Web Portals Opening Doors to Asian Market

They are two Asian American men who both work on the Web.

But one is Korean and the other is Chinese, which ordinarily would make them unlikely to seek each other out as business partners in a world that keeps tight ethnic boundaries.

In cyberspace, however, Joe Cheon and Chin Yao are trying to break the barriers of difference and distance by creating a Pan-Asian Web portal, bringing together Asians from across the U.S and eventually around the globe.

“Offline they might have a problem communicating, but the online community all understands English,” said Cheon, chief executive of Click2Asia, the Los Angeles-based Web site that he and Yao launched in October. “There are not many players out there. This market has huge potential.”

The reasons may be subtle. Asian Americans are generally assumed to be on the technological cutting edge, but language, culture and geography have kept this large and diffuse community from taking full advantage of the digital revolution.

But the financial and commercial success of Web portals targeting women, Latinos, gays and teens has opened the floodgates for sites that cater to specific demographic areas.

For Asian Americans, the timing couldn’t be better. The Asian online community is reaching critical mass, making it lucrative for Net entrepreneurs to forge unlikely alliances to capitalize on this new cyberturf.

“Yahoo is great, but it has a very mass-market appeal,” said Steve Chin, a founder of one of the earliest--but now defunct--Asian American Web sites. “What people are searching for is more vertical and special-interest sites that go deep.”

A range of Web sites are now targeting diverse segments of the Asian community: young Asian Americans who grew up in the U.S. and are searching for others with common interests; more recent immigrants looking for news and information about their home country; and English-speaking Asians on both sides of the Pacific seeking business opportunities.

Some portals are focusing on the U.S., while others are looking to expand to Asia as global players. All of them believe the Internet can help them transcend cultural and marketing limitations.

“The U.S. ethnic market represents one-third of the U.S. population and $1 trillion in annual purchasing power,” said Web entrepreneur Benjamin Sun. “Buyers and sellers will want to know the best way to reach them. We can be that intermediary.”

The former banker at Merrill Lynch knows firsthand about the growing pains facing ethnic Web portals. At 26, Sun is CEO of New York’s Community Connect Inc., which runs AsianAvenue.com, a 3-year-old site focusing on young Asian Americans.

With more than 300,000 registered members, AsianAvenue holds bragging rights as the most-visited Asian American Web site. Users bond through AOL-like features, such as instant messages, chat rooms and discussion forums. But more important, AsianAvenue has lured billboard advertisers such as GM and Microsoft.

“The biggest hurdle we faced was that people didn’t think Asian Americans saw themselves as a collective group,” Sun said.

Even though Asian Americans are the fastest-growing ethnic group in the country, they make up only 3% of the population, according to the U.S. Census. As a result, some polls and surveys simply leave them out as statistically insignificant.

But in cyberspace, it’s a different story.

A study by Cambridge, Mass.-based Forrester Research found that Asian American households are the most wired of any U.S. household. At 64%, the share of Asian Americans online is almost double that of Caucasian families at 34%, the study found.

Asian Americans are also most likely to shop and do product research electronically, spending more money online than any other racial group, according to Forrester. Perhaps even more attractive is their collective wealth. According to the 1997 U.S. Census, their income was 22% above the U.S. median of $45,249.

“This market is very, very interesting for Wall Street to look at,” said Peter Chu, managing director of AsiaTech Ventures, a venture capital firm that invests in many Asian Internet start-ups, including Click2Asia. “It’s getting the attention because it means dollars to the advertising people.”

But race is only a secondary consideration, said Ekaterina O. Walsh, an analyst with Forrester.

“Asian Americans are online not because they are Asian Americans but because they are highly educated, very positive about technology and have the income to buy new technology,” Walsh said. “That makes them a very attractive audience to advertisers.”

Capturing Market Hasn’t Been Easy

Translating the optimistic demographic into real value on the Net remains an uphill hike, since the community traditionally lacks a strong track record for marketing success. But that’s not stopping young Internet entrepreneurs from jockeying for position, many with an eye toward the gold mine across the Pacific.

“Both those player pools are interested in [each other], said Rajeev Gupta, an analyst with Goldman Sachs in Hong Kong, referring to the Asian and Asian American markets. “Because you are targeting a culture, you can’t differentiate by geography.”

Some investors looking at a start-up’s global potential prefer entrepreneurs who have cut their teeth in the U.S. market, said AsiaTech’s Chu.

Steve Chin learned that the hard way. The former newspaper reporter launched San Francisco-based Web site Channel A in 1996 with content designed to create an online Asian American community. But the site never really took off and shut down last year, a victim of strategy clashes and a loss of financial backing after the Asian economic crisis.

With the lessons learned from his previous Web effort, Chin is planning a comeback. This time, he’s joining forces with A Magazine, a decade-old, New York-based publication aimed at Asian Americans. Together they hope to create a Web site that has a better-focused audience and more relevant services, two of the pitfalls of Chin’s last project.

