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Rika Nakazawa
Business Development Liaison
The Web Connection

1.What is your title and role?
Business Development Liaison, Web Connection - San Francisco

2.What is cultural/ethnic marketing and why does it matter? Cultural or ethnic marketing means tailoring the planning and execution of customized marketing initiatives so as to address the specific needs, desires, tastes, and consciousness determined by the ethnic background of the particular targeted group.

It matters because the U.S is an aggregation of racial groups from all over the world - and of varying generations. Cultural marketing begets loyalty, and loyalty begets repeat customers, which begets diminishing cost per sale, which translates into increase in bottom line profit. Word of mouth also can be effectively triggered by successful ethnic marketing - once a company establishes itself to be "with it" in terms of addressing a particular ethnic group, viral marketing takes care of itself. As immigration continues into the U.S, and as ethnic families continue to grow their families, the pressure will increase for companies address these groups specifically, lest they lose out to the competition that does.

The emerging challenge is that with each generation, the ability to categorize people into the various ethnic groups becomes increasingly impossible, as the number of inter-racial families grows, and offspring thereof are neither purely one ethnic group nor the other. In addition, the further down on the generational group you target, the further away the target group is in terms of identifying with distinct cultural specifications.

With respect to marketing to the Asian American group specifically, the imperative comes out of the fact that Asian Americans have the highest percentage of professionals among all ethnic groups, and also have the highest average household income - close to USD $48,000 in 1998 (Caucasian average household income for the same year was about USD $42,500). In light of an extremely favorable financial profile, the Asian American group is a highly desirable target demographic for businesses.

3.What are some of the demographics for Asian Americans in the United States?
Currently there are 12 million Asian Americans in the U.S, and this number is expected to grow to 17 million over the next 10 years. 55% of Asian American households have computers, and as a side note, 76% of San Francisco Bay area Chinese households have a computer at home.

In terms of Internet use, 65% of Asian American households are online, and this figure is projected to jump to 84% in 2005. In absolute figures, by the end of 2000, 2.2 Asian-American households will be online. 41% of Asian American Internet users make online purchases.

4.Asian Americans is a broad term. Can you explain some of the sub-categories commonly used?
Sub-categories follow the specific regions within Asia: Korean-American, Chinese-American, Japanese-American, Vietnamese-American, etc.

5.The "Digital Divide" is something that is mentioned often. Where do Asian Americans stand in this?
The Asia American demographic has an remarkably high penetration of computer compared to other ethnic groups - over 55% Asian American household have a computer, compared to 48% for Caucasian, 27% for Hispanic, and 22% for African American. And as indicated in the demographic figures above, Asian Americans, as a group, are the most Internet savvy - 65% of Asian American households are online. Clearly, Asian Americans are on the attractive side of the "digital divide".

6.What kinds of web sites are popular for Asian Americans?
This depends highly on the specific group within the Asian American community, and for what purpose they are using the Internet - just as in the general market. However, there are ones that stand out as examples of sites that have effectively customized and localized content to serve that specific community, and with information from their homeland:

Again, we need to be careful and keep in mind that one cannot generalize and identify any site that is going to be popular with Asian Americans in general - the differences within that subset can be as wide as the differences between the subsets in the group "Europeans" - British, French, Greeks, Italians, etc. When embarking on a strategy or plan to target an ethnic group, a company should and must devote considerable funds and time to understanding the particular audience they are targeting.

7.How important is it for a U.S. based Internet company to translate their site in effort to reach Asian Americans?
Whether it is a U.S based Internet company, or any U.S company conducting business online, the answer to this largely depends on the target group. If the business is targeting 1st generation Asian Americans, the ones who migrated to the U.S at some point in their life, than it is crucial. However, if it is to target the 2nd + generations (the offspring of those who moved here), than it may not be such an imperative, as often times these generations might not even be able to speak the native tongue of their elders.

In terms of how important it is for a U.S based company to incorporate an online effort into their business mix, the answer is that it is most definitely necessary. Jupiter research finds the Asian American population to be the most Internet-savvy. Ethnic minority demographics will grow at double-digits for the next five years. As mentioned above, by 2005 84% of Asian American households will be online. This is especially given the relatively high income earned by Asian American households - as stated above. The cost per acquisition within the Asian American group tends to lower than for the broad market.

To reiterate some statistics: currently, there are 2 million Asian-Americans online, and this number will increase by 55% to 3.1 million in 2005. Currently, Asian Americans are the most likely to be online relative to their overall population in the US, with almost two-thirds accessing the Internet. The high online penetration of this group will continue to increase, with 84% accessing the Internet in 2005.

8.Other than translation, what can a company do to their site to attract Asian Americans?
This really depends on the business model - is it a portal? Is it a retail site? Is it for personal finance? Is it an entertainment/gaming site? And again, it also depends on the target market within the Asian American group.

In general, the company must be sensitive to culturally prescribed calendars, issues, taboos, symbols, and measurements. So for example, knowing that the Chinese New Year is based on the Lunar Calendar - so it could be end of January or February depending on the year - will endear you much more to the Chinese American group than if you were to just do a general "New Year" holiday promotion first of January. An example of a taboo would be with the use of color - red is generally not a good color to use in Japan, nor is the number '9'. And then the color Red is great for Vietnamese and Chinese target audience, as it denotes good luck.

Above and beyond all this of course, a company must make the presence of their site known in the first place. This would involve a carefully planned and executed integrated (offline and online) marketing campaign and integrated channel management.

9.What is the difference between a Chinese person in China online and a Chinese person in the United States online?
There are many differences. There are differences even amongst the Chinese themselves in the Asia region. For example, Taiwan Chinese and Mainland Chinese. Or Hong Kong Chinese and Singaporean Chinese. This being said, very general differences can be delineated by comparing income level, connection to the Internet and psychographic profiles.

