Global Networks 1, 2 (2001) 131–153. ISSN 1470–2266 131
Regrounding the ‘Ungrounded Empires’:
localization as the geographical catalyst for
YU ZHOU and YEN-FEN TSENG
Abstract The emerging literature on transnationalism has reshaped the study of
immigration in the USA from ‘melting pot’ and later ‘salad bowl’, to ‘switching
board’, which emphasizes the ability of migrants to forge and maintain ties to their
home countries. Often under the heading of ‘transnationalism from below’, these
studies highlight an alternative form of globalization, in which migrants act as active
agents to initiate and structure global interactions. The role of geography, and in
particular, localization in transnational spaces, is central to the transnationalism
debate, but is yet to be well articulated. While it has been commonly claimed that
transnationalism represents deterritorialized practices and organizations, we argue
that it is in fact rooted in the territorial division of labour and local community
networks in immigrant sending and receiving countries. We examine closely two
business sectors engaged in by the Chinese immigrants in Los Angeles: high-tech
firms and accounting firms. Each illustrates, respectively, the close ties of Chinese
transnational activities with the economic base of the Los Angeles region, and the
contribution of local-based, low-wage, small ethnic businesses to the transnational
practices. We conclude that deeper localization is the geographical catalyst for
transnational networks and practices.
At Los Angeles International Airport (LAX), it is easy to spot Chinese travellers
heading to, or coming back from, Asia. Many are family bound. A good proportion of
them, however, come and go with suitcases full of sample products to market either in
Asia or the USA. These are Chinese business people. Through jet flight, telephone,
fax, and the Internet, they weave a worldwide business network that encompasses
ethnic strongholds in the heart of American metropolitan areas and industrial cities in
Asia. Unlike immigrants who left Europe for America in the late nineteenth and early
the twentieth centuries, to whom the Old World represented treasured, yet fading
memories,1 this paper focuses on a new type of immigrant entrepreneur whose well
being in the New World depends heavily on their connections to the Old World.
The article engages the emerging literature on transnationalism as a framework to
study international migration. Transnationalism recognizes the concurrent nature of
immigrant connections with home and host countries, thereby introducing a critical
social field in which nation states are not ultimately restraining factors, but provide an
arena to be transgressed, evaded, and taken advantage of by migrants. Transnationalism
Yu Zhou and Yen-Fen Tseng
also highlights an alternative form of globalization in which migrants act as active
agents to initiate and structure global interactions (Basch et al. 1994; Guarnizo and
Smith 1998). Central to the concept of transnationalism is the reconfiguration of
geographical space and territorial boundaries to accommodate intricate and flexible
interactions engaged by migrants at global, regional and local levels. But how
geography is practised on this transnational space has yet to be articulated in full. It is
commonly suggested that transnationalism represents a deterritorialized form of social
activity or organization, and that the nation state, being the hegemonic territorial
form, is losing its grip on citizens (Ong and Nonini 1997). By contrast, we agree with
Guarnizo and Smith (1998) that the term deterritorialization obscures the spatial
processes and local specificity essential to transnationalism. Furthermore, we contend
that not only is locality important, but also that localization is catalytic for effective
transnational networks or practices. We will substantiate our points by closely
examining two business sectors in Los Angeles with strong Chinese immigrant
involvement: high-tech firms and accounting firms. The empirical cases identify the
key to the success of Chinese transnational activities in Los Angeles as being the
close ties between transnational networks and the regional economic structure on the
one hand, as well as the ties between transnational-oriented immigrant businesses and
local-oriented ethnic economies on the other.
‘Melting pot’, ‘salad bowl’, and ‘switching board’: transnationalism as a new
framework of migration studies
Starting from the Chicago School in the 1920s, studies of immigration in the USA
have generally been characterized by either the assimilation (the ‘melting pot’) or the
cultural pluralism (the ‘salad bowl’) model. Despite their opposing ideological stands,
both models regard the outcomes of immigration as resting on the tension or dialogue
between a current environment of a dominant culture, and a persistent, yet struggling,
ethnic tradition. In other words, the forces affecting immigrants are framed on a linear
scale of the past and present. While the assimilation model argues in favour of the
inevitable replacement of the past by the present, cultural pluralism advocates the co-
existence or preservation of the tradition or heritage. What has often been taken for
granted, however, is the concurrent nature of forces affecting immigrants from both
home and host countries. Based on the realization that immigrants are increasingly
living lives across national borders, a new conceptualization of migration has
emerged, termed variously ‘transnationalism’ and ‘transmigration’. Drawing on and
also reworking the pre-existing notion of diaspora, scholars define transnationalism as
a process in which migrants or diasporic populations build a social field that links
together their countries of origin and settlement (Basch et al. 1994; Glick Schiller et
al. 1992, 1995; McKeown 1999; Tölölyan 1991). In contrast with the term
‘immigrant’, which implies unidirectional movement, transmigrants are a new type of
immigrant, one who develops and maintains multiple relations – familial, economic,
social, organizational, religious and political – that span international borders (Basch
et al. 1994; Glick Schiller et al. 1992). Studies on Caribbean, West African, or Asian
immigrants in the USA show that transnational ties play a critical role in the political,
social, economic and cultural spheres of many immigrant groups (Glick Schiller et al.
