Divergent Trends for Entrepreneurs
Like many more-recent Korean American entrepreneurs, John Kim did not want the hardships or risks of running a dry cleaner or an inner-city minimarket. So in 1992 he opened a one-hour photo shop not far from his home in Torrance.
What Kim did not foresee was the mushrooming of discount drugstores and club warehouses all around him. “I need to do something else,” the 52-year-old immigrant said the other day, moments after a potential customer walked away, after perusing Kim’s prices and then asking a familiar question: Where is the nearest Target store?
Alex Vong, a native of Hong Kong, sells computer parts in Walnut. But his sphere of business extends far beyond the San Gabriel Valley. His firm, Bunta Technology, takes orders from the Internet and ships throughout the world. Sales last year grew 300%, he said, and are up 50% this year, to about $5 million.
“My goal is to be another Michael Dell,” the 26-year-old Vong said, referring to the chief executive of giant Dell Computer Corp. He added: “I love Internet.”
Kim and Vong are in many ways emblematic of the striking differences in performance that emerged from a Times survey of these two leading entrepreneurial groups. As in the gap seen between white-owned businesses and minority firms in general, a key difference between Chinese and Korean entrepreneurs is the extent of their involvement in fast-growing high-tech ventures, according to the survey results and interviews with experts.
Although many have met with success over the years, The Times Poll found that 37% of Chinese American owners achieved sales growth in the last year, while 26% of Korean owners reported gains. Chinese owners also were more confident than Koreans about projected sales for next year and about their hiring plans. The small-business poll, conducted during the summer, included 512 Korean and Chinese business owners.
“What you’re not seeing among Korean Americans that you see among Chinese Americans is the rate of entrepreneurship from those with engineering and biotech backgrounds,” said Edward Park, director of the Asian Pacific American Studies Program at Loyola Marymount University.
Such differences suggest divergent trends ahead for Korean and Chinese entrepreneurs, who between them operate a substantial share of Los Angeles County’s 92,000 Asian-owned firms, as last tallied by the Census Bureau in 1992. More recent census data suggest that Asians now own nearly one-fifth of all businesses in the county, surpassing Latinos as the dominant minority entrepreneurial group.
Behind the strength of Chinese and Korean immigrants, Asian American entrepreneurs have reshaped the face of industries such as apparel and toys. And in establishing businesses in old and new areas of Southern California, they have revived and transformed inner-city and suburban neighborhoods alike.
The different success rates of Chinese and Koreans in the survey may reflect their unique immigrant histories and culture. The Chinese have a presence in California that dates to the mid-1800s; hence, scholars say, they tend to benefit more from a firmer business base and English-language skills than Koreans, most of whom arrived after the early 1970s.
More concretely, The Times study indicated that Chinese Americans, far more than Korean Americans, are exporting goods and services, making use of the Internet and tapping their ethnic connections to enhance markets and financing.
More than 60% of the Chinese owners surveyed said ethnic ties helped their business, whereas one-fourth of Korean owners said so. Part of this reflects the strong small-business base and computer industry in Taiwan, the birthplace of many Chinese American entrepreneurs.
“The transnational aspect of Chinese American businesses is a reason for their greater success,” said Yu Zhou, a Vassar College assistant professor of geology and geography who has written on the subject.
One of the more optimistic firms surveyed by The Times and later interviewed is Xie He Group USA, a management services and trading firm in Long Beach. Office manager Chris Jacob said the firm was established in 1995 by Juyu Chen, chairman of a big pharmaceutical concern in Shenyang, China. Jacob said Chen lives in China but travels back and forth, like many of the so-called transpacific nomads, or “spacemen,” from Asia who have established economic outposts in California.
Korean American businesses tend to be more insular retail or service establishments. Pyong Gap Min, a Queens College sociologist, counted roughly 30,000 Korean American firms in Southern California in 1994. Of them, 3,500 were minimarkets and liquor stores, 3,500 were retailers of Asia-imported goods, 2,000 were dry cleaners and 1,000 were house painting firms.
Phillip Shin, 45, is an exception. He is a Korean American with an engineering degree who did go into business. For the last nine years, he has owned and operated York Engineering, a 13-employee plastic injection molding company in Highland Park. Shin said in the survey that business has been fairly robust. One big factor: His company doesn’t rely on the local market for his sales--as 60% of Korean-owned firms say they do. Shin ships his goods nationwide.
