Chinese firms can learn from co-ethnic US counterparts

For historical reasons, Chinese-American 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 Chinese-American 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.