FACULTY Q&A

An increase in anti-Chinese sentiment has led to consumer discrimination against Asian American-owned small businesses, according to new University of Michigan research.

In the wake of the COVID-19 pandemic, politicians have spread stigmatizing language, media outlets have used dehumanizing images of Asians, and anti-Asian hate crimes have increased.

In a new study published online in Nature Human Behaviour, Ross School of Business professors Justin Huang and Julia Lee Cunningham and their colleagues examined how this sentiment can damage minority-owned businesses.

Huang discussed the research on the podcast, “Business and Society with Michigan Ross.” An excerpt appears below.

We have an unfortunate history in this country of a particular group of people being unjustly blamed for something, followed by hate crimes against individual members of that group. Why does this notion of collective blame arise?

I think a lot of it is coming from a lack of exposure, and ignorance as well. We studied this. The more that an individual tended to overestimate that fraction of Asian Americans that are ethnically Chinese, the more likely they were to blame Chinese or Asians for the spread of the COVID-19 pandemic. And the more likely they are to say, “I think that Chinese food, ordered from a Chinese American business, presents a higher risk for contracting COVID-19.”

In terms of violent attacks, the patterns follow the same way. The less you know about these groups, the more you tend to fear and project blame sentiments toward them.

Why did you choose restaurants to study the economic effects of this bias?

Restaurants were a great bellwether for broader sentiment toward these ethnic groups because they are ubiquitous and easily ethnically identifiable. These results translate really well to other classes of businesses that are ethnically identifiable—lawyers, doctors or dentists; landscaping companies; barbers or nail salons or beauty salons. All these businesses are subject to these same forces, whereby if an individual holds these blame sentiments, then that could be expressed in consumer avoidance.