1992; Guarnizo and Smith 1998; Smith 1992, 1994). Appadurai (1996: 172), in his
Regrounding the ‘Ungrounded Empires’
assertion that we are living in a post-national era in which nation states are
increasingly less relevant, argues that ‘[the] United States, always in its self-
perception a land of immigrants, finds itself awash in these global diasporas, no
longer a closed space for the melting pot to work its magic, but yet another diasporic
switching point.’ Here we borrow his ‘switching point’ analogy and expand it into
‘switching board’, as ‘board’ better represents a sense of space and a collection of
multiple linkages. Differing from melting pot or salad bowl, the switching board
envisions a space where the external linkages practiced by many diasporic groups
constitute a fundamental identity of place.2
The extent to which transnational practices are new is still debateable, since strong
homeward connections have historically existed for various immigrant and diasporic
populations: Jews, overseas Indians, and overseas Chinese are obvious examples.3
Research on African and European migrants also noted long distance social ties and
persistent identification with distant origins (Epstein 1958; Guarnizo and Smith 1998;
Portes and Rumbaut 1990). Yet, Portes et al. (1999: 225) argue that traditional immi-
grants ‘lacked the elements of regularity, routine involvement, and critical mass
characterizing contemporary examples of transnationalism’. Regardless of how new
transnational practices are, what does seem to be new is the willingness of social
scientists to develop a social space for transmigrants that is unbounded by the nation
state at either end of their migration.
It is no accident that the growing attention to transnationalism coincides with the
much greater attention to globalization. Basch et al. (1994) argue that the current
moment of capitalism as a global model of production necessitates the transnational
practices. Globalization provides the context, possibility and motivation for trans-
national practices. Social scientists have for quite some time tied migration with
global capitalism (Castles and Miller 1993; Parnwell 1993). Paul Ong et al. (1994),
for example, illustrate the powerful global forces in motivating Asians to immigrate to
the USA and in shaping their economic and political integration patterns in Los
Angeles. However, this literature only tends to see migration as the outcome of
globalization. For example, Ong et al. (1994) view Asian Americans as accommo-
dating, adapting, or resisting global forces, but largely in a reactionary fashion. A
transnational framework, in contrast, allows transmigrants to be cast as active agents
who initiate or forge global interactions by engaging simultaneously in a number of
countries relating to their migration. In this way, transnationalism accounts for a
broader range of global activities than those that are normally associated with
globalization. Much of the current discussion of globalization concerns the global
movement of goods, capital and information, and features such players as
multinational corporations, international organizations, treaties and national govern-
ments in structuring the global network of communication and interactions.
Transnationalism, or more precisely as some call it ‘transnationalism from below’
(Guarnizo and Smith 1998; Smith 1992, 1994), stresses the role of everyday practices
of ordinary people in structuring political resistance, economic strategies and cultural
hybridity. We argue that transnational activities by transmigrants represent an
alternative form of globalization where the flow of capital, information and commodi-
ties is embedded in the movement of human populations, and governed not merely by
treaties, laws or corporate hierarchies, but by a network of social relations. Such
personalized networks used to be dismissed as outdated or marginal modes of
Yu Zhou and Yen-Fen Tseng
transactions. Now they seem to command new respect under the condition of late
capitalism, globalization and flexible accumulation (Guarnizo and Smith 1998;
Hamilton 2000; Redding 1990; Yeung 2000).
The geography of transnationalism: the nation state and localization
A distinct feature of the emerging literature on transnationalism and diasporas
concerns territoriality as framed by the nation state. Diaspora is seen as the ‘other’ of
the nation state. Even as it challenges the domination and discipline of the nation
state, it is also defined and shaped by, and implicated with, the nation state
(Appadurai 1996; Dusenbery 1995; McKeown 1999; Tölölyan 1991). The conse-
quences of transnationalism are that nations become unbound and deterritorialized
communities emerge (Basch et al. 1994). Aihwa Ong and Donald Nonini’s work is a
good example of this perspective. They are the leading voices in reinterpreting
overseas Chinese experiences under the post-colonial and globalized context.
Ungrounded empires, a volume edited by Ong and Nonini (1997) argues that overseas
Chinese transnational practices constitute ‘a third culture’. Featherstone (1990: 8)
describes third cultures as ‘new types of flexible personal controls, dispositions and
means of orientation, in effect a new kind of habitus’. Central to the overseas Chinese
strategy is a spatial mobility that resists and evades the discipline of the Chinese
family, the capitalist workplace and the nation state, all of which require the
disciplinable subjects to be localized or confined by a specific space.
When discussing the overseas Chinese transnational practices and imageries at
different locations around the Pacific Rim, ranging from China to Canada, Ong and
Nonini (1997: 17, 20) argue that:
Our chronotopes are not, however, locales or sites, but rather time-bound,
irreversible paths or itineraries of connection between places that are spanned
by imagined and remembered narratives of Chinese transnational practices and
discourses. … It is precisely for this reason that we have entitled this book
Ungrounded empires, to refer to the new deterritorialized and protean
structures of domination that span the Asia Pacific and within which diaspora
Chinese act – empires that constantly change shape, being constituted by
Chinese transnational practices in the ether of airspaces, international time-
zones, migrant labour contracts, mass media images, virtual companies, and
electronic transactions, and operating across all recognized borderlines.
(Emphases added by the authors)
In essence, Ong and Nonini see their project as envisioning transnationalism as a
deterritorialized organization, with an emphasis on ‘travel’, not villages’. They view
localization primarily as a disciplinary tool that is rejected or evaded by Chinese
diasporas. Their interpretation of deterritoriality, however, is largely framed by
rejecting the nation state as the hegemonic form of territoriality. Yet with this broad
stroke of deterritoriality and ‘ungrounded’ structures, they lose the opportunity to
enquire into other forms of territoriality and the spatial process that may be essential
for Chinese transnational activities. Can ‘ungrounded empires’ be truly ungrounded?
Sassen (1994, 123), in her study of global cities, argues that ‘globalization processes
Regrounding the ‘Ungrounded Empires’
assume concrete, localized forms.’ Similarly, Guarnizo and Smith (1998: 11) argue
that local specificity is central to transnationalism. ‘Transnational practices, while
connecting collectivities located in more than one national territory, are embodied in
specific social relations established between specific people, situated in unequivocal
localities, at historically determined times.’
