Chi­nese firms can learn from co- eth­nic US coun­ter­parts

China Daily (Hong Kong) - - BUSINESS / VIEWS - BRUCE COR­RIE AND ZHANG XIUPING

The ex­pe­ri­ence of Chi­nese-Amer­i­can firms in the US can pro­vide in­sights on strate­gies to grow small busi­nesses in China. Chi­nese-Amer­i­can com­pa­nies, like other mi­nor­ity firms in the US, face con­sid­er­able bar­ri­ers to suc­cess, yet they are a vi­brant entrepreneurial pres­ence all across the coun­try.

Ac­cord­ing to the lat­est govern­ment data avail­able — the Sur­vey of Busi­ness Own­ers — there are about 500,000 Chi­nese-Amer­i­can firms with an­nual sales of $142 bil­lion. To get an idea of the com­par­a­tive sense of the value of these Chi­nese-Amer­i­can firms, a re­cent WPP re­port es­ti­mated the value of the top 100 Chi­nese brands in China to be $379 bil­lion.

There were also close to 145,000 fe­malerun Chi­nese-Amer­i­can firms with sales of $26 bil­lion and an an­nual pay­roll of $4.2 bil­lion.

In to­tal, Chi­nese-Amer­i­can firms em­ployed 782,738 peo­ple and had an an­nual pay­roll of $21 bil­lion. The growth of these firms both in num­ber and sales was much higher than that of all the busi­nesses in the US.

One usu­ally as­so­ci­ates Chi­nese-Amer­i­can busi­nesses in the US with the all too fa­mil­iar “Chi­nese Restau­rant” in big cities or small towns across the coun­try. How­ever, the fig­ures show that the top sec­tor for these firms was in the pro­fes­sional, sci­en­tific and tech­ni­cal ser­vices area with 16.4 per­cent of the firms in that sec­tor and $9 bil­lion in sales.

The sec­ond-largest pres­ence was in the ac­com­mo­da­tion and food ser­vices sec­tor with 12.7 per­cent of the firms in that sec­tor and $18 bil­lion in sales.

There also have been a num­ber of re­cent high-pro­file re­ports that doc­u­ment the strong pres­ence of im­mi­grants from China in the high-tech sec­tors of the US.

The sec­tor with the largest rev­enue was whole­sale trade with sales of $54 bil­lion.

While Chi­nese-Amer­i­can firms can be found in nearly ev­ery state in the US, the top five states, ac­count­ing for most of these firms, are Cal­i­for­nia, New York, Texas, New Jer­sey and Hawaii. Cal­i­for­nia ac­counted for al­most 40 per­cent of Chi­nese-Amer­i­can firms in the coun­try and 48 per­cent of rev­enue.

For his­tor­i­cal rea­sons, Chi­ne­seAmer­i­can firms con­cen­trated in cer­tain sec­tions of some large cities that be­came what is pop­u­larly called Chi­na­town. Re­cent re­search helps us get a sense of the economies of these Chi­na­towns. The Asian Amer­i­can Fed­er­a­tion in New York es­ti­mated re­cently that there were more than 6,000 firms owned by Chi­nese Amer­i­cans in New York’s Chi­na­town in 2008. De­posits in banks op­er­at­ing in the area were es­ti­mated to be $6.8 bil­lion in 2005.

Chi­na­town, San Francisco, is smaller than the one in New York. Ac­cord­ing to the city of San Francisco, Chi­nese-Amer­i­can firms there paid an es­ti­mated $120 mil­lion in sales tax in 2008.

The ex­pe­ri­ence of Chi­nese-Amer­i­can firms in the US points to the fact that en­trepreneur­ship is a core el­e­ment of the Chi­nese DNA. All over the world, the Chi­nese di­as­pora dis­plays this char­ac­ter­is­tic. Small busi­nesses could flour­ish in China and be­come a po­tent en­gine of eco­nomic growth.

From the ex­pe­ri­ence of Chi­ne­seAmer­i­can and other mi­nor­ity firms and as doc­u­mented in the re­search of Robert Fair­lie and oth­ers, we find that the crit­i­cal fac­tors for busi­ness suc­cess are: avail­abil­ity of startup cap­i­tal; ed­u­ca­tional lev­els; work ex­pe­ri­ence in run­ning a busi­ness; and po­lit­i­cal and cul­tural fac­tors.

Re­ports on Chi­na­towns in New York and San Francisco sug­gested some other ar­eas that are also im­por­tant for suc­cess; such as: move­ment from price com­pe­ti­tion to qual­ity, ser­vice and unique­ness; im­prov­ing cus­tomer ser­vice; fo­cus on mar­ket de­mand; de­vel­op­ing busi­ness and trade as­so­ci­a­tions; cul­tural her­itage tourism; and tech­ni­cal as­sis­tance to help firms per­form bet­ter.

As China helps its small busi­nesses thrive and nur­tures en­trepreneur­ship, the ex­pe­ri­ence of Chi­nese-Amer­i­can firms can pro­vide a glimpse of both the pos­si­bil­i­ties as well as the in­fra­struc­ture nec­es­sary for small busi­nesses to grow. Chi­nese-Amer­i­can en­trepreneurs could also be tapped to be­come men­tors to en­trepreneurs in China. Bruce Cor­rie is an econ­o­mist with ex­per­tise in mi­nor­ity busi­ness de­vel­op­ment in the US. He is as­so­ci­ate vice-pres­i­dent at Con­cor­dia Univer­sity-St. Paul, Min­nesota. Zhang Xiuping is vice-dean of the depart­ment of man­age­ment at Minzu Univer­sity of China in Bei­jing.

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