The wage-earning Chinese person in the U.S makes much more money in absolute terms than the Chinese person in China. They will therefore have more disposable income and higher spending power. In relation to matter of online spending, another key difference is in the e-commerce participation levels between a Chinese person in China vs. in the U.S. The Chinese person in China, mainland China (the comparison would be altogether different if we were to compare U.S with Hong Kong Chinese), does not yet engage in purchasing activities over the Internet. This is due to both the lack of sites that have enabled or promote transaction, and also because of the scarcity of credit card use in China. In contrast, for those of us living in the U.S, we have a plethora of e-commerce enabled sites to choose from, as well as the relative ubiquity of credit cards that makes e-commerce a smooth and structured reality.

Secondly, a Chinese person in the U.S is likely to be on a much faster connection, with the relative prevalence of high-speed access - from 56 kbps, to DSL, or T1. And they can afford to stay on longer because of the free ISP model or flat-fee model. Telecommunication infrastructure and transmission cost much more in China than in the U.S, resulting in longer surfing patterns and access to rich media content. Of course, content is also much more restricted for the Chinese in China.

The psychographic differences arise out of the different set of needs and influences that are in the sphere of the day-to-day life of the Chinese person in China vs. the Chinese person in the U.S. The Chinese person in China, for example, may gravitate more towards news and information sites, given the limited access to such resources in the offline world due to continued forms of government censorship.

And another key difference is in the e-commerce participation levels between a Chinese person in China vs. in the U.S. The Chinese person in China, mainland China (the comparison would be altogether different if we were to compare U.S with Hong Kong Chinese), does not yet engage in purchasing activities over the Internet. This is due to both the lack of sites that have enabled or promote transaction, and also because of the scarcity of credit card use in China. In contrast, for those of us living in the U.S, we have a plethora of e-commerce enabled sites to choose from, as well as the relative ubiquity of credit cards that makes e-commerce a smooth and structured reality.

10.What is the difference between a Japanese person in Japan online and a Japanese person in the United States online?
Internet penetration in Japan is much higher than that of China, so their level of Internet familiarity, knowledge and depth of adoption into the every day life is much greater. So in some ways, the gap between the Japanese users in Japan versus those in the U.S is narrower for this group.

Of course, there are several differences to be kept in mind. A key difference to note is that increasingly, the Japanese person in Japan is likely to be accessing the Internet through their mobile phone. Currently 12 million Japanese are doing so. As a larger proportion of Internet users either migrate to this behavior, or start using the Internet right from their phone, their user experience will be different from the Japanese person online in the U.S, whose surfing habit will more closely mirror the PC-enabled one still more common here.

Additionally, from a through-PC Internet access standpoint, being online in Japan is prohibitively expensive. While there is more of the hard-wired infrastructure than say, China, the financial burden of telecommunications charges in Japan often outweigh any benefit perceived for staying online a great deal. So the user in Japan as an audience group are not as "sticky" as those here in the U.S.

Also, similar to the situation in China, but not to such a degree, credit card penetration is much less in Japan than in the U.S. The Japanese person in the U.S will probably be acculturated to making online purchases than their in-Japan counterpart.

11.Whether a company decides to do translation or just some small changes to their site in effort to reach out to Asian Americans, how do you suggest they go about this marketing venture?
When it comes to marketing to ethnic groups, a company really only has one chance - if they do it wrong, it is difficult to undo any damage to the image. And to have any real affect, the company should be prepared to do more than merely make small changes to their site. A marketing initiative to reach out to the Asian American community should be a concerted one - with focus, attention to details, and follow through. Establishing a relationship with ANY ethnic group - Caucasian, African-American, Asian - involves more than a one-shot or incremental-change event. It takes a long term strategy, clarity of objectives, and commitment of substantial funds to the initiative at hand.

12.What companies do you think have been particularly successful at targeting Asian Americans online?
Surprisingly few. Charles Schwab deserves particular attention with their Asia Pacific Services initiative that was launched several years ago, and which was migrated onto the online medium a couple of years ago. I attended the Cupertino, California branch opening, which Charles Schwab himself attended in acknowledgement of how important the Chinese community is to their business.

As the Internet continues to make the world a smaller and smaller place, smart businesses will realize the need to address ethnic and cultural groups wherever they may be - in the U.S or in their home countries.

13.What issues or problems are commonly over-looked by companies attempting to address Asian Americans?
The answer to this can be found mostly in the responses above, however I should add that oftentimes companies tend to think the Asian American as one, and perhaps too enigmatic to even try to address. Concomitantly, another mistake would be to not take the group seriously enough. From everything I have said above, it is clear that the Asian American cumulatively is clearly a force to be reckoned with. It is a group that has relatively high disposable income, is Internet savvy, and generates a high return on investment compared to other ethnic groups. To dismiss them in the overall market strategy is a mistake for any company. Conversely, to err in approach and delivery in execution of a strategy targeting them can be devastating for the image, reputation, and credibility among this group - damage that can take a long time to undo, if ever. Short of hiring a whole in-house team, a business can most cost-effectively deal with all these challenges by working with a professional familiar with such details and intricacies. By working with specialists within that firm, the business can get on the right and long-term growth path of capturing the wallets and loyalty of the Asian American group, and the subgroups therein.

Rika Nakazawa is the Web Development Liason for the Web Connection, a company that offers Internet strategies and solutions for major corporations and dot-com startups. She is located in San Francisco, CA and can be reached at rika.nakazawa@twc-asia.com.

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