Perhaps equally important as changing the focus to ‘travel’ is reconceptualizing
locale or ‘village’ from a socially, politically and spatially bounded community into a
site of practices where various forces at different spatial scales converge (Amin
2000). The geographical literature is particularly keen to regard place and locale as
fundamental categories of analysis and crucial dimensions of social action. Soja
(1989) argues that spatialization is essential to understanding social changes and
social movements. Studies in regional economic dynamics and industrial clusters, a
heated field in economic geography and associated disciplines in the last two decades,
have made major contributions in delineating the role of localization or regional-
ization in contemporary global capitalism (Blim 1990; Camagni 1991; Crevoisier and
Maillat 1991; Piore and Sabel 1984; Saxenian 1991; Sayer and Walker 1992; Scott
1988, 1993; Scott and Storper 1986; Storper 1997; Storper and Walker 1989). Amin
and Thrift, for example, argue that while the world economy may have become more
decentralized, it is not without geographical centres. They describe these centres as
‘place-bound communities in which the agglomeration and interaction between firms,
institutions and social groups acts to generate and reinforce that “industrial atmos-
phere” which nurtures the knowledge, communication and innovation structures
required for retaining competitive advantage in a given global production filière’
(1992: 577). It is not the purpose of this paper to engage in a full discussion of the
literature on industrial geography.4 But we would like to stress that this literature
underscores the persistent significance of locale and localization in the age of
increasing ease of transportation, communication, and corporate mobility.
So what is locality and how does local work? The power of place exists not
so much in the location itself but in the interactive patterns between social agents
and processes within local contexts. Cox and Mair (1991) argue that locality should
be understood both as a localized social structure and as an agent. The former
develops through territorial forms of the division of labour, and the latter captures the
ability of local actors to form alliances, negotiate local identities, and implement local
In the transnationalism literature, some scholars also begin to pay greater attention
to local specificity in transnational flows. The term ‘trans-locality’ is used to account
for both the local embeddedness and external connections (Goldring 1998; Smith
1998). Yet, the role of locale in shaping transnational flows is still under-theorized.
While it is generally more obvious that migrants are socially embedded in the sending
societies, we know far less about how their activities are also conditioned by the
receiving community. More generally, little research has attempted to look at the link
between localization, and the scale and effectiveness of transnational activities. One
can certainly engage in transnational activities such as sending remittances while
being only minimally embedded in the locales in the host country. But more
sophisticated and larger scale activities such as transnational business or politics
would require a deeper and wider set of connections to local contexts at either end of
the migration route.
Yu Zhou and Yen-Fen Tseng
These are the areas our article addresses with empirical examples. If we visualize
the transnational activities as a complex network through which flow humans, goods,
capital and information, such a network can not be effective if it does not have firm
anchors in particular locales within which migrants, with and without transnational
ties, as well as non-migrants, all play important parts. We view localization as a
deliberate and central strategy to the vitality of transnational networks and practices,
in short, a catalyst for transnationalism.
Transnational centres and ethnic enclaves
If transnational practices are indeed localized, what are the nature and dynamics of
such transnational centres? The transnational framework has led many researchers to
separate transnational activities or transnational centres from ‘regular’ immigrant
activities and enclaves. Portes et al. (1999), for example, contrast immigrant
entrepreneurs and transnational entrepreneurs, and argue that the former ‘simply
settled abroad and became progressively integrated into local ways’, while the latter
are ‘cultivating their networks across space, and travelling back and forth in pursuit of
their commercial ventures’ (225). The former move along the course of assimilation,
while the latter refuse to be confined in either one space or the other. Rogers (1992:
244–7) similarly classifies ethnic communities in the USA into three types. The first
is a community plagued with job losses due to the closing of major manufacturing
industries and the suburbanization of urban economies. The second type of ethnic
community locates near the emergent international centres of metropolitan areas, and
is comparable to the ports-of-entry of earlier immigrants. It contains a large secondary
labour market characterized by new employment opportunities in personal and
producer services, in downgraded or petty manufacturing and in retailing (Sassen-
Koob 1984; Waldinger 1987). This would be the area of the predominantly working-
class immigrant enclave. The third type, the transnational business enclave, according
to Rogers, has no recognizable antecedents in earlier periods of immigration because
it is a product of the internationalization of the urban economy. The emergence of a
transnational business enclave is due to ‘the arrival of immigrants with an established
adaptation to urban conditions, middle-class characteristics, and sometimes directly
connected to transnational businesses or the homeland government’ (p. 247).
Li (1998a, 1998b) develops the term ‘ethnoburb’ to describe the unique dynamics
and class structure of middle-class Asian communities at suburban locations as
contrasted to traditional Chinatowns. Ethnoburbs replicate some features of an
enclave, but also those of a suburb without a minority majority. Its economy may be
based on a high technology or capital-intensive businesses that are able to draw on
and feed global flows of capital, commodities, and of skilled labour and managers (Li
1998a, 1998b). Without being her main concern, Li’s ethnoburb concept in many
ways captures some of the essential spatial distinction and dynamism characterizing
the transnational centres. Given the human and financial resources, ethnoburbs, far
more than traditional immigrant enclaves, tend to host a high concentration of
transmigrant activities and serve as anchor points for transnational networks.
While the economic distinction between the traditional ethnic enclave and
transnational business centres is necessary, it should not be overdrawn. Low-wage
secondary labour markets and petty businesses often co-exist at many locations with
Regrounding the ‘Ungrounded Empires’
transnational financial institutions and high-tech ventures established by immigrants
from Little Havana in Miami, Chinatown in New York, to Silicon Valley, California.
This is certainly the case in the Los Angeles Chinese community where the central
Chinese business district in Monterey Park is crowded with banks, certified public
accountant (CPA) firms, insurance and real estate companies, and international
trading offices amid abundant restaurants, grocery markets, gift shops and bookstores.
