a much bigger company here.”

Phan said: “We wanted to be a success on American terms.”

Alpha Systems Lab

* Founded: 1990

* Headquarters: Irvine

* Owners: Rose Hwang and Mitchell Phan

* Employees: 60

* Business: Designs components for multimedia computers

* Annual revenue: $40 million Source: Times reports; Researched by JANICE L. JONES / Los Angeles Times