Twice a week, Alvin N. Chau visits the Charles Schwab brokerage office in Chinatown in Oakland, Calif., where almost all the customer-service reps speak Chinese. Even though the 45-year-old accountant came to the U.S. from Hong Kong three decades ago and speaks fluent English, he still prefers to handle investments in his native language. "I feel closer to the person if we speak Cantonese," says Chau.
Operating branches that cater to customers such as Chau is one prong of discount broker Charles Schwab & Co.'s strategy to court a large and particularly lucrative ethnic market: Chinese Americans. By Schwab's estimates, the Chinese community in the U.S. may hold as much as $150 billion in investable assets.
HIRING SPREE. Ethnic marketing by financial firms isn't new. Banks have long pitched services to Asians, Hispanics, and African Americans. And many brokerage houses have Spanish-speaking branches in the Miami area, aimed at wealthy South Americans and Cuban exiles. Schwab is also targeting Latinos: It started an online Spanish-language site in July that within six weeks was up to 9,600 transactions a week.
But it's Chinese Americans whom brokers are pursuing most intently. Boston's Fidelity Investments has placed Chinese-speaking brokers in 10 of its 77 branches and is seeking more bilingual staffers. New York's TD Waterhouse Group plans to launch a Chinese-language site early next year, while E*Trade Group, based in Menlo Park, Calif., intends to unveil a service in October. Most aggressive has been Schwab. Based in San Francisco, it has opened 14 Chinese-language offices in such places as New York's and San Francisco's Chinatowns and plans to add about five more in the next 18 months. In August, its Chinese-language site, launched in 1998, racked up more than five million hits by customers either making trades or looking up quotes. That's a sixfold increase in the past year. And in April, it added an online Chinese-language news service, where customers can check the U.S. market, news headlines, and earnings estimates.
Chinese Americans number only 2.6 million, but they've got plenty of money. The median Chinese-American household income is $65,000 a year, compared with $40,000 for Americans in general, according to Boston research firm Forrester Research Inc. And about 69% of Chinese households are hooked to the Internet, compared with 43% for the population at large.
BROKER'S DREAM. Even more appealing to brokers is the flamboyant Chinese investment style. Noted throughout East Asia for their financial acumen, many Chinese cut their trading teeth on the fast, roller-coaster markets of Hong Kong, Taipei, and Singapore. In the U.S., some Chinese play the market as if it were mah-jongg and trade two and three times as much as other investors, generating a lot of commissions. "Long-term" is six months to some of her customers, says Tracy Zhang, manager of Schwab's Chinese branch in Milpitas, Calif.
And Chinese investors pour money into stocks. At Waterhouse, the average Chinese-American account is one-and-a-half to two times the size of the firm's average account. "The Chinese like to gamble," says Mary Yang, a Schwab customer who teaches English in San Francisco and who trades weekly--more often when the market's hot.
It takes more than language skills to attract such customers. To many Chinese, for instance, the number 8 is supposed to bring good fortune. So Waterhouse tries to include an 8 in account numbers for its Chinese investors. And for the past two years, it has awarded gold Chinese New Year pendants to customers who deposit $28,888. During the Moon Festival in September, the firm even handed out traditional moon cake pastries. Do these gestures help business? Daily trading volume by Chinese customers at Waterhouse has tripled in the past year, compared with a 44% increase for the firm as a whole.
With that kind of growth, it's little wonder that brokerage firms are pursuing Chinese Americans. At its Chinese-language branches, Waterhouse even displays a big goldfish bowl. Goldfish are a traditional symbol of prosperity. And how many goldfish are in the bowl? You guessed it: 8, of course.