Asians Shun American Dream for a Break Back Home
"Destiny" and "opportunity" are the reasons Thomas Woo, president of Hong Kong lifestyle store City Super, gives for returning home to Asia after studying in the U.S.
Woo is just one of many successful Asian entrepreneurs, who while educated in the U.S. or having spent some time on Wall Street, opted to return home to put their ideas into play.
"I was going to work in the U.S. after graduation but then fate intervened," says the Hong-Kong born entrepreneur, who though tempted to stay in the U.S. after he graduated from Eastern Oregon State University, returned to Asia. In 1996, he set up City Super in Hong Kong with friends to cater to a growing appetite for high-end lifestyle products.
"I remember when I was studying in the U.S., people were just starting to talk about the future of the Pacific-Rim and China was opening up. So even though that was in the early days we did see opportunities popping up," Woo added.
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Asia's rapid economic development and a growing consumer class in countries such as China, India and Indonesia means the temptation to return home for those Asian entrepreneurs with a Western education is strong, analysts said.
The Organization for Economic Co-operation and Development (OECD) forecasts that as a result of the rapid economic growth in Asia outside Japan, spending by the middle-class will surpass that of the U.S., European Union and Japan combined by 2022.
It is this lucrative market that is bringing Asians back from Western countries such as the U.S., which has long been a magnet for talented professionals and business people.
The latest Forbes list of successful entrepreneurs in China under the age of 30 offers some examples of those who were educated overseas and returned home to set up their business, taking advantage of a boom in the Chinese economy.
Chen Ou, number two on the list, got his MBA from Stanford University before coming back to China to set up jumei.com, an online cosmetics retailer, in 2010. The site has about four million registered users and sells products from Calvin Klein and Elizabeth Arden, according to Forbes.
Mykolas Rambus, the CEO of Wealth-X, a research firm that tracks the ultra-wealthy, says Asia is about 15 years into a 150-year wealth creation cycle and that means the region is an ideal place to be in if you have a great idea.
"We're about 15 years into the process of wealth creation across Asia, so we've got a long way to go, which is a good thing for entrepreneurs in Asia," Rambus said. "Growth will come from new places; we will think mostly there will be consumer driven opportunities and businesses that cater to the middle classes in China, India, and Indonesia."
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Starting a new business in a region where the economic prospects are strong is not the only reason why Asia might have greater appeal over the U.S. for budding entrepreneurs.
Experts said easy access to capital and low regulation and taxes in some Asian countries such as Hong Kong and Singapore means there's not too much difference to setting up a new business in Asia compared with the U.S.
"Hong Kong is one of the easiest places in the world to do business because of low taxes and the ease of labor laws," said City Super's Woo. "I think it's something similar to Singapore – you can set up a business in one week's time."
Easy access to capital in Asia means the region's entrepreneurs don't necessarily have to take their ideas to Silicon Valley or other innovation hubs outside the region, analysts said.
Since 2005, the number of startups in Asia has risen sharply with at least 8,000 backed by venture capital, according to Rebecca Fannin, author of the books Silicon Dragon and Startup Asia.
"The entrepreneur revolution is spreading throughout Asia, even to places like Hong Kong that have not traditionally been startup hubs," she told CNBC.
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China is the second-largest venture capital market in the world, followed by India, while China ranks fourth in the world for new patent applications, up from 10th place in 2005, an example of innovation taking hold, according to Fannin.
Asian entrepreneurs educated or trained in the West have a distinct advantage over peers who are not, said experts.
"To start up a new business you need finances. For those people who have worked on Wall Street or in Silicon Valley, it helps them create a business model that might appeal to Western investors," said Ringo Choi, strategic growth markets APAC leader at Ernst &Young.
Take a Chance
Even with Asia's rapid economic growth, the U.S. has traditionally been a strong location for Asian entrepreneurs to start up a new business and follow the successful examples of Apple's Steve Jobs or Facebook's Mark Zuckerberg.
But tighter immigration laws in the U.S. could be another motivation for those U.S.-educated Asians to follow their ambitions in Asia rather than in Silicon Valley, analysts said.
According to the U.S. Kauffman Foundation, the share of companies founded by immigrants in Silicon Valley slowed to 44 percent between 2006 and 2012 from 52 percent between 1995 and 2005, suggesting some reverse flow of talent from the U.S. may be taking place.
"The U.S. is very entrepreneurial and it is a great place to have your own business and of course working in the financial industry gives you a lot of opportunities as an entrepreneur," said Steven Pan, chairman of Regent Hotel who returned home to Taiwan in the 1990s after starting his career as a banker on Wall Street.
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"If you stay in the U.S. there are a lot of opportunities in the financial industry alone, but in Asia there is a broad range of industries you can go into. I didn't even know about the hotel industry until I came home," said Pan who returned to work for a hotel and then went on to buy out his boss.
But giving up the American Dream to come back is not always easy.
Pan, the winner of the 2012 Ernst & Young entrepreneur of the year award in Taiwan, said he took a 50 percent pay cut when he quit his Wall Street job to return to Asia.
In Asia there is more of a taboo associated with failing compared with the West so that could discourage risk taking, analysts said, while others added that finding skilled professionals was difficult as they did not always want to work for a start-up.
According to Pan, the long-term gains of setting up a new venture, however, outweigh the risks.
"Coming back to Asia you have a lot of growth potential even though the financial reward of working on Wall Street in the short-term is much greater," he said. "But the mid-term and long-term rewards, not just financial but also in terms of being your own boss, the likelihood of having that in Asia is greater than staying on Wall Street."
- By CNBC.Com's Dhara Ranasinghe; Follow her on Twitter @DharaCNBC