“The market is wide open,” Chin said. “Not only is there a critical mass of Asian Americans online, but also there is a critical mass of Asian Americans who identify as Asian Americans and realize why it’s important to identify themselves this way.”

The popularity of existing sites is evidence the community is ready to embrace the concept of Asian portals.

AsianAvenue, for example, registered a huge number of online volunteers to help an Asian leukemia victim who was looking for a rare bone marrow donor. In another instance, the site galvanized a community protest that forced a liquor company to drop one of its national ads that was considered racist.

As a sign of its growth potential, AsianAvenue is using its community model to reach other young ethnic markets. In September, it launched BlackPlanet.com, a portal for African Americans. A third site catering to Latinos is in the pipeline.

Many other Asian entrepreneurs, however, are casting their eyes beyond the U.S. border.

“People think of Asia as a huge market; actually it’s a lot of diverse micro-markets,” Chu said. “Asian Americans can be a great bridge to create a community of global Asians that share something in common, whether it’s social issues, business or entertainment.”

Joe Cheon saw the Internet’s potential for bringing together a community four years ago when he launched KoreaLink.

Now 30, Cheon came up with the idea for his Web effort after seeing his neighbor’s Internet business explode almost overnight. That company’s name: EarthLink.

Cheon noticed how hard it was to find other Asians online and focused on linking up the Asian business community. But with no experience and a tiny audience unfamiliar with ethnic portals, Cheon was unable to attract investors and lost $300,000 of his own money.

Instead of abandoning the business, he shifted focus--offering chat, dating and special issues forums that allow users to build relationships and generate their own content.

“When we made it community-oriented, everybody came in,” said Cheon. “Once you build up your community you can reach out to the business community.”

Meanwhile, his future business partner, Chin Yao, was struggling to build a loyal online following with the Asian Buying Consortium, a successful offline buying club.

Yao had heard about Korea-Link’s impressive network of nearly 200,000 Korean users from both South Korea and the U.S. So last year, Yao gave Cheon a cold call.

The two hit it off. Yao learned the secrets to a successful online presence, while Cheon found a way to tap Yao’s strong reach into the Chinese American community that he, as a Korean American, had little access to.

Today, Click2Asia’s office on Wilshire Boulevard is buzzing with incoming calls from advertisers, job seekers and potential partners.

“If we had Click2Asia during the Taiwan earthquake, we could have immediately united the global Chinese community, to send supplies and check the latest news,” said Yao, 28. “With the Internet, for the first time we can break geographic boundaries, we can use English as a unifying language to bring together Asians in the global community.”

Asian Market Is Huge--and Growing

The number of Internet users in Asia is projected to grow from 12 million this year to 90 million by 2003, according to Gartner Group. Goldman Sachs recently nearly tripled its own projection of the online Asian population to 202 million by 2003. The reason? Unlike in U.S households, many Asian accounts have multiple users.

“In the U.S. there are all these Asians, whether it’s first or second generation, that all have some ethnic ties back home through a parent or grandparent,” said Savio Chow, managing director of Yahoo in Asia. “The Internet will provide an easy way to form this virtual community, not just in the U.S. but to extend that virtual community back home.”

In September, Yahoo launched YahooChina to target users inside China. In June, AOL acquired a 10% equity interest in China.com, the only Asian portal to go public in the U.S. After the World Trade Organization agreement between China and the U.S., stock in China.com shot up. On Friday, it rose an additional $10.19 to close at $119.69 on Nasdaq.

That success can be a boost to lesser-known brands.

“Big players make smaller players more motivated, even though they also create challenges,” said Ya Li, CEO of Global Villager Inc., which in October founded DragonSurf, a New York-based bilingual portal featuring a popular dating and career database, as well as news and information about China. In its efforts to reach the 1.3 million Chinese who live outside their native country, DragonSurf is competing with industry heavyweight Sina.com, the largest Chinese-language portal with more than 1 million registered users.

But instead of offering distinct Web destinations for users in China, Hong Kong and Taiwan, Li’s DragonSurf wants to put all overseas Chinese on the same page.

“The Internet eliminated restrictions between time and space,” Li said. “So we emphasize global exchange rather than separation.”

Lacking the benefit of scale and powerful backers, most smaller start-ups must rely on private investors and advertising revenues. DragonSurf taps long-distance phone companies and major airlines and, like AsianAvenue, is thinking about capitalizing on its ability to conduct online polls and surveys that could attract job recruiters and market researchers.

“As the pie gets bigger, even if your slice is small, you can still maintain critical mass,” said Mukesh Ahuja, CEO of Asia-Links, a Sunnyvale, Calif.-based portal that zeros in on businesses in Asian countries by offering financial news, job listings and travel information. Ahuja is also pushing for e-commerce opportunities, such as connecting suppliers with buyers and selling merchandise online.

Since the field is still considered in its infancy, analysts expect various models to emerge as the market takes its time to shake out a winner. That means smaller start-ups, too, could shape the future.

“It’s going to be a dogfight,” said Goldman Sachs’ Gupta. “Differentiation is key.”