Asian-American Buying Power
Last year, 14 million Americans, or 4.6 percent of the country’s population, claimed Asian ancestry, making the group a powerful force in our consumer market.
This group’s shares of the population were 3 percent and 4 percent in 1990 and 2000, respectively, and its enormous economic clout continues to attract more attention from businesses and advertisers. My data for Asians combines two race categories, including those who identified themselves as Asian or as Native Hawaiian and Other Pacific Islanders.
I expect the nation’s Asian buying power will more than quintuple, climbing from $116 billion in 1990 to $269 billion in 2000, to $459 billion for 2007, and to $670 billion in 2012. The 294 percent gain from 1990 through 2007 is substantially greater than increases in buying power projected for whites (124 percent), the nation as a whole (134 percent), blacks (166 percent) and Native Americans (190 percent). However, it’s lower than the 307 percent gain projected for Hispanics.
At $459 billion in 2007, the U.S. Asian market outshines the economies of all but 16 countries.
Georgia is home to the nation’s third-fastest growing Asian consumer market. For 2007, the state’s Asian market ranks 14th in size, advancing from 15th in 1990. Current data show that Georgia’s Asian buying rose to $8.1 billion, up from $4.2 billion in 2000, and far outstripped the $1.1 billion mark set in 1990. The impressive 624 percent increase in Asians’ buying power ranks third, surpassed only by gains in Nevada and North Carolina. Asians’ share of Georgia’s consumer market was 2.9 percent in 2007, up from 1.1 percent in 1990.
The group’s fast-paced growth in buying power demonstrates the increasing importance of Asian consumers and should create great opportunities for businesses that pay attention to their needs. Because the group includes consumers of so many national ancestries, languages and cultures, firms that target specific subgroups – Chinese or Filipino, for example – may find niche markets particularly rewarding.
The Asian population is growing more rapidly than the total population, mostly because of strong immigration, a trend that is expected to continue. In 2007, the Asian population reached 14 million.
The Asian population is relatively young: The American Community Survey indicates that the median age is 35 compared to 40 for non-Hispanic whites. Thus, a larger proportion of Asians either is entering the workforce for the first time or is moving up the career ladder. Also, only 8 percent of Asians are over 65, compared to 15 percent of non-Hispanic whites.
Another factor contributing to Asian buying power is that nearly all Asians are urbanites. Some 95 percent of Asians live in metro areas compared to only 78 percent of non-Hispanic whites. The economic rewards of education also provide a big boost. Asians are much better educated than the average American, and therefore hold top-level jobs in management or professional specialties.
According the U.S. Census Bureau, 48 percent of Asians over 25 hold a bachelor’s degree or higher, compared to only 30 percent of non-Hispanic whites. Moreover, the Census Bureau estimates that over a working lifetime, the payoff for a bachelor’s degree compared to a high school diploma is between $700,000 and $1 million. The payoff for an advanced degree compared to a high school diploma is about $2 million.
Compared to the overall consumer market, Asians’ spending is much more focused geographically. In 2007, the five states with the largest Asian consumer markets account for 60 percent of Asian buying power, and the top 10 states account for 75 percent. In contrast, the five and the 10 largest total consumer markets account for 38 percent and 56 percent of U.S. buying power, respectively.
One positive implication of this geographic concentration is lower marketing costs. Still, zip-code mailings, the use of selective media, the internet and other techniques can reduce the costs of reaching Asians in states where the group’s market share is slim.
Ranked by the growth rate for Asian buying power between 1990 and 2007, the top 10 states are Nevada (848 percent), North Carolina (654 percent), Georgia (624 percent), Arizona (552 percent), Nebraska (536 percent), Texas (525 percent), Minnesota (524 percent), Delaware (515 percent), New Hampshire (493 percent) and Tennessee (493 percent).