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1.12.00
East Meets West Meets East: Chinese Networking in Silicon Valley
Asian entrepreneurs' groups hobnob across the Pacific  

Mingling at the annual Asian-American Manufacturers Assn. conference in Silicon Valley last June, entrepreneur Chih Cheung had a mission. Mao's Cultural Revolution had driven the 29-year-old from China when he was 7. Now, he wanted to participate in a new cultural revolution in Asia — the Internet phenomenon. His company, HelloAsia.com, was to be a marketing site serving Taiwan, Korea, Singapore, and Hong Kong. Its big draw: points leading to rewards for subscribers who purchased its affiliates' products.

Cheung faced a big barrier. He had enviable credentials — two degrees from Harvard University and a stint at Goldman Sachs — but not nearly enough Asian contacts. Peter Lui, a high-tech angel investor and AAMA board member, told him the prestigious high-tech networking group was his ticket. "We had lunch. We became friends, and he encouraged me to join," says Cheung.

Lui was right. A third of the investors, entrepreneurs, and high-tech professionals at the AAMA confab were from Asia. Cheung, a Valley denizen only since April, connected with AudioTalk Networks Inc., a Mountain View (Calif.) company with the technology he needed. And he met people who pointed him to Asian partners and investors.

On Oct. 11, HelloAsia.com announced $20 million in first-round funding. Investors included San Francisco-based H&Q Asia Pacific Ltd., a unit of Chase H&Q, whose principal, Ta-lin Hsu, is an AAMA member.

Cheung's experience shows how ethnic networking groups are helping change the role of Asians in Silicon Valley from technicians-for-hire to entrepreneurs. About 15% of the engineers in the region are of Chinese heritage. Of the high-tech companies started in the Valley between 1980 and 1998, 2,001, or 17%, were run by Chinese, according to research by Anna Lee Saxenian, professor of regional development at the University of California (www.ppic.org/publications/reports.html). Yet until recently, prejudice — the belief that they couldn't run companies — lingered. "By the late '90s, a major turnaround occurred in which people saw Chinese and Indians not just as engineers but also as entrepreneurs, completely capable of leadership," says Saxenian. "That was not true 10 years ago."

Part of that success, she says, is due to more than a dozen Chinese organizations — many staffed by volunteers — in Silicon Valley. New ones spring up yearly. Their memberships generally follow professional or national lines. Some welcome anyone from the Chinese community in a given high-tech niche. Others cater to techies from one country. Some are narrower: The Chinese-American Computer Corp. serves Taiwanese PC-clone sellers, while the North America Chinese Semiconductor Assn. is for mainland Chinese in semiconductors.

"Most of these organizations were founded in response to the feeling of being isolated and of facing glass ceilings," says Saxenian. "Those factors are less important now, but the organizations are still very strong, for the same reason that networking groups exist within the white community: Success in high tech is dependent on cross-cutting institutions and relationships that allow people to learn quickly from one another."

While the Valley Chinese do belong to mainstream groups, "the bulk of their energy goes into ethnic organizations," Saxenian says. "A lot of them felt isolated when they came here, and they want to make it easier for others."

Unlike other networking organizations, their organizations also play an international role: They connect Asians across the Pacific, turning cultural ties into a strategic business advantage. "All the Chinese associations have some kind of connections with Asia, and that has grown over time," says Saxenian.

"There's a huge market over there and an amazing amount of trade going on, and we facilitate it," says Robert P. Lee, AAMA president and CEO of Inxight Software Inc. Three of the 16 startups that gave formal presentations at the June AAMA conference were from Singapore and China. "Broken English and all, they had these great ideas," says Lee. "Many of them already have great local backing, but they needed to talk to people here."

When officials from Hong Kong, Taiwan, and Singapore visit Silicon Valley, the Chinese organizations are among their first stops. "They want us to advise them and talk about our experience, and to introduce them to U.S. companies," says Wyatt Leung, president of the Chinese Software Professionals Assn. Recently CSPA helped Hong Kong officials line up speakers and meetings with VCs and companies at Nansha, an industrial park in southern China.

The Taiwanese, the most established Chinese group in Silicon Valley, pioneered the transpacific career path. Many came to the U.S. for graduate school in the 1960s and 1970s, worked here, then took senior positions in Taiwan's semiconductor companies. Now some are back in Silicon Valley as venture capitalists concentrating on the Asian community. Some 30 to 40 Taiwanese VC firms operating in Silicon Valley invested $300 to $400 million last year, estimates Jen Chang Chou, director of Monte Jade Science & Technology Assn., a focal point of their networking activity. Symmetry, which designs simulation models for electronic components, and AboveNet, an Internet hardware and service company, were just two of the companies that found Taiwanese financing that way, says Chou.

Mainland Chinese students, who have recently emerged from U.S. doctoral programs, are following in the footsteps of the Taiwanese. Hong Chen, who received his doctorate in computer science in 1991 from the State University of New York at Stony Brook, joined the Chinese Information & Networking Assn. (CINA) in Silicon Valley in 1994, where he met CINA's chairman, a U.S.-based angel investor named Jeff Lin. "He [got to know] me and believed in me," Chen recalls. Lin invested in Chen's regional ISP, AimNet, based in Santa Clara (Calif.), and introduced Chen to Vertex Management, the venture-capital arm of the Singapore Technologies Group conglomerate, which invested $2 million.

Now Chen has a second company, GRIC Communications Inc., based in Milpitas (Calif). GRIC provides software and services to Internet service providers. Chen has raised $55 million for GRIC — $37 million of that from Asian sources. GRIC went public on Nasdaq on Dec. 15, and its share price has risen from $14 to $45.

Chen has become the consummate networker and a connoisseur of the groups' virtues. He likes CINA for the ideas. He's vice-president of AAMA, which he prizes for high-level contacts, and he has become vice-president of the Chiao-Tung University (his alma mater) Alumni Assn. in Silicon Valley to strengthen ties to the next generation. That's a lot of potential deals.


By Meg Lundstrom in New York

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