Abacus: How Asian Americans Are Changing the Face of the Country
Asian Americans are increasingly becoming one of the most diverse and successful ethnic groups in the United States. In financial terms, they are impacting the economy in a multitude of ways, whether it be because of their entrepreneurial spirit or because of their growing economic presence. Demographically speaking, Asian Americans also contribute to over 40 unique cultures and languages to the ‘face’ of the United States, providing invaluable perspectives and knowledge for the country as a whole. For the people wondering how the sustained growth of the Asian American community in the United States will benefit the country as a whole, well, a better question would be “in what ways does it not benefit the country?”
Just so you can understand the extent to which Asian Americans contribute to the nation’s economy, here is a mind-blowing statistic. From the year 2000 to 2015, the buying power of Asian Americans has increased by a staggering 199%! In other words, Asian Americans have nearly $825 billion dollars in purchasing power at their disposal, making their buying power larger than the total GDP of the Turkish economy. In the next four years, the projected buying power growth for Asians in the United States is expected to increase an additional 32% to $1.1 trillion dollars.
For businesses looking to increase their sales, this should be particularly exciting as more disposable income will potentially flood the market in the coming years. Asian Americans spend on average $58,000 dollars a year, which is nearly 18% higher than any other demographic in the country. With an increase in income, we can expect this to increase even more.
In regards to this changing dynamic, it would be wise for businesses to retool their strategies and approaches towards catering to the Asian-American demographic if they seek to benefit from this development. Looking at the chart below, the spending habits of Asian Americans reveal a number of key facts to consider.
The chart signifies that compared to other demographic groups in the United States, Asian Americans tend to spend more money on healthy food options as well as on electronics such as phones or computers. For companies that produce or sell food, perhaps, increasing or focusing on the procurement of organic food will draw in more Asian American customers as they tend to value it more than other ethnicities. In the case with electronic stores, staying up-to-date with the newest technologies and trends will surely attract and retain new customers.
Given that Asian Americans are heavy users of electronics, this also presents a great opportunity for advertisers and marketers in the sense that traditional methods of customer outreach are a thing of the past. Asian Americans “over-index” - which is a fancy way of saying that they use it a lot – the usage of smartphones, tablets, computers which signals a huge online presence. In addition, Asian-Americans also have the most online purchasing intentions for any other group, meaning that they are more inclined to purchase items online. For advertisers seeking to increase brand awareness, placing ads on mobile apps and websites would be considered more efficient than other means of ad placement such as billboards or storefront kiosks. Using websites like YouTube, Twitter, and Facebook, which boast high numbers of Asian-American users, can undoubtedly increase the exposure of a product to these potential customers.
Throughout the course of this column, we’ve largely been referring to the Asian American demographic as a singular entity. However, this is not entirely the case. As mentioned earlier, there are over 40 different Asian ethnicities represented in the United States, meaning that there is a wide spectrum of differing consumer habits and other key information to take into account. For example, looking at the picture below, it reveals that throughout the major regions of the United States the composition of Asian ancestry is variable.
So while one region may be predominantly East Asian, another region may consist of more South East or South Asians. For example, in places like the Houston Metro Area Asian Indians average around 25% of the Asian population while in areas like Los Angeles and San Francisco they average around 6% and 13% respectively. The same type of trends also holds true for other regions and for other major Asian-American groups. Clearly, there is no homogenous makeup of the Asian-American populations in the United States so it must be said that for any company that seeks to reach out to this demographic, they must take into consideration the distribution of different sub-groups of Asian-Americans that exist. One of the biggest issues for a marketer is treating the various Asian subgroups as if they all adopt the same consumer behaviors or participate in the activities as this will surely result in poor market optimization.
Regional buying power for Asian-Americans also varies depending on the region. The chart below shows that in the “West,” such as in states like Washington and California, Asian Americans earn far greater amounts of money compared to other regions. Having said that, for producers and marketers in the Western United States, the selling of luxury items will most likely succeed at higher rates than it would in the Midwest for example. Perhaps observing the tendencies of Asian-Americans at different income levels will shed light onto particular trends in spending for Asian-Americans, thus allowing for companies to accurately market the ‘right’ products.
The immense growth in spending power from Asian Americans is not the only benefit to come out of this demographic explosion. Asian-Americans are also some of the most active members of the business community, creating many different businesses across the country that provide valuable services. Out of the 2 million U.S. businesses, more than 50% of the owners are considered Asian-American and on average, these businesses generate up to $708 billion dollars each year combined. The most common businesses being created are categorized as professional, scientific, healthcare, and retail trade companies indicating that Asian Americans have a broad set of labor and technical skills. So not only are Asian-Americans purchasing products and stimulating the economy but they are also creating millions of jobs that employ our friends, neighbors, and relatives.
Asian Americans, even as far back as the 1800s, have helped create the foundations on which this country was built upon. Characterized by having a fiercely independent and strong penchant for success, Asian Americans have continued to contribute to the growth of this nation in a variety of ways. Not only are they becoming even more wealthy, thus being able to stimulate the economy, they are also creating jobs for the thousands of communities scattered across the United States. In the future, as Asians become more integral to this country’s demographic makeup, we can expect to see a continuation of these advances thus all but ensuring a bright future for the country despite what may seem like ‘darker’ times.