Asian American Businesses, Entrepreneurs Andcommunities in Virginia and Fairfax County

Asian American Businesses, Entrepreneurs andCommunities in Virginia and Fairfax County: Taking Root

Wilson He

Coalition of Asian Pacific Americans of Virginia

August 20, 2017

Introduction

In recent years, Virginia has been a top destination for business and entrepreneurs. With its proximity to the nation’s capital and military installations, agency and military contracting have provided great opportunities for businesses to flourish. Additionally, particularly in the state’s northern regions, steady immigration has supplied an influx of many high-skilled individuals from countries all across the globe. High numbers of these aspiring Americans have not only provided their skills for Virginia’s economic development but have also assumed personal risk in entrepreneurship. Understanding these communities is critical for the future direction of the state. This report will analyze both business developments by the Asian American and Pacific Islander (AAPI) community and differences in occupations and education within selected groups in that demographic.

Understanding Virginian Minority-Owned Businesses

In 2006 and 2007, Forbes Magazine applauded Virginia for having the best business climate in the United States on the merits of economic growth, business costs and incentives, and quality of life.MSNBC also gave the state the top ranking for business in 2007. In part due to sequestration, Virginia has not maintained the top rankings, but the state has several distinct advantages. From 2007 to 2012, Hispanic- and Pacific Islander-owned enterprises grew at high rates of 53.5 percent and 49.6 percent, respectively. As a further demonstration of the strength of Virginia’s minority-owned businesses, even though the state only contains 1 percent of the nation’s Hispanic population, it contains 3.6 percent of the companies which are listed in the Hispanic 500 Directory.[1]

Indeed, the increasing numbers of immigrants into the state have spurred its business growth. Understanding these trends is necessary for making sense of current Virginian AAPI business environment. The Migration Policy Institute, an immigration think tank, reports that as of 2014, India, China, the Philippines, Vietnam, and Korea were the top five countries of origin for Asian immigrants to the United States.[2]Based on the American Community Surveys (ACS), the growth of the Asian immigrant population from 2010 to 2014 was 11,284,000 to 12,750,000, and by 2055 it is expected to become the largest foreign-born group of immigrants.[3]

Virginia has reaped the benefits of this demographic trend. In 2013, according to The Commonwealth Institute for Fiscal Analysis, an independent research organization serving Virginian policymakers and governments, there were over 585,000 Virginians who self-identified as Asian American or Pacific Islander. Compared to 2007, when there were only 416,000, the increase is rapid. Almost two thirds—353,000—are immigrants, amounting to more than a third of all foreign-born Virginians. And from 2007 to 2015, the increase in the number of AAPI Virginians is attributable for a substantial share of Virginia’s overall population growth at 31 percent.Their origins are as diverse as the nations, with the top three countries of origin being India, Korea, and the Philippines at 18 percent, 14 percent and 13 percent respectively; other countries include Vietnam, China (excluding Hong Kong and Taiwan), Pakistan, Iran, and various other locales. These immigrants tend to congregate in various regions, with 70 percent of the state’s immigrants who were born in Asia or the Middle East residing in Northern Virginia. 12 percent live in the Virginia Beach and Hampton Roads metro area, 8 percent are in the Richmond metro area, 2 percent live in the Charlottesville metro area, and the remainder are in other metro areas and rural Virginia.[4]

While an in-depth historical analysis is outside the scope of this report, from anecdotal evidence, AAPI people immigrating into Virginia gravitate to where there are already similar communities, partially explaining some happenings such as the established Korean communities in Annandale. These trends are a boon for the Commonwealth. At a time when Census data reveals that Virginia only grew by 44,000 residents in 2016, in raw terms the smallest population gain since the 1970s as people are leaving the state, AAPI immigrants are a crucial driving force for Virginia’s economic engine.[5]Almost 75 percent of foreign-born AAPI Virginians are within the age bracket of 25 to 64, “prime working years” in the view of the Commonwealth Institute, while only 51 percent of non-immigrant Virginians fit that category.[6]These members of society not only power economic growth, but also support social services, infrastructure investments, and other critical areas where government improves living conditions through increased tax revenues, keepingthe worker-to-retiree ratio sustainable.

This is reflected by the fact that 67 percent of all immigrant AAPI Virginians age 16 or older are currently employed, a proportion greater than that of non-immigrant Virginians. These people utilize their productive capacity in various realms, namely Virginia’s “Professional/Scientific, Management/Administrative/Waste Services Industry, Finance/Insurance/Real Estate/Rental/Leasing Industry, and other services.”Additionally, AAPI immigrants take critical roles in Virginia’s small business community. Over 20,000 self-employed immigrant AAPI Virginians, or more than 1 out of every 10 employed AAPI Virginians, and seven percent of all Virginia entrepreneurs, manage small businesses.Fairfax County in Northern Virginia is a hotspot of AAPI business and we can analyze it more closely to understand broader trends about Virginia AAPI businesses.[7]

