Asian-Owned Firms Booming

Contracting and Outsourcing Help Fuel the Growth of a Regional Economic Force

The number of Asian-owned businesses surged in the Washington area from 1997 to 2002, as a diverse mix of entrepreneurs with broad global ties flocked to the region's technology and government contracting sectors in suburban commercial centers outside the District, according to a U.S. Census Bureau report released yesterday.

The number of firms owned by ethnic Asians locally rose 30 percent, to 40,152, during the five years studied, double the national rate of growth for all businesses and more than the 24 percent growth in Asian-owned firms nationwide.

Though the number of Asian-owned firms in the District fell slightly, growth in the outer suburbs was explosive, with the number of firms roughly tripling in Loudoun and Frederick counties and more than doubling in Prince William.

It was a trend driven by small-business aspirations, familial interests and larger global forces -- from the tech boom to the rise in government contracting and corporate outsourcing.

Indian-owned government contractor Zolon Tech Inc. began in Sterling and later opened an engineering development office in Hyderabad, India. Lani Abeya-Barnabas started home-health-care firm Encore NG Services Inc. in Rockville with the help of relatives here and in Manila. South Korean-owned New Star Realty has offices in Fairfax and Centreville and sends agents to market local properties in Seoul.

Maria Nguyen, 36, owner of Elegance Nails in Fairfax, used the salon as a steppingstone after emigrating from Vietnam. The business helped her support a family while attending computer science classes, but she now plans to sell it after being offered a job at the Defense Department.

"I'm going to sell my business through a Vietnamese broker who will find another family that is in the same position as ours was when we first started," Nguyen said.

"Asian businesses are different from other minorities in that they are using family connections and connections to their home countries to make these businesses work," said Ying Lowrey, a senior economist at the Small Business Administration. "That kind of capital mobility within a global arena is important and has a positive impact on our economy."

The number of local Asian-owned firms grew more slowly than did the number of Hispanic- and black-owned businesses, which increased 50 percent to 28,936, and 38 percent to 67,213, respectively, during the same period.

But the Asian-owned firms tended to bring in more revenue, as Indian and Korean entrepreneurs in particular, many concentrated in scientific and technical fields, benefited from a boom in technology and security spending. During the period included in the recent report, the revenue of Asian-owned firms increased 36 percent, to $10 billion.

Businesses created by all major Asian ethnic groups grew in the Washington area, but growth was most rapid among the Filipino and Japanese communities. The number of Filipino-owned firms more than doubled to 3,436, and the number of Japanese-owned firms grew 69 percent to 1,216.

However, the South Korean community had the largest number of businesses, with 9,406, while Indian-owned firms pulled in the most revenue. The number of Indian-owned companies grew 46 percent to 8,707, and they earned $3.8 billion.

Sudhakar Shenoy, president-elect of Indian entrepreneur association Tie-DC, said a number of Indian business owners have migrated to the Dulles corridor of Fairfax County because of the area's connection to the federal government.

Fairfax county had the largest number of Asian-owned businesses at 14,313, up 35 percent from 1997 to 2002. The number of Asian-owned firms in Montgomery County rose 17 percent to 10,819.

"So many Indian-owned high-tech companies have started getting 8(a) designations," Shenoy said, referring to the federal program that provides government contracts for minority-owned firms. "This has attracted highly educated and skilled Indian professionals, particularly in engineering."

Shenoy estimates that 80,000 people in the region are employed by Indian-owned firms. Tie-DC says it has 290 member companies that are Indian-owned.

The growth in Filipino and Japanese businesses points to an economic evolution in groups that historically have not been known for their entrepreneurialism in the United States.

Filipino Americans have for years had a foothold in professional services such as health care and teaching because of their English proficiency and the high education levels among immigrants. Lately, there has been a movement toward business ownership in related fields and retail firms that serve the region's growing Filipino population.

"This is the second and third generation that is really motivated," said Mitzi Pickard, head of the Philippines American Chamber of Commerce in the District. Businesses have stretched beyond the largest Filipino centers in Prince George's County and into suburban areas such as Fairfax, Prince William and Montgomery counties, she said.

Abeya-Barnabas, a second-generation Filipino American, took the combined experiences of a family of health-care professionals to form Encore. And initially, she tapped into the community's pool of nurses and caregivers for employees of her business, which offers home care for the elderly and disabled.

"We worked with the circles that we knew," Abeya-Barnbas said.

Japanese business organizations were surprised by the rapid growth in Japanese-owned firms. They said the growth has come in part from Japan-based biotechnology and high-tech companies opening local offices in Fairfax and Montgomery counties. With the recent recovery of Japan's economy, more investments have been made overseas, he said.

"Even though we have seen numbers increase in our membership, it is not even close to these numbers," said Takashi Misukami of the Japan Commerce Association of Washington.

The number of Vietnamese-owned firms rose 38 percent to 6,071, while the number of Chinese-owned firms increased 14 percent to 7,591.