Why do Korean Entrepreneurs Dominate the African American Beauty Supply Industry?
As a native Chicagoan and inner city resident, I have patronized many beauty supply stores in pursuit of hair care products and accessories specifically designed to address the unique needs of African American hair. While the product offerings vary greatly among these local businesses, there is an unwavering similarity: each is owned and operated by Korean businessmen. This phenomenon extends beyond my hometown: 80 to 90 percent of independent beauty retail stores in America that cater to African American clientele are owned by Koreans, while only 1 percent are owned by African Americans.
Historical perspective sheds light on this strategic move. In the early 1970’s, research on the ethnic hair care market revealed that although African Americans only made up 11% of the population, they contributed over 30% of cosmetic sales. More specifically, African American women purchase roughly 80% more hair care products and accessories, primarily wigs, than any other ethnicity— a trend that has facilitated the growth of the 9 billion dollar black hair care industry. With such rapid growth in demand, American wig manufacturers began to export Korean hair. However, exporters quickly realized the economic benefits of creating wigs themselves. It was at this time that immigrants began entering black neighborhoods, many of which were comprised of low income groups who valued inexpensive wigs; Korean owners were able to meet this need due to the relatively low cost of processing hair within Asian countries. This suggests a substantial economic surplus for the target market: the benefit of patronizing local stores with reasonably priced items far exceeds the cost of traveling to less inaccessible beauty supply stores to purchase the same items at a higher cost. This competitive advantage drove several small and larger wig retailers out of business. Korean wig shop owners then began...
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