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
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,
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