Shin arrived in the United States 26 years ago, got a chemical engineering degree from UCLA and worked at big aerospace firms before going out on his own. Financial backing from his parents and his technical background both helped, Shin said. “My parents were kind of open-minded,” he said.
But entrepreneurs such as Shin are increasingly a rarity in the Korean American community. Scholars have found that self-employment rates of younger Korean Americans are below average, which some see as a kind of second-generation reaction to the struggles of their immigrant parents.
And with Korean immigration to the U.S. down sharply in recent years and many existing Korean American firms clearly hurting, experts are expecting a slow fading of Korean businesses.
Young Ku Chang, a Korean American attorney, said he still sees new arrivals from South Korea gravitating to tough retail businesses such as minimarkets and dry cleaners. In the Korean community, Chang said, people joke that what a new Korean immigrant does upon arriving in Los Angeles depends on the occupation of the person who picks up the immigrant at the airport.
What’s different today from two decades ago is that most Korean businesses are in suburban areas, reflecting the suburbanization of the large Korean community in the Southland. But for all their hard work, Chang said, many still lack interpersonal communication skills needed to attract customers.
Of course, many Chinese American immigrants face the same barriers, and to be sure Chinese entrepreneurs in low-end services and restaurants are confronting enormous pressures as well. But many Chinese businesses such as restaurants tend to have broader mainstream appeal, and the more insular enterprises have the benefit of steadily high levels of Chinese immigration, in recent years predominantly from mainland China.
Wei Li, an assistant professor of geography and Asian American studies at the University of Connecticut, analyzed the Chinese American community in Los Angeles, with a focus on what she termed the Chinese “ethnoburb” in the San Gabriel Valley. The establishment of a commercial hub there, especially in Monterey Park, reflects the longer history of Chinese settlement as they shifted from inner-city Chinatown to the suburbs. The main business district for Koreans is still in Koreatown near downtown.
Li said many Chinese American enterprises in the Los Angeles area have an advantage in the many Chinese-owned banks that have popped up, reflecting the large amounts of money brought here by many Chinese immigrants.
Li said there are 23 Chinese American banks headquartered in Los Angeles County, most of which sprang up in the last two decades. That compares with just a handful of Korean American banks, which are generally smaller as well.
“I think that plays a role,” Li said.
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Complete Times Poll results are online at https://www.latimes.com/timespoll. They will be discussed at The Times’ Small Business Strategies Conference on Sept. 24-25 at the L.A. Convention Center. For more information, call (800) 350-3211 or go to https://www.latimes.com/sbsc.
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Asians in Business
Some differences between Chinese and Korean businesses owners.
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Chinese Korean Born outside the U.S. 80% 93% Type of business sole proprietership 22% 65% partnership 9 12 corporation 68 21
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Time of ownership
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Chinese Korean 10 years or less 43% 54% 11-30 years 45 44 more than 30 years 9 2 Has Web site 32 13 Exports outside U.S. 32 9 Sales growth last year 37 26 by more than 10% 16 6
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Note: Numbers do not toal 100% where some answer categories are not shown.
Source: Los Angeles Times Poll
Special Report: State of Small Business in L.A. County
WEDNESDAY: Small businesses in Los Angeles County overwhelmingly are enjoying brisk business, but more minority than white-owned companies are struggling.
THURSDAY: Black are much more likely than other ethnic minorities in the county to be considering relocating their firms.
SATURDAY: Minority-owned businesses in Los Angeles County overwhelmingly employ minority workers and tend to hire within their own ethnic group.
BOOST YOUR BUSINESS: Get insights, advice and inspiration for your business at The Times’ Small Business Strategies Conference on Sept. 24-25 at the Los Angeles Convention Center. For more information or to register, call (800) 350-3211 or log on to https://www.latimes.com/sbsc.
How The Times Survey Was Conducted
The Times Poll surveyed Los Angeles County small-business owners--with an emphasis on minorities--from May 26 through Aug. 19. Questionnaires initially were mailed to 875 Asian, 875 Latino and 875 black owners. Interviewers called those who did not return the mailing. The response rates were 59% (432) for blacks, 52% (394) for Latinos and 53% (401) for Asians.
In the survey’s second phase--an overall sample of the county’s small companies, 683 owners (including 353 whites) were interviewed out of 1,500 randomly selected businesses contacted by phone Aug. 4-19. The overall county response rate was 58%.
Those surveyed were selected at random from Dun & Bradstreet’s business database. Companies that were no longer in business or that could not be located were deleted, which affected response rates.
