Business & Economy

Korean small business ownership wanes as markets and generations change

Korean-American shop owners wait for customers along East Pico Boulevard on a recent quiet Saturday afternoon.
Korean-American shop owners wait for customers along East Pico Boulevard on a recent quiet Saturday afternoon.
Ryan Thompson

Monday through Saturday, week after week, Byung Yu arrives promptly at 8 a.m. to open his women’s clothing store in Los Angeles’ Fashion District. He pulls up the security bars, sweeps out the entranceway, and rolls out racks of his merchandise onto the sidewalk. 

The 68-year-old has been following the same routine since 1992, when he opened GA Fashion along east Pico Boulevard.

“It’s not my passion, selling clothes for ladies. This is just to make a living,” Yu said. 

Yu’s story is typical of Korean immigrants, who have the highest rate of small business ownership of any ethnic group in Los Angeles. 

They follow a route similar to Yu’s on arriving in the United States: they join a church, make connections and open a business – often liquor stores, dry cleaners and mini marts.

But marketplace factors, including the consumer move to online shopping, and a declining interest in shop ownership among younger generations are changing the business landscape for Korean-Americans.

Some churches play role in starting business

When Yu came to the United States in 1985, he didn’t know what he would do for work. At home in the Chungbuk province of South Korea, Yu had been an elementary school teacher. But with poor English and lacking recognized teaching credentials, he had to find something new to earn a living. 

On the advice of family members, Yu joined a now-shuttered Korean Presbyterian church to help get adjusted to life in his new country. There he met people, made friends, and, most importantly, learned about an opportunity that would come to define his life in America. 

Fellow members of the church were building a new shopping plaza in the Fashion District for Korean-owned businesses. They asked congregation members if they wanted to open up stores. 

“They gave me resources, they gave me information,” he said. “They gave me everything.” 

Within two years, Yu joined dozens of other Korean immigrants in the Fashion District, selling cheap, Chinese-made clothing imports to a largely Hispanic customer base. 

“Nobody can deny the role that church plays, more than for religious reasons,” said Kyeyoung Park, professor of anthropology and Asian American studies at UCLA. “Korean churches double as community centers, and when immigrants arrive, many become religious so they can seek out the resources of the congregation.” 

The amount of help that churches give immigrants to become established financially varies widely. Some ministers said they want to keep business-related activities out of their sacred space because they believe that churches are strictly for worshipping. Others see the benefits that such support could mean for members of their church. 

At Hana Presbyterian Church in Buena Park, a series of monthly meetings bring business owners together. Some events are specifically geared to newly arrived Korean immigrants — a recent meeting focused on American customer service etiquette, stressing the importance of “greeting, smiling, and chit-chat.” 

Other meetings are conducted in English, and focused on topics more of interest to Korean-Americans who were born in the United States or immigrated as young children. 

“It's a place for the Korean business owners to get together and learn,” said Ho-El Park, president of the Korean American Chamber of Commerce of Orange County. “Sometimes they have successful business owners who come and speak about their lives, giving out their life testimony, and that helps a lot of other people who are listening.” 

Ho-El Park, a lawyer, has lectured Korean business owners, including those at Hana church, about the importance of following regulations. He said the biggest issues facing first-generation immigrants early in their business careers are California’s tough regulations and permitting requirements. 

“The business owners don't have the reserved funds to pay these penalties or hire a lawyer to settle disputes,” Ho-El Park said. “When they come into noncompliance with a lot of laws, they just get stuck and their businesses fail.” 

Language barriers can also be a significant obstacle for Korean-Americans going into business. Many prospective business owners choose to open shops that require minimal conversation between themselves and their customers.  

Language can pose barriers

The Los Angeles City Office of Finance, which handles business licensing and tax collection, said communication with Korean-owned businesses has been difficult over the years because of language barriers. While 80 percent of licensed businesses renew their permits online, Carl Sampson, assistant director for the finance office, said that number is comparatively lower for Korean-American-owned businesses, adding as a possible explanation that the site is available only in English. 

“They’re much more likely to come into our office where we can give them extra assistance,” said Sampson. “They’ll come with their son or daughter, someone who has a better grasp of the language and can guide them.” 

He said his office is working to improve customer service for underserved communities like that of Korean-Americans. The finance office’s site currently allows electronic filing of business tax permits in Korean, but Sampson hopes to increase the amount of Korean-language resources online. 

Funding for those early businesses was directly linked to Korean church communities. In the early eighties, first-generation immigrants started credit associations to help support the business ambitions of arriving immigrants. 

“From a trust standpoint, these networks relied on the church and people’s faith,” said Kyeyoung Park. “This idea came from villages a long time ago in Korea, where it's not a problem to trust each other because you have lived together for a long time. So everybody knows how reliable you are.” 

Market, generational changes impacting small businesses

Korean credit associations have fallen out of favor since 2000. Today, Korean-American banks have become a more popular source of capital for arriving immigrants. 

Korean-American businesses have also become increasingly dominated by manufacturing and franchise businesses since 2000, a departure from the tradition of small stores and restaurants that Koreans opened during the height of their immigration in the ‘80s. 

Some are beginning to fear that small business ownership by Koreans living in the United States is on an irreversible decline. The rise of online shopping and global imports, among other developments, have threatened some businesses. Others point to generational changes. 

Just over 11 percent of Korean-Americans who were brought to the United States as young children, known as the 1.5 generation, are small business owners, according to Kyeyoung Park. Business owners among second-generation members is even lower at 6.2 percent. 

“[The] second generation doesn’t have to work so hard,” said Eun Sang Yoo, a first-generation small business owner and parent of two. Both her children graduated from universities in Los Angeles and now work for American companies. 

“The difference is, they will work on Main Street, and we work on side streets,” she said.

Foot traffic at her small clothing store has declined dramatically in recent years. Like Yu, her Fashion District neighbor, she’s not optimistic about the future of the Korean-American small business dream. 

These days, she says, she spends her time outside of her shop, “waiting and waiting for customers to come.” 

This story is one in an occasional series of reports by students taking part in a class of the USC Annenberg Knight Program on Media and Religion, headed by Diane Winston. Through a grant from the Luce Foundation, Annenberg students have covered global religion, culture and politics for the past several years. This spring, students reported and wrote on Southern California's Korean community and visited South Korea.