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June 25, 2024

As Asian-owned businesses struggle in Mass., report recommends dropping citizenship requirement for minority-owned certification

A woman with dark hair in a ponytail wears a red uniform stacking clear containers of desserts. Photo I Courtesy of the Asian Business Empowerment Council The Asian Business Empowerment Council survey found that 56% of AAPI business owners experienced challenges in finding and retaining qualified and reliable employees and 52% saw a decrease in customers.

As the number of Asian-owned businesses in Massachusetts have risen by 187% in the past two decades, a new survey shows Asian American & Pacific Islander company owners are struggling in the economy, particularly among immigrant-owned businesses, and they are having a harder time finding employees than the average business in the state.

But these issues are not lost causes, increasing cultural- and language-competent support for AAPI business owners is key to promoting equity and tackling barriers to entry, according to the report by the Boston-based statewide not-for-profit organization Asian Business Empowerment Council.

The report recommended state and local governments remove barriers such as citizenship and permanent residency requirements for these businesses to be certified as minority-owned businesses, as those certifications are often how other companies and contractors with public money find out about AAPI business.

The report, titled Setting Roots in Rocky Soil: The State of AAPI-Owned Businesses in Massachusetts, includes survey and focus group data from 262 participants throughout areas including Worcester, Springfield, and Boston. 

Results were roughly split amongst AAPI business owners in their reports of their business conditions improving or worsening throughout the polled sectors of: accommodations and food services; retail; health care and social assistance; professional, scientific, and technical services; and other services,. 

Yet, reported business conditions exhibited significant disparities when polled by the ​​business owner’s educational level and status as an immigrant or not.

With most AAPI-owned businesses founded by immigrants, the survey reported those owners were almost twice as likely to report worsened or much worsened business conditions when compared to non-immigrant identified business owners, with 41% of immigrant-owned businesses reporting worsened conditions as opposed to 21% other AAPI-owned businesses.

This gap narrowed when comparing those who experienced improved or much improved business conditions: 32% of immigrant business owners reported better business conditions in comparison to 40% of other AAPI business owners.

Disparities in business conditions were stark when comparing experiences of owners with or without higher education degrees.

Business owners with no college degree were more likely to report worsened or much worsened business conditions over the past 12 months with the majority of business owners without degrees, 52%, reporting worsened conditions compared to 22% of those with college degrees.

The ABEC study found among the top five challenges faced by AAPI business owners, the majority, 56%, experienced challenges in finding and retaining qualified and reliable employees and 52% saw a decrease in customers. 

The survey reported 47% of owners had challenges keeping their wages up with inflation, 34% faced challenges getting capital for funding, and 27% experienced supply chain problems.

Respondents were allowed to select more than one answer, accounting for overlapping percentages.

Though many small businesses, regardless of the race or ethnicity of the owners, have difficulty hiring new employees, data from the ABEC report shows the issue can be particularly prominent amongst AAPI owners. The report cites results from a 2024 survey conducted by The MassINC Polling Group showing 73% of Asian-owned businesses reported hiring difficulties compared to 61% of white-owned businesses, and 53% of Black- and Latino-owned businesses.

When it comes to ameliorating the issues facing AAPI business owners, the survey recommends increasing access to a variety of culture- and language-specific assistance including community-based organizations, networks, and collaborations. 

Only 23% of respondents had accessed technical assistance in the last year including only 11% of AAPI business owners without college degrees. Focus group participants expressed lack of familiarity and trust with obtaining capital from financial institutions while businesses owners who utilized technical assistance were more likely to report better business conditions within the past month. 

Investing in technical assistance that is both language- and culture- specific and initiating collaboration between technical assistance providers and AAPI-serving organizations will help facilitate comprehensive support for AAPI business owners, the report said.

Increasing AAPI business owners’ access to AAPI and non-AAPI networks alike was underscored by focus group participants. Utilizing networks can help business owners tap into opportunities including new revenue sources, expanding customer bases, obtaining new contracts, and meeting diverse advisors and mentors, according to the report. 

Navigating the funding application process for funding is a key challenge for AAPI owners with businesses reporting difficulty when it comes to complex processes and barriers to language accessibility. Thus, survey data emphasized the lack of funding and external investor support for AAPI businesses. 

To bridge this gap, the report recommends institutions prioritize hiring culturally competent and multilingual staff who can support AAPI business owners through the application process and implement microloans and targeted grants for those owners who are facing challenges with traditional financing options. 

CORRECTION: A previous version of this article stated Asian Business Empowerment Council is a nonprofit. ABEC is actually a not-for-profit organization. 

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