Asia Rising

American Demographics, July 1, 2002

Byline: HASSAN FATTAH

Twelve years ago, Charles Schwab & Co. quietly launched one of its most ambitious ethnic marketing initiatives in an attempt to attract business from Asian Americans. Spurred by 1990 census figures showing the Asian community becoming wealthier and growing at a faster pace than any other ethnic group in the U.S., the San Francisco-based brokerage firm assigned three full-time employees to reach out to the market.

A decade later, that step has proven prescient. Schwab now employs more than 300 people who speak Chinese, Korean and Vietnamese at call centers dedicated to Asian American customers who want to communicate in their own languages. Those who are Chinese can access a Chinese-language Web site for trading, and a Chinese online news service delivers real-time information and research about the U.S. financial markets. Asians also have access to over 14 Schwab branches in predominantly Asian neighborhoods on the East and West Coasts. And the company's name is plastered on Asian TV channels, in newspapers and across billboards. The result: Thanks to its early entry and its long-term focus, the discount broker is now one of the leading financial services firms serving Asians, laying claim to millions of their dollars. "To really be able to capture this market, you need a continuous, long-term investment in building brand and awareness. It's not just an investment from quarter to quarter," says Christin Chan, director of marketing for Schwab's Asia Pacific Services Division. "Understanding how to make the [Asian] investor comfortable is the most critical part of the whole process."

Many other companies are taking note of such lessons to learn how to gain a share of Asians' buying power, estimated at $253 billion annually, according to the Selig Center for International Growth at the University of Georgia in Atlanta. Indeed, many big businesses are waking up to the strength of the Asian market, exploring the best ways to tap these consumers. Carmakers, retailers, health-care providers, vacation resorts, drug companies and others have begun rolling out campaigns to attract a demographic known for brand loyalty and quality consciousness - one that has the potential for significant growth in the future.

Emboldened by their success in targeting other ethnic and racial groups, businesses hope to use the experience gained from their campaigns in the Latino and African American communities when appealing to Asians. Some are hoping to enter this emerging market while it's still early enough and cheap enough to capture a sizable piece of the pie. And others have homed in on this long-ignored demographic as they search for bright spots in a slow economy. "We're finally being invited to sit at the adults' table now," says Julia Huang, president of Torrance, Calif.-based Asian marketing firm Intertrend Communications, noting that large brands and major corporations have been calling and taking the market seriously.

When it came to Asian Americans, not long ago even the proverbial kids' table was considered unworthy of marketing dollars. Skeptics insisted that the small size of the Asian American population, its fragmented nature and the cost of reaching it outweighed the investment required. However, financial services firms such as Schwab, and long-distance providers like AT&T and MCI, bet that demographic trends would make marketing to Asians pay off over the long term. And that's precisely what has happened during the past decade. The Asian population in the U.S. - including those of mixed race - grew 72 percent over the period, reaching almost 11.9 million in 2000. Asians now make up 4.2 percent of the total U.S. population and the group is expected to continue growing at a healthy clip, thanks to continued immigration, higher than average birthrates and intermarriage.

Asians have also become a far wealthier group. Fully one-third of Asians earn $75,000 or more annually, many holding managerial or key positions in technical sales. "We call the Asian American segment a segment of superlatives," quips Wanla Cheng, a principal of New York-based Asia Link Consulting Group. "From the last wave of immigration, there are more Asians who have been in this country longer, and their accumulated wealth has increased over time."

For businesses, such growth is hard to ignore. And as they've grown comfortable with the dynamics, sensitivities and special requirements of marketing to Hispanics and African Americans, companies have been encouraged to go after the more complex Asian market. (See sidebar, page 41.) "Corporations now are better geared for the smaller niche marketing that it takes to reach Asians," says Larry Moskowitz, director of strategic marketing services at Kang & Lee Advertising in New York.

Take American Honda Motor Co., which in 2001 launched a multimillion- dollar plan to reach Asian car buyers, after making successful appeals to Latino and African American consumers for several years. The company took note of the Asian market several years ago, says Barbara Ponce, manager of emerging markets for Honda's advertising division, but waited to dedicate full-time staff to the sales effort. Thanks to its experience in the Latino market, she notes, Honda was able to move into the Asian marketplace quickly and launch an ambitious campaign.