As of 2016 Census estimates, Fairfax County has a population of 1,138,652.[8]Its population can be split into major groups, including 51.5 percent white alone (not Hispanic or Latino), 19.7 percent Asian, 16.1 percent Hispanic or Latino, and 10.2 percent African American (the remainder can be attributable to category overlap, mixed race people and other small ethnic groups). The percentage of Asian residents is high compared to both the countrywide average and the rest of Virginia. Fairfax County is a very wealthy county with a median household income in 2015 dollars of $112,552 and a 6.2 percent poverty rate. It is also highly educated, as 59.9 percent of residents have a bachelor’s degree or higher, a much higher percentage than the national average.[9]

These conditions both influence and are influenced by the types of businesses headquartered in Fairfax County. According to a 2017 Fairfax County Economic Development Authority (FCEDA) report, there are 25,000 Asian-owned businesses in the county.[10]Collectively, they employ 54,000 people and their total sales and receipts equates to $9.0 billion.[11]The same report broke down Asian-owned businesses by industry sector. They are involved in every field of industry. In descending order, here are Fairfax county Asian-owned businesses by sector:

Other Services: 23%
Professional, Scientific, and Technical: 20%
Health Care and Social Assistance: 10%
Real Estate and Rental and Leasing: 8%
Finance and Insurance, Information, Arts, Entertainment and Recreation, Wholesale Trade, and Manufacturing: 8%
Construction: 7%
Retail Trade: 6%
Transportation and Warehousing: 6%
Administrative and Support: 5%
Accommodation and Food Services: 4%
Educational Services: 3%

From this distribution, it is clear that Asian-owned businesses touch every aspect of commercial life. Setting aside the nebulous “Other Services” category, the most numerous kind of businesses involve professional, scientific, and technical affairs, many of which require postsecondary educations to fulfill. Many of these companies, some of which will be profiled later in this report, provide contracting for the federal government and its constituent departments. Regardless of a business’ sector, since Fairfax County is close to the nation’s capital, there are continuously new opportunities for businesses to win contracts. In recent years, various Fortune 500 companies have either started in Fairfax County or moved their headquarters there, including but not limited to Freddie Mac, Northrop Grumman, Capital One Financial, ITT Exelis, and Booz Allen Hamilton Holding.[12] This reflects the tremendous growth and expansion Fairfax County businesses have undertaken, especially after one takes into account the Great Recession and the sequester that decreased government spending.

Out of the 5,051 Asian-owned businesses with multiple employees, there are some stark trends in which industry sectors their employees are engaged:

Professional, Scientific, and Technical: 50%
Accommodation and Food Service: 18%
Health Care and Social Assistance: 7%
Administrative and Support: 7%
Retail Trade: 6%
Wholesale Trade, Educational Services, Manufacturing, Finance and Insurance, Real Estate and Rental and Leasing, Transportation and Warehousing, Arts, Entertainment, and Recreation: 5%
Other Services: 3%
Information: 2%
Construction: 2%

The gulf between the largest employment sector and the next largest is very wide at 32 percent. What this highlights is both the importance of Professional, Scientific and Technical jobs in Fairfax County as well as the large number of opportunities in that sector. For this area’s highly educated population, many have the skills to supply the labor demanded in information systems, systems engineering, computer science, research, and consulting. The federal government will often contract firms in these areas for both civilian and military purposes in building administrative structure, maintaining database architecture, conducting strategy consulting, and other objectives. Many Asian-owned businesses also have several branch offices, some international, outside of Fairfax County.Additionally, the Small Business Administration (SBA) provides support for small businesses through its 8(a) Business Development Program, which enables Small Disadvantaged Businesses (SDBs) to access special procurements and technical and management assistance.[13] As of March 2017, 400 firms in Fairfax County were participating in the 8(a) program, with 51 percent of the business owners being of Asian descent.[14]Through both large and small businesses, those with employees and those run by one person, AAPI Virginians are building opportunity and creating positive outcomes.

Selected Examples

This report will briefly examine two businesses headquartered in Fairfax County as well as the founders’ histories to present a more qualitative view of how some Asian-owned businesses began. There will also be a brief examination of Virginian Asian-owned retail businesses.

Inoventures LLC is a firm focused on business analytics, information technology and management consulting. Founded in 2008 by Meena Krishnan, by 2016 Inoventures had $5 million in revenue and almost 50 employees.[15]She was a 2017 Women in Leadership finalist, and as president and CEO, she led Inoventures to earn a ranking by Inc. 500 as one of the top 10 fastest growing women-led companies in the United States.[16]From 2013 to 2016, it saw an incredible 3,255 percent growth, and according to Washington Exec, it “ranked No. 7 in the Commonwealth of Virginia compared to other companies on the list.”[17]Krishnan holds a bachelor of science in mathematics, graduated summa cum laude from a master of science in system engineering, and is an alumnus of Wharton Business School.