We argue that such co-existence of higher and lower level immigrant businesses is by
no means accidental, but provides the crucial local conditions for the development of
transnational practices. It is essential not to isolate transnational activities from their
regional context and the ethnic economy at large. In the following section, we will
first briefly outline the development of Chinese transnational activities in Los Angeles
and then provide a detailed examination of two Chinese immigrant business sectors:
the high-tech and accounting service sectors. Each sector reveals in different ways
how Chinese transnational activities are embedded and integrated within both the
regional and the ethnic economies.
The information presented in this article was collected during the two authors’
fieldwork in Los Angeles from 1992 to 1994 and some subsequent fieldwork in New
York and Taiwan. Both researchers rely on a combination of qualitative and quanti-
tative methods in data collection. Both conducted surveys and intensive personal
interviews with different Chinese ethnic business sectors in Los Angeles. The case of
the high-tech firms draws primarily from Tseng’s work. She relies on an analysis of
the 1990 population census public use micro data sample (PUMS) and interviews
entrepreneurs, informants and community leaders. The information on the accounting
sector is based primarily on Zhou’s investigation. She conducted a mail survey for all
181 identifiable Chinese accounting firms in Los Angeles County in 1993 and
obtained a 45 per cent response rate. In addition, she also interviewed about 15
accountants who were either self-employed or were employees in CPA firms. The
interviews cited in this article are identified via each author’s own numbering system.
Chinese transnational activities and Los Angeles
The transnational activities of the Chinese have both deep historical roots and a wide
geographical scope. The active long-distance trading conducted by the Chinese
merchants in Southeast Asia can be traced back to the thirteenth century (Abu Lughod
1989). The dispersion of Chinese since the sixteenth century from mainland China to
many parts of the world in conjunction with European colonization has built up an
extensive transnational network with Southeast Asia as the core (Wang 1991). In
North America, a significant Chinese presence along the West Coast dated back to the
mid-nineteenth century. Their number was kept small, however, due to the operation
of the Chinese Exclusion Act between 1882 and 1943, and discriminatory immigrant
policies until 1965. The Chinese population in the United States has soared only in the
past two decades, at the same time as the intensified economic integration between
North America and East Asian countries.
Los Angeles has become a focal point of the Chinese transnational networks both
because of its burgeoning Chinese population and the status of Los Angeles as a
world city, particularly as a trade and service link between the USA and the Pacific
Rim. Emerging from restructuring in the 1970s and 1980s, Los Angeles has become a
Yu Zhou and Yen-Fen Tseng
post-modern capital of North America and a Pacific Asian trade and financial centre.
Along with Los Angeles’ increasing Asian linkages is the growing Asian population,
in which the Chinese are one of the largest groups. From 1970 to 1990, the Chinese
population in Los Angeles County grew twelve-fold (Table 1). The new immigrants
consist of an increasing proportion of people with professional skills and financial
capital (Ong et al. 1994). While the old pattern of unskilled labour migration has not
entirely disappeared, a substantial number of new immigrants are from urban,
educated, middle-class backgrounds and come to the USA as professionals, managers
and entrepreneurs (Tseng 1994a, 1994b).
Table 1. The growth of Chinese population in Los Angeles County, 1960–1990
Chinese population Percentage increase
1960 19,400 100.0
1970 40,798 210.3
1980 93,747 229.8
1990 248,415 265.0
Source: Censuses of Population, USA, 1960,1970, 1980, 1990.
The largely middle-class background of this migration influx leads to several unique
developments in Los Angeles. First, it has become a prominent node of the Chinese
ethnic economy in the USA. While the Chinese population more than doubled
between 1980 and 1990, Chinese-owned businesses grew at a much quicker rate. The
number of Chinese-owned firms more than tripled from 1982 to 1992. The annual
sales grew more than ten times during this period (Table 2). In particular, during the
latter part of this decade, between 1987 and 1992, there was an over 400 per cent
growth in sales with a 160 per cent growth in the number of firms, indicating the
increasing size of Chinese firms measured by average sales. During the 1980s, Los
Angeles became the single largest Chinese business centre in the USA (US Depart-
ment of Commerce 1992). With a population size virtually identical to the Chinese
population in New York City in 1990, Los Angeles in 1992 had 32 per cent more
Chinese-owned firms, hired three times as many paid employees, and generated more
than three times as much in revenue (Zhou 1998b). Secondly, the Chinese economic
structure has become increasingly diversified and sophisticated. Prominent Chinese
self-employment sectors in Los Angeles today include not only the ethnic staples such
as groceries, restaurants, and gift shops, but also skill-intensive professional services
such as banks and high-tech firms, and the capital-intensive hotel and motel sector
(Tseng 1994a, 1994b).
Thirdly, the structural change of Chinese businesses in Los Angeles has been
accompanied by spatial change during the last two decades. A good number of
studies, including our previous work (Fong 1994; Li 1998a, 1998b; Tseng 1994a,
1994b; Zhou 1996, 1998b) detail the trajectory of the Chinese community in Los
Angeles, so it will be outlined only briefly here. The rapid increase in Chinese
population since the 1970s has largely been a suburban phenomenon. Although
Regrounding the ‘Ungrounded Empires’
downtown Chinatown expanded in absolute numbers of people, particularly with the
heavy influx of Southeast Asian refugees, the bulk of Chinese immigrants and newly
developed Chinese businesses located themselves in the suburban community of
Monterey Park, about 13 km to the east of Chinatown, immediately adjacent to the
city of Los Angeles (Figure 1).
Table 2. The expansion of the Chinese ethnic economy in Los Angeles County,
Annual sales of
1972 1,378 100.0 107 100.0
1977 3,063 222.3 283 264.5
1982 7,611 248.5 754 266.4
1987 16,049 210.9 1,963 260.3
1992 26,279 163.7 8,077 411.5
Sources: Survey of Minority-Owned Business Enterprises, US Department of Commmerce
Monterey Park is known as ‘Little Taipei’ because it offers such a wide variety of
services owned and run by the Chinese that one can fulfil practically any daily need,
from groceries and advertising to learning deep-sea diving in Mandarin Chinese. In
addition to the variety, the highest end of Chinese businesses such as banks and
professional services are concentrated in Monterey Park and neighbouring Alhambra.
