AAPI businesses in Massachusetts: Significant challenge and immense potential

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Asian American and Pacific Islander (AAPI) businesses in Massachusetts face unique challenges and opportunities, as highlighted in the recent report by the Asian Business Empowerment Council (ABEC) at the Asian Community Fund and The Boston Foundation. Despite AAPI businesses being the fastest-growing sector in Massachusetts, these businesses often encounter significant obstacles, ranging from exclusionary policies to hate-based violence.

One key finding from “Setting Roots in Rocky Soil: The State of AAPI-Owned Businesses in Massachusetts” is the dramatic growth of AAPI-owned businesses over the past two decades, increasing by 187%. These businesses contribute more than $3.9 billion in payroll to the state’s economy and make up over 10% of “Main Street” businesses — those small enterprises that bring goods, services and cultural vibrancy to neighborhoods. Despite this significant growth and robust contributions to the state’s economy, AAPI-owned businesses have vulnerabilities and still face significant challenges.

The COVID-19 pandemic starkly exposed some of the vulnerabilities of AAPI businesses. Many faced a severe loss of customers due to increased anti-Asian sentiment and insufficient support networks. They also struggled to access relief funds. According to the report, AAPI businesses were often misunderstood and under-supported, exacerbating their difficulties during the pandemic. Moreover, the report revealed a significant reliance on personal savings or informal networks for capital, with two-thirds of AAPI business owners expressing a need for better access to external funding. This indicates a critical gap in financial support and resources, which hampers their growth and sustainability.

Language barriers and a lack of trust in financial institutions further complicate the situation. The report points out that many AAPI business owners are hesitant to seek help, a cultural trait that can impede their access to necessary resources.

Qingjian (Q.J) Shi, director of ABEC said, “This report underscores that the challenges AAPI businesses face are shared across historically marginalized communities. The lack of capital, networks, trust and language access resonates with many.” Commenting on the narrative about the AAPI community being better equipped to succeed in business, she said, “The data we see in this report serves as a reminder that skewed public narratives like the model minority stereotype that paints all AAPI businesses as successful harms not only AAPI communities, but also creates barriers to solidarity and mutual support among all marginalized groups, hindering our collective progress.”

The report drew on data from survey and focus groups conducted by ABEC in the fall of 2023. Respondents and participants were from 20 different AAPI ethnic communities covering a range from professional, scientific and technical services to health care and social assistance. Covering the business conditions in the AAPI community and the challenges businesses faced, the report ends with opportunities to support AAPI businesses and policy recommendations.

“What makes this new report so powerful is that is successfully brings the voices of people across the AAPI community into the data — by offering the survey in multiple languages, reaching out to a broad cross-section of business owners, and collecting data both in Greater Boston and statewide,” said Orlando Watkins, vice president and chief program officer at The Boston Foundation.

Hoon Heo, Executive Director of the Overseas Korean Trade Association Boston and the Boston Korean Business Association appreciated the report as well saying, “I agree with the report, since many businesses closed due to the pandemic.” Considering the challenges and opportunities, Heo said, “Like other immigrant people, Koreans see the generation changes from first, second and even third generations who are fluent in English so there hasn’t been any more barriers to operate any kind of business. Start-ups is a good example. In addition, … the pandemic and soaring inflation made younger generation to come back home and succeed their parents’ business and upgrade it. I think that is a good sign for succession and inherited culture”

Despite the challenges described in the report, AAPI businesses have demonstrated remarkable resilience and adaptability. This is due in part to AAPI businesses bringing diverse cultural elements to the communities they serve, providing a variety of businesses and services, and enriching the local economy and social fabric. The community’s diversity is seen as a potential strength. Nevertheless, there is no single narrative that describes how AAPI businesses are faring.

“The AAPI community is far from monolithic,” Shi pointed out. “Our community encompasses a vast array of languages, identities and histories. Our report found that AAPI immigrant-owned businesses are twice as likely to find themselves in worse or much worse business conditions in the last 12 months than their non-immigrant counterparts. Our diversity brings unique perspectives and experiences that enrich our collective identity but also highlight the need for tailored approaches to address the specific challenges faced by each group.”

On the horizon, AAPI business owners can find hope in the opportunities to support and enhance their businesses that the report outlines. Recommendations like making investment in language- and culture-specific technical assistance or providing targeted technical assistance can help AAPI business owners navigate the complexities of entrepreneurship, from securing funding to scaling their operations can create equitable opportunities for all.

The state of AAPI-owned businesses in Massachusetts is one of both significant challenge and immense potential. By addressing the barriers identified in the report and leveraging the strengths and opportunities within the community, there is a clear path forward to fostering a more equitable and prosperous environment for AAPI entrepreneurs. The collective efforts of policymakers, financial institutions and community organizations will be crucial in ensuring that AAPI businesses not only survive but thrive, contributing to the vibrant economic and cultural landscape of Massachusetts.

For The Boston Foundation, this work is critical to having a more inclusive and equitable society. “Just as ABEC itself has done as a partner to organizations like BECMA and Amplify Latinx, the resulting report brings a fuller understanding of the AAPI business experience to light,” said Watkins. “We are so pleased to be able to host the work here at TBF.”

Rahsaan D. Hall, Esq. is president and CEO of the Urban League of Eastern Massachusetts.