Before serving in the world of government contracting, Krishnan was part of Senior Management at Verizon Business Research, and holds 25 years of professional experience. But, unless she had decided to move from India to the D.C. region, Inoventures and the employment it provides would not have materialized. She has shown personal fortitude by withstanding the anguish of personal tragedy in 2006 when some of her family died in a car accident in India, enduring to manage a company which provides services to the U.S. Census Bureau, Federal Deposit Insurance Corporation, the Environmental Protection Agency, and other federal agencies. In her words, she moves with a spirit of “no regrets,” and has chaired the nonprofit Save a Child Now for the past decade, assisting children in poverty around the world.[18]

Another founder and leader of a business headquartered in Fairfax County is Mahfuz Ahmed, who immigrated to the United States from an upper-middle class family yet saw the conditions of poverty in Bangladesh up close. Digital Intelligence Systems (DISYS), a technology services company, has experienced very fast expansion in recent years: in 2001, it recorded $1.6 million in annual revenue; in 2005, $34 million; in 2009, $131.8 million; and in 2012, $343.2 million. While DISYS was launched in 1994, it struggled for the first several years as partners lost faith and business did not come in often. The situation required litigation near the end of the decade to resolve those underlying conflicts, but Ahmed was only more encouraged to develop the company, and through the grinding work of many busy nights, today he manages a company which competes with juggernauts such as IBM, Deloitte and Accenture for the contractual right to assist Fortune 500 companies. From his beginnings in Dhaka, Bangladesh, to living in Great Falls with an uncle to attend George Mason University and graduating in December 1992 with degrees in engineering and computer science (where more than half his engineering class was foreign-born), Ahmed has contributed his knowledge and experience as a technology employee of Mobil and immigrant to lead DISYS to new heights. He has emphasized that as someone who has seen poverty in Bangladesh, he will never take anything “for granted.”[19]

What Inoventures and DISYS have in common are entrepreneurial founders from foreign backgrounds who leveraged their high levels of education, work experience and business sense to create businesses which provide management and technical assistance to the federal government and large companies. There are many similar successful Asian-owned businesses in Fairfax County and Virginia, each providing employment and fulfilling vital services. Asides from technological and management companies,Asian Americans also own businesses in other industry sectors such as retail. Last year, the Virginia Asian American Store Owners Association sponsored the Mid-Atlantic C-Store Expo 2016 in Henrico County, bringing together operators and owners of convenience stores.[20] According to the Alexandria-based National Association of Convenience Stores, there are roughly 4,519 convenience stores in Virginia, “58 percent of which are single-store operators”; one store owner expected to gain 50 to 60 new customers from attending the exposition.[21] Conferences and associations such as those for Asian American convenience store owners exist for various industry sectors, representing the growing numbers and productivity of Virginian Asian American businesses.

Occupation and Education

It is useful at this point to briefly account for not only the types of Asian-owned businesses in Virginia but also the occupation and education of the Asian American demographic. While often portrayed as monolithic in both the media and general parlance, there are substantial differences within the group. There is abundant data from the Census American Community Surveys for Virginia based on 3-year estimates from 2011-2013, the most recent analysis of this depth.[22] For this report, the data will be summarized for convenience:

Asian Indian and Chinese were much more likely to have a graduate or professional degree at rates of over 40 percent, while Korean and Pakistani both hovered at 20 percent and Filipino and Vietnamese were around 10 percent; for them, all except the Vietnamese had over 30 percent of their Virginia population holding bachelor’s degrees.
Filipino, Korean, Pakistani and Vietnamese workers are more likely to be in service or sales and office occupations compared to Asian Indian and Chinese workers, who are more often in management, business, science and art.
Virginia’s poverty rates are at 7.5 percent, 9.4 percent and 9.4 percent for Chinese, Korean, and Pakistani people respectively; Filipinos were at 4.8 percent and the Vietnamese were at 5.7 percent.

Clearly, the Asian American demographic is variegated. The statistical estimates in and of themselves do not provide the historical and contemporary reasons for the differences among various ethnic groups, including but not limited to American immigration law which often favored highly educated workers from some countries, political conditions and warfare in the countries of origin, and other factors. Still, they provide a better picture of the Asian American communities that live in Virginia than simple aggregations of “Asian Americans” which are not representative of constituent groups.

Conclusion

Virginia, and particularly Fairfax County, has welcomed peoples of many nations. Coming from all socioeconomic strata, they have settled in this state and built communities, businesses and lives over several decades, in some cases over 60 and 70 years. Their work has provided important services and employment for both their fellow Virginians and new arrivals, and entrepreneurs continue to arise daily. Through briefly profiling their socioeconomic conditions, livelihoods and backgrounds, this report has presented a clearer understanding of Asian Americans businesses in Virginia, their founders and the communities in which they call home.

[1]Ryan Fallon, “The State of Small Business: Virginia,” Business News Daily, last modified January 20, 2017,

[2]JieZong, Jeanne Batalova, “Asian Immigrants in the United States,” Migration Policy Institute, last modified January 6, 2016,