Monterey Park and Alhambra have become unquestionably ‘the Chinese central
business district’ as well as the prominent Chinese social, cultural and entertainment
centre (Tseng 1994b). Although Monterey Park was proclaimed ‘America’s first
suburban Chinatown’ by The Los Angeles Times (Arax 1987, Fong 1994), it has never
become an exclusive ethnic enclave, growing to less than 40 per cent in its Chinese
population. Before Monterey Park reached its Chinese population peak in 1985,
Chinese businesses quickly spread to surrounding cities, such as Alhambra, San
Gabriel, and Rosemead (Figure 2).
The more affluent Chinese population moves further east, settling in cities such as
Walnut, City of Industry, Hacienda Heights, Rowland Heights and Diamond Bar.
These cities are known by the Chinese as the ‘East District’. In contrast to the two
earlier Chinese business centres, where development was fuelled by residential
growth in combination with retailing and consumer services, development in the East
District was led by Chinese industrial activities, particularly computer hardware
manufacturing and distribution firms. Following the industrial firms, the Chinese
population, especially professional Taiwanese immigrants, grew rapidly in this area,
followed by Chinese consumer and business services (Zhou 1996).
At the heart of the growth of the Chinese community in Los Angeles is the role
of transnational linkages. Zhou (2000) details the impact of foreign capital, trade,
Yu Zhou and Yen-Fen Tseng
expertise and information on the Los Angeles Chinese communities. It would be
difficult to find a major Chinese business sector in Los Angeles that does not involve
in one way or another a significant role for overseas capital, markets, information or
labour forces. We contend that the Chinese business community in Los Angeles is
neither an isolated ethnic enclave nor simply a vibrant outpost of Chinese business
people. Rather, it has become a transnational anchor point in a vast global web of
ethnic Chinese including such cities as Vancouver, Sydney, Singapore, Kuala
Lumpur, Bangkok, and Manila. The Chinese community in Los Angeles exemplifies
a new type of ethnic economy within which financial, labour, information, and
commodity flows are international in scope, yet deeply intertwined and embedded
within a local milieu of intense ethnic networking and entrepreneurship. The
following are two examples of ethnic businesses developed by the Chinese immi-
grants in Los Angeles. They each illustrate, respectively, the close ties of Chinese
transnational ventures with the major economic sectors in the Los Angeles region and
the contribution of the locally based, low-wage, small ethnic business part of the
ethnic economy to successful transnational practices.
Far removed from a typical perception of ethnic entrepreneurship, Chinese
entrepreneurs are well represented in the dynamic high-tech industry in Southern
California. According to the 1990 Census, Los Angeles had 85 self-employed Chinese
in computer manufacturing, 65 in aircraft and parts, 16 in guided missiles, 20 in
medical and optical equipment, and 59 in electrical machinery. Table 3 compares the
Chinese high-tech entrepreneurs with the general population, and it shows that
Chinese self-employed were over-represented in all sectors except for guided missile
manufacturing. Among these sectors, the Chinese business ownership in computers
and related products, as well as in aircraft and parts manufacturing is the most
significant. They account respectively for 12 per cent and 10 per cent of all businesses
in these two sectors in the Los Angeles region.
Chinese involvement in these sectors is closely tied to the region’s industrial base
and its restructuring. Large-scale federal defence spending over the post-war decades
led the aircraft industry in Los Angeles to blossom into one of the world largest
aerospace-electronics manufacturing complex (Scott 1993: 3–4). Three major sectors,
aircraft and parts, missiles and space equipment, and electronics, represent the
essential core of the region’s high-technology industry. Sassen (1988) identifies
several advantages in Southern California for the development of a high-technology
economy. First, the numerous, cheap and proficient immigrant workers from all over
the world, especially Asia, lowers the labour cost and at the same time provides high-
quality workers required by the high-technology industries. Second, California’s high-
technology industries are close to various centres of technical research, control and
design. Third, the industries enjoy an availability of industrial land that accom-
modates a territorially-clustered organization of production firms
Chinese high-technology entrepreneurs mainly consist of scientists and engineers
who obtained postgraduate degrees in the USA and formerly worked for TRW,
McDonnell Douglas, Rockwell, or Lockheed. They chose self-employment in part
due to the glass ceiling they experienced at the large companies. Many Chinese high-
tech entrepreneurs cited their disadvantage in promotion and the lack of training
Regrounding the ‘Ungrounded Empires’
opportunities as the most important reasons for leaving their companies and becoming
self-employed. According to one interviewee who started his aerospace parts manu-
As Asian engineers and scientists, they are perceived as competent in
technical-oriented tasks of research and development but weak in marketing
and management. This persistent perception greatly increases their chance of
being laid off when the company is not doing well.
(Tseng Interview, 21 February 1994)
Table 3. Number of high-technology business owners in Los Angeles County,
Chinese versus total population, 1990
Industries* Chinese population All population Index**
Computers and related products 85 705 384
Aircraft and parts 65 605 342
Guided missiles 16 748 68
Medical and optical equipment 20 511 125
Electrical machinery 88 964 290
Business owners in all industries 16,625 528,896
* Note: All of the following are manufacturing industries.
** Note: Index = b/a x 100.
a = Chinese business owners in all industries/ All business owners in all industries =
b = Chinese business owners in specific industries/ All business owners in specific industries
(for example, b = 85/705 for computer and related products).
If index = 100, that means a = b.
If index <100, Chinese business owners are underrepresented.
If index >100, Chinese business owners are over-represented.
