With their prevalence in technology, Orange County’s largest minority-owned businesses have been among the area’s fastest-growing companies. But now the group is showing signs of wear amid the tech slump and a larger economic slowdown.
Employment growth at the top 30 minority-owned businesses is up 3% vs. a year ago,a far cry from the heady double-digit growth the group posted in recent years and even lower than the 3.3% job growth rate for OC as a whole in 2000. In all, the largest minority-owned businesses employ 6,100 OC workers.
Still, revenue at the 30 companies was up 10% to $3.5 billion in 2000. For an example of the divide between revenue growth and jobs, look no further than No. 1 Fountain Valley-based Kingston Technology Co.
The Chinese-owned maker of computer memory products saw sales climb 13% to $1.7 billion last year. But employment is down by about 30 people to 1,144, and the company recently said it would lay off about 19 salespeople due to the computer industry slowdown (see related story, page 3).
“The whole industry is going through tough times,” said Wai Szeto, Kingston’s vice president of business development. “The demand for PCs and memory modules is not as strong as it was some time ago. But we’re still gaining market share.”
The list of minority-owned businesses shows trends represented throughout OC’s economy. Minority businesses proliferate throughout the economy,from the food sector, hotel management and temporary employment agencies to technology.
Chinese-owned companies have supplanted Hispanic ones in recent years to become the most numerous on the list, representing 11 businesses. Hispanic-owned companies are next at five, followed by Vietnamese (four), Indian (four), African-American (four), Filipino (two), Japanese (one) and Korean (one).
Tracking minority-owned businesses is a less-perfect science than, say, listing the county’s largest public companies. Many of these companies are small and in most cases aren’t outwardly identifiable as being minority-owned; some are reluctant to be put in that category. And each new list brings a handful of new discoveries. The companies are ranked by revenue and include several Business Journal estimates.
One minority-owned technology business has defied the industry’s slowdown by reporting strong revenue and employment growth. No. 2 The Linksys Group Inc., an Irvine computer networking products maker, grew revenue a whopping 92% to $206 million last year. Local employment grew 63% to 196 people. The increases moved up Linksys four spots from last year’s list.
Linksys was founded by Taiwanese immigrants Janie and Victor Tsao 14 years ago. The company is expecting 65% revenue growth this year, according to Janie Tsao, who also is the company’s vice president of business development.
“We will be needing another 100 or so employees over the next year and 99% of those will be in OC,” Janie Tsao said.
The company plans to move into new facilities nearby to accommodate the new hires, she said.
Even with the tech slowdown, Tsao said the demand for Linksys products continues to grow. Unlike Cisco Systems Inc., which is struggling with slower sales to telecommunications and corporate customers, Linksys sells to consumers and smaller businesses. Demand for digital subscriber line and cable Internet products still is expanding, according to Janie Tsao.
“When hard times hit, companies are still willing to buy these products,” she said. “They want to improve data flows without having to dramatically change their employee headcount in a slowdown.”
Another standout is No. 11 QPS Inc., an Anaheim supplier of recordable compact disc drives. The company saw sales increase 143% to $51 million last year, while OC employment went from 15 to 30.
“While PC sales are down, demand growth for storage products is increasing steadily,people always need more storage space,” said QPS marketing director Shaun Shankaran.
Indian immigrant Priti Bala Sharma founded QPS in 1993 under the name of Canara Technologies Inc.
“There has been tremendous growth in the Indian-owned businesses in the technology sector,” Shankaran said.
QPS also owns part of another OC-based company,DV Studio Technologies LLC, which sells video-mastering products.
Other minority-owned tech companies are more reflective of the industry’s slump. No. 7 Princeton Graphic Systems Inc., a Santa Ana seller of computer monitors owned by William Wang, saw revenue drop 35% to $110 million last year. OC employment dropped by 15 people to 125.
Among the climbers is No. 21 Vanco Trading Inc., which moved up three spots from its place on last year’s list. The Asian supermarket operator grew revenue 11% to $20 million last year. Local employment grew by 10 people to 1,000.
Denise Dao Tran, Vanco vice president, said sales at the stores aren’t so vulnerable to an economic downturn. The company owns and operates three stores,in Fountain Valley, Garden Grove and Westminster.
“People always need to buy groceries,” Tran said.
The Irvine office of real estate financier Capri Capital LP fell a notch to No. 17, despite growing revenue 16% to $29 million last year.
Co-chairman and co-founder Daryl Carter said consolidation has fueled much of the firm’s growth. The company has bought five companies in recent years, the largest buy being that of Washington, D.C.-based Washington Capital in 1999. The company generates about a third of its revenue on the West Coast, according to Carter.
“We’ll probably see a 30% to 40% increase in staff for our California operations over the next year or so,” Carter said.
No. 28 Systems Integrated, a 25-year-old Orange-based water and electricity utility monitoring company, saw 2000 revenue fall 16% to $14.2 million in 2000. As a result, the company fell from its No. 21 posting on the previous year’s list.
“There hasn’t been much change for us and in general,” said Chief Executive Susan Corrales-Diaz. “Things seem to be in a holding pattern right now.”
The company provides monitoring services to water and electrical utilities based in Mexico City, China and Malaysia. Systems Integrated also has a manufacturing plant in San Diego.
“Our manufacturing costs have gone up considerably because of the rise in electricity rates,” Corrales-Diaz said. “Most of OC hasn’t even begun to see the cost spikes that San Diego has.”
Three companies are new to this year’s list. Besides QPS, they are: No. 6 Raj Manufacturing Inc. an Indian-owned apparel maker in Tustin, and No. 13 Express Manufacturing Inc. of Santa Ana, a contract electronics maker owned by C.P. Chin and family.
Dropping off the list were last year’s No. 18 La Pizza Loca, which moved to Downey, last year’s No. 27 APR Consulting Inc. of Tustin and No. 29 Cordova Bolt Inc. of Buena Park, which didn’t meet this year’s revenue cutoff of $13 million in 2000 sales. n
