Tastes From Home
Immigration Feeds Rhee Bros.' Growth

By Ylan Q. Mui
Washington Post Staff Writer
Monday, October 16, 2006

The story of how Syngman Rhee built one of the largest Asian food distributors in the Washington area starts with a container of dried squid.

Rhee came to the United States in the early 1960s to earn his master's degree in political science at American University. Back home in South Korea, he had wanted to be a government worker. But in this country, he needed a way to pay tuition.

His mother refused to send him cash because "I just spent it right away," Rhee recalled during an interview at the modest headquarters of Rhee Bros. Inc. in Columbia. So he sold stuffed animals and jewelry on the street and artificial flowers near the monuments in the District, turning a modest profit.

Then one day his mother sent him a wooden box with dried squid from the Kangwon province of South Korea, which is famous for its seafood. Rhee knew how difficult it was to find the squid in the United States, so he took it to a Japanese grocer who bought it for twice what his mother paid. It flew off the shelves, and the grocer came back asking for more.

"People have to eat," Rhee said he realized.

That transaction planted the seed for Rhee Bros., and Rhee went on to build a business that now supplies national grocers such as Giant Food LLC, Costco Wholesale Corp. and Safeway Inc. -- and mom-and-pop ethnic supermarkets -- with products ranging from noodles to sesame oil. The company produces private-label brands. And it operates supermarkets under the names Lotte Plaza and Assi Super -- in Rockville, Fairfax, Silver Spring and Ellicott City, with a fifth scheduled to open in Germantown in the spring -- and one each in California, New York, Georgia and Pennsylvania.

Rhee, 65, is still chairman and chief executive. His three younger brothers also have executive positions: Sung Kil Lee, 59, is in charge of the East Coast retail stores; Seung Kwan Rhee, 56, is vice president; and Sung Chul Rhee, 48, oversees the Los Angeles store. The company has 200 employees in the Washington area and 1,500 across the country. It brought in roughly $300 million in revenue last year and expects to hit $500 million by 2008. The company would not disclose other financial information.

"They dominate the Korean supermarkets in this area," said Young Kim, president of the Korean American Association of the Washington Metropolitan Area.

The growth of Rhee Bros. mirrors the rise in the number of Asian Americans in the United States over the past several decades. According to the latest estimate by the U.S. Census, there are more than 425,000 Asian Americans in the Washington area, about 8.3 percent of the population. In 2000, there were 330,000 -- 6.6 percent of the population. In 1990, there were just over 200,000 -- 5.2 percent of the population.

"The whole point of the growth of our business is immigration," said Phillip Ahn, project manager for Rhee Bros.

The company has long branched out beyond Korean food, serving other Asian ethnic groups such as Vietnamese, Chinese and Japanese. Recently, it has begun expanding into Hispanic food, sparked by the growth in the Latino population.

Asian Americans are a particularly lucrative market for food retailers. According to a recent report by MarketResearch.com, Asian Americans average 3.0 family members per household compared with 2.6 nationally. And they have the highest median household income of any racial group.

In the Washington area, Korean Americans in particular have flourished as entrepreneurs. A Census Bureau report shows that between 1997 and 2002, the number of Korean-owned businesses grew 21 percent to 9,406, the largest among Asian groups.

Rhee's business quickly grew beyond selling dried squid. His family began sending him other Korean foods, including dried anchovies and relish. Then he landed a job with distributor JFC International Inc., which imports Japanese food, while continuing to supply products to Korean customers. The position provided him important connections in the wholesale industry, and in 1976 Rhee founded his namesake company.

Today Rhee Bros. imports more than 10,000 different products from Asia for more than 1,500 retailers and wholesalers, the company says.

The start-up was initially financed entirely by Rhee and his brothers. But two years later, he took out his first loan of $20,000 from a local bank, slowly building his credit and his business. By the time the first retail store opened in 1989 in Rockville, the wholesale business was thriving, importing food from across Asia.

Rhee named his store Lotte Plaza and opened a sister store in Fairfax in 1990.

Howard County resident Young Chan Han recalled the weekend that Lotte Plaza opened in Ellicott City seven years ago.

"I went, and I just drove away," she said. "It was too busy."

But she came back a few days later and has been a regular since. The store has become a hub for the Korean community that has congregated along Route 40 in the fast-growing Maryland suburb. Han and a friend recently bought an extra-large $60 container of kimchi and ordered 60 pounds of beef to make bulgogi , the Korean barbecue dish, for a church lunch.

"I hit two places, one American grocery store like Giant or Safeway and one Korean grocery store," Han said of her shopping habits. "We just have to have both."

But success breeds competition. Though Rhee Bros. was the first to establish itself in the Washington area, two other Asian grocers are making major plays for shoppers. Grand Mart also started as a wholesale business and opened its first retail store in the Washington area four years ago in Germantown. And well-known H Mart, which started in New York and was formerly known as Hanahreum, has opened three stores in the region in the past decade.

All three grocers have rooted themselves in the community. Each sponsored a booth at the first KORUS festival in Annandale on Oct. 6, which and commemorates the National Foundation Day of Korea. Kim of the Korean American Association said Koreans are not brand-loyal -- they search only for the best quality food at the lowest prices. But he thinks the Asian community is large enough to support all three chains and is friends with the owners of each.

"Business is business, and friendship is friendship," he said.

But there are differences among the chains. Grand Mart's merchandise at its 13 stores -- seven of which are in the Washington area -- is up to 50 percent Hispanic. The mix recognizes the area's changing demographics. Several Asian supermarkets are in neighborhoods that have seen significant influx of Hispanic immigrants in recent years.

At Grand Mart, signs in the aisles are in Spanish, and most of produce is bought by Hispanic customers. About 30 percent of its products are aimed at Koreans, and the rest toward other Asian ethnic groups. Seung Lee, a member of the chain's investment team, said he considers Shoppers Food Warehouse Corp. their biggest competitor.

"I believe there's more chance of fitting in the Hispanic market rather than focusing on just Asian-only," he said. "Number-wise, they are the biggest minority. There's a lot of growth potential."

The main rival of Rhee Bros. is H Mart, operating 17 stores along the East Coast and in Illinois. Han said she craves their California sushi roll but otherwise favors Lotte Plaza because it's closer to her house. But she has noticed that H Mart draws more varied ethnicities.

"It's quite an international scene," she said. But "the type of things they buy is not what I buy. Our food is different."

Rhee Bros. is changing, too, offering more Hispanic foods. In Ellicott City, Sancochito pork skins were stocked across the aisle from Vietnamese spring roll wrappers known as banh trang .

The company is also targeting second-generation immigrants ages 30 to 40 who love to eat national dishes but may not know how to prepare them. The store scheduled to open in Germantown, for example, will be well stocked in ready-made meals of seasoned tofu and soybean paste soup.

"These days, people live the fast life," said Tek Y. Lee, manager of the Ellicott City location. "They have no time to cook."

Despite its growth, the company retains its family feel. Its modest headquarters are outfitted in wood paneling and staffed almost entirely by Koreans. Rhee said he can't imagine a day when the business would not operated by a member of his family.

"In here, I take care of all my brothers," he said. "Family trusts each other more. That's a strong relationship."