Source: US Bureau of Census, Census of Population and Housing, 1990, 5% Public Use
However, the major reason for their willingness to go off on their own has to do with
the industrial restructuring in high-tech sectors in Southern California, which tends to
favour small competitive subcontractors. One of the restructuring trends in recent
years has been the vertical disintegration of large companies with small subcontract
shops and input suppliers providing specialized services. These small subcontractors
are manufacturers of printed circuit boards and aluminium foundry products,
transistors, assembly services and moulded plastics. The subcontracting system of the
aerospace and defence industries, which favours small and flexible production lines,
offers an opportunity for the Chinese to establish their businesses in these sectors.
According to Scott (1993: 122), one of the important characteristics of the aerospace
and defence industries is that they are dominated by large systems houses embedded
Yu Zhou and Yen-Fen Tseng
in dense networks of smaller, flexible, specialized establishments that provide them
with innumerable physical inputs and subcontracted services. Large systems houses
are called ‘prime contractors’. They receive the primary contracts from the
government or the private sector, and distribute the work among second-tier
subcontractors who subcontract to other smaller manufacturers. Large systems are in
charge of the final assembly, putting together parts from smaller specialized
Chinese self-employment in the aerospace and defence industries began with a
handful of Chinese entrepreneurs who pioneered work in the aircraft parts and guided
missiles industries during the early 1980s. Later, they became second-tier contractors.
They obtained contracts from large systems such as TRW, McDonnell Douglas, or
Hughes based on their previous ties established while employed by these companies,
and subcontracted to smaller Chinese producers. The need for smaller producers in
the area of specialized parts manufacturing has encouraged more Chinese engineers
and scientists originally employed in the aerospace and the defence industry to set up
their own companies. Chinese engineers working in large systems also help Chinese
suppliers to gain contracts.
Given the education and technical resources of the Chinese engineers, the glass
ceiling they encounter and the opportunity structure of the Southern California
aerospace industry, it would not have been surprising if a few Chinese engineers
decided to be self-employed under the circumstances. What is surprising, however, is
the number of them to do so. This is linked to an additional condition, the emergence
of a supporting structure of transnational-based resources, in particular the venture
capital from overseas. Even with human capital to start up a high-tech venture on their
own, potential entrepreneurs still need substantial financial capital to enter the high-
tech industry. Capital supply from overseas is identified as the major source for
Chinese high-tech ventures. Southern California has attracted foreign capital to its
thriving high-technology, capital-intensive industries. Due to the presence of a large
number of Chinese scientists and engineers in California, Chinese source countries
interested in high-technology ventures have invested capital in this area (Liu 1991). In
1990, California absorbed 45 per cent of all high-technology venture capital collected
in Taiwan, and almost all the capital was invested in Chinese-owned ventures (Liu
1991). Information, electronics and biotechnology were the three most favoured
industries. We lack recent figures to update the above statistics. However, according
to the survey conducted by Taipei Venture Capital Association (TVCA newsletter
1997), in 1995, 90 per cent of all the venture capital invested in the US high-tech
enterprises was in California. Saxenian’s (1999) research in Silicon Valley also
pointed out the importance of venture capital from Taiwan in the high-tech ventures
of Chinese entrepreneurs. Southern California, although to a much smaller degree
than northern California, is also a major destination for venture capital.
One might wonder why venture capitalists favour their co-ethnic-owned high-tech
enterprises. In the mid-1980s, Taiwanese venture capital was initially invested in non-
Chinese American high-tech companies. However, most of them failed to generate
profit and later much of the investment was withdrawn. The director of the Taipei
Venture Capital Association stated the problems of investing in non-Chinese in
contrast to Chinese firms:
Regrounding the ‘Ungrounded Empires’
Those initial investments failed mainly because there was a serious defect in
communication due to the language barrier and inefficient information flow.
To generate a positive result, the venture capitalists need to continue to
monitor as well as to assist the company invested. In terms of these aspects, it
is more difficult to achieve an ideal communication with non-Chinese. On the
contrary, investments in the Chinese high-tech ventures have been more
successful. Later, it became a consensus among Taiwan’s venture capitalists
that it is better to invest in Chinese firms. From my judgement, they
(capitalists and Chinese firms) can communicate better and establish a more
informal relationship. As a result, the investments often lead to technology
transfers and international subcontracting later on. In other words, the
investments in Chinese firms enhanced the industrial linkages across borders.
(Tseng interview, 21 March 1997)
According to him, Chinese firms in the USA depend heavily upon the supply of
venture capital from Taiwan. He estimated that of 60 venture investment
opportunities he handled in 1996, half were from Chinese or Chinese-co-owned high-
tech firms in California. He said, ‘there is a well-known saying within our circle: for
start-up capital in high-tech ventures, Chinese Americans can count on Taiwan, but
the Asian Indians would have to collect locally in the USA.’ The venture capital
available in Taiwan mainly came from the profit made by early returnees from the
USA who had established successful high-tech ventures in Taiwan (Chen and Jou
1996). According to Dr Denny Ko, the founding president of the Organization of
Chinese Entrepreneurial Advisory Networks (OCEAN), a non-profit Chinese high-
technology consulting group based in Los Angeles, since many Taiwan venture
capitalists are scientists or engineers, they mainly rely on existing networks such as
former colleagues, classmates, or friends to search for ideal investments in high-tech
ventures established by the Chinese.
There are also various organizational channels aimed at facilitating high-tech
ventures in Los Angeles and overseas capital. For example, in the area of aerospace,
they network through Chinese American Aerospace Engineers Association (CAAEA).
They often come together to exchange information regarding the business oppor-
tunities in the aerospace industry and venture capital available from Asia. For
example, in a 1994 event, the CAAEA offered a one-day conference addressing issues
of self-employment opportunities for components suppliers in the aerospace industry
and Taiwanese venture capital. The conference was conducted mainly in Chinese. The
Chinese speakers included successful high-tech entrepreneurs and engineers from
Hughes and TRW, introducing new developments at both companies and the
implications for business opportunities. The development of Taiwan’s aerospace
industry was also discussed and considered to be one of the important business
opportunities for Chinese aircraft parts suppliers. Venture capitalists from Taiwan
also addressed their interests in the areas of Chinese high-tech start-ups. More than
100 Chinese engineers attended, both salaried as well as self-employed in the
aerospace industry. Many of these companies have financial backing and production
facilities within the Chinese-dominated economies of East Asia. From the member-
ship directory of Chinese high-tech organizations, it is common to find companies
with overseas branch offices or factories in Asia. The international division of labour
Yu Zhou and Yen-Fen Tseng
occurs in different forms. Some run research and design facilities in the USA and
production lines in Asia, while others use the reverse of this arrangement.
The case of the Chinese high-tech sector shows that the local industrial and
corporate structure has provided incentives, labour supply, expertise, experience,
networks and market opportunities for the Chinese entrepreneurs. Transnational
resources, such as venture capital, expanded the possibilities by injecting strong
overseas support. Without such deep embeddedness within the receiving society,
Chinese high-tech engineers will not be able to enter such a high-level market. On the
other hand, without overseas capital, most engineers would end up as employees of
large firms, rather than independent entrepreneurs. What we observe is a powerful
alliance of transnational mobilization with a primarily locally induced industrial
specialization. Transnationalism in this case clearly goes hand in hand with
Chinese accounting firms
In great contrast to the Chinese high-tech sector, the presence of Chinese accounting
firms is rooted in the Chinese enclave economy as opposed to the Southern California
regional economy. In Chinatown, bookkeepers have long assisted other small firms
with bookkeeping and filing tax returns. Before 1970, these basic accounting services
were about the only accounting facilities available in Chinatown. Interviews with long
time residents suggest that due to small and fluctuating demands, most bookkeepers
were part-time, often operating from a small shop, and did accounting in their spare
time or in the tax season. The formally trained Chinese CPAs launched their careers
in mainstream firms rather than in the Chinese community.
Starting in the 1970s, demand for various levels of accounting services soared as
Chinese businesses boomed in the San Gabriel Valley of Los Angeles. Most busi-
nesses were established by new immigrants and were mostly small in size and
relatively inexperienced. They were also likely to operate on a more stringent budget
and face tougher competition as new players in unfamiliar fields. Subcontracted
accounting work to independent firms was especially advantageous for them.
Subcontracting not only saves overhead costs, since the workload may be too light or
seasonal to sustain an in-house accountant, but it also enables Chinese entrepreneurs
to use the expertise of accountants to overcome their unfamiliarity with the business
environment. Mainstream American accounting firms were poorly adjusted to the
needs of the emerging ethnic market and were unable to offer the cross-cultural or
language services necessary for new immigrant-owned small firms. Chinese
accountants working in mainstream firms responded cautiously to these new
opportunities, with a few Chinese CPAs opening offices in the rising Chinese
business centre in Monterey Park in the late 1970s. They were mostly full-time firms,
typically with CPAs. The firms mainly targeted the Mandarin-speaking Taiwanese,
and some of their projects involved investment consulting and financial planning that
went beyond simple bookkeeping and personal tax returns. Until the middle 1980s,
Chinese CPA firms, estimated at fewer than 20, were still too few to meet the
demands of a vibrant ethnic economy. As recalled by one interviewee who was
among the first group setting Chinese CPA firms in San Gabrial Valley. ‘Until the
middle of the 1980s, there was a lot of demand for accounting in the community. If
you were a CPA, you had no problem finding clients. They would come to you’
Regrounding the ‘Ungrounded Empires’
(Zhou’s Interview No. A–7). From 1985 to 1993, the number of Chinese-operated
accounting offices mushroomed. Seventy-two Chinese accounting firms were listed in
the Chinese yellowpages, published in 1985. In 1993, the same publication listed 196
CPA firms, and another 39 bookkeeping and tax services. The survey conducted
among Chinese-owned accounting establishments in Los Angeles in the early 1990s
showed that slightly more than 10 per cent of the firms were in existence since the
1970s, 63 per cent of the firms opened in the 1980s, and 23 per cent of the firms
opened in the 1990s. Thus within a few years, this once empty field suddenly became
crowded and extremely competitive.
Chinese transnational practices are a driving force behind the boom of Chinese
accounting firms. As overseas investments from Taiwan and Hong Kong increase
steadily in Los Angeles, Chinese accountants are in great demand to guide this
capital into a variety of industrial and commercial activities, and ensure that these
activities conform to the American accounting and regulatory systems. In their own
words, accountants have to ‘baby-sit’ these new arrivals, as most of them are
unfamiliar with, and frequently confused by, the new commercial environment in the
USA. The CPA would start by convincing them that they need to pay taxes and
explain the US tax code and accounting system, and then move into tax strategies
and investment and financial consulting. Many interviewees suggested that
international finance and taxation are among their major services, indicating how
common overseas connections are for their clients (Zhou 2000). In fact, the most
profitable and the fastest-growing clients are those immigrant entrepreneurs who have
international business backgrounds, own businesses or have other investments
overseas, since they are likely to be involved in large projects financed by overseas
capital. Many accountants viewed international connections as the major advantage
of doing business in Los Angeles. As one CPA operating a three-partner firm
I believe Chinese CPAs are better situated than their American counterparts.
We are bilingual and bicultural. The globalization integrates the USA and the
Chinese Rim [usually used to refer to mainland China, Taiwan, and Hong
Kong and some Southeast Asian countries where Chinese dominate the
economy]. Our client base will expand as the global economy grows. Every
week, one or two of my clients are flying across the Pacific. There is so much
demand for us to help them with their tax and accounting systems.
(Zhou’s Interview, No. A–10)
Chinese accountants make frequent trips to East Asian countries. Some 43 per cent of
respondents visit mainland China, Hong Kong, Taiwan, or Singapore at least once
every one or two years. The different accounting systems limit their ability to transfer
their skills to other countries, however, so they tend to focus on local transnational
firms rather than work directly for overseas firms. Even so, the survey found that
Chinese firms tend to have more overseas clients than out-of-state clients in the USA.
The survey also shows that 36 per cent of the accounting firms claimed to have close
relations with overseas business associates, the majority of which were located in
Taiwan, Hong Kong, mainland China, and some Southeast Asian countries.
What is interesting, however, is that the transnational part of the accounting
Yu Zhou and Yen-Fen Tseng
services only constitutes the tip of the iceberg, albeit the most lucrative part, among
the services provided by Chinese accounting firms. Few interviewees suggested that
they could rely on the international sector exclusively, either because their small size
and specialization do not allow them to handle very large-scale projects, or because
there is an oversupply of accountants for the transnational projects available. The vast
majority of the clients in most accounting firms tend to be locally-based small
businesses in the San Gabriel Valley, such as restaurants, gift shops, and miscel-
laneous services. As described by the CPAs, it was these small, local businesses that
provide the ‘bread and butter’ of their firms, so that they could survive and hopefully
grow into larger, more specialized and profitable firms.
What is clearly beneficial for the Chinese accounting firms in Los Angeles is the
spatial integration of transnational businesses and local businesses in the San Gabriel
Valley (Figure 3). When asked for location preferences, almost half of the surveyed firms
chose Monterey Park/Alhambra and its vicinity as the preferred choice, and another 17
chose the East District. Such locations enable Chinese accountants to access the largest
possible ethnic client base and, more importantly, a dense ethnic network that could at one
point or another lead the accountants to more lucrative parts of the transnational practices.
New York City illustrates a contrasting case. New York’s Chinatown represents the
largest enclave of the Chinese ethnic economy in the city, dominated by garment
manufacturing and restaurant businesses (Zhou 1992). However, the transnational
businesses such as Chinese international traders are concentrated in the midtown area
(Zhou 1998b).5 The spatial separation forces Chinese professional services to choose
which sector or location they would rather be involved in. The president of the New York
Chinese CPA Association (who owned a CPA firm) commented that the two accounting
bases are vastly different. Chinatown provides a large business base, but low profit, while
midtown clients are fewer and more demanding, but lucrative. He would have to relocate
from Chinatown to midtown to capture the transnational business there. He made this
move in 1996. Two years later, he had to return to Chinatown, conceding that he still
needed the stability provided by Chinatown clients and the midtown location put him
out of touch with this group of clients. He would have been grateful if these two client
bases were spatially integrated as in the case of Los Angeles. Ultimately, the spatial
separation in New York leads to a far less viable ethnic professional service sector.
In short, Chinese transnational practices desperately need bilingual and bicultural
accounting services to guide them into the local commercial environment and
regulatory framework. Yet, the Chinese accounting sector could not have flourished
without the large number of Chinese locally oriented businesses ranged from
restaurants to advertising services in the San Gabriel Valley. These local businesses
form a rich and diverse base that provides stability and fertile ground for growth and
further development of Chinese accounting firms. They also provide endless entry
points into a potentially international network.
Chinese accounting firms are not alone in drawing markets and resources from
both local and international businesses. A similar case is true in other professional
services, such as legal, advertising, real estate and banking in the Chinese central
business district (Tseng 1994a, 1994b; Zhou 1998a). In other words, the restaurants,
small family stores and factories that may be characterized by low-wage labour is an
integral part of what builds the Chinese transnational phenomenon.
Yu Zhou and Yen-Fen Tseng
By addressing the concurrent ties that immigrants maintain with their home countries,
transnationalism introduces an additional dimension in the ongoing debate between
assimilation and cultural pluralism as a desired mode of integration. Transnationalism
also represents an alternative form of globalization initiated by migrants as opposed to
globalization guided by multinationals, international agencies or treaties. This study
focuses on the geography of transnationalism. Unlike some scholars who see it as a
rejection of localization, we view transnational practices as rooted in the territorial
division of labour and community networks. We maintain that such practices may be
decentred and fluid, and transnational empires may be borderless and ever changing,
but successful transnational organizations are necessarily grounded. Such practices
are only effective by creating powerful alliances between the local and international
interests, resources and opportunities.
Places such as Monterey Park and Alhambra in Los Angeles represent a prototype
of a transnational community where global ties intersect and take root in the network
of a local community. Monterey Park and Alhambra host a range of Chinese firms
from the very local to the very international. The area has a mixed class structure
ranging from highly paid professional entrepreneurs or high-tech engineers, to low-
wage restaurant workers and barely surviving small-business owners. Yet, all of them
are important actors constituting the dynamism of transnational place. It is important
to observe the deep local embeddedness of the transnational practices even as we
appreciate their distant outreach. After all, localization is the geographical catalyst of
Yu Zhou is at the Department of Geology and Geography, Vassar College,
Poughkeepsie, New York, USA.
Yen-Fen Tseng is at the Department of Sociology, National Taiwan University,
Taipei, Taiwan, ROC.
1. Some studies show that earlier European immigrants also maintained active engagement
with their home countries, only disrupted by the two world wars and Americanization
campaigns (Basch et al. 1994; Guarnizo and Smith 1998).
2. The analogy is partial, as it does not adequately account for the assimilation and
intermingling among groups with geographical proximity. But it is a useful way to
conceptualize the complex flows and intersections metropolitan areas embody today, in
which migrants play a vital role.
3. One may argue that in southeast Asia and the Pacific, the overseas Chinese and Indians
have managed to sustain a close relationship and routine interactions with their home
regions with the important institutions such as trading, marriage and education (McKeown
1999; Kelly 1992).
4. To start, see Zhou 1996, 1998a, 1998b for a review of geographical literature on space and
place in economic enterprises.
5. For a fuller discussion, please refer to Zhou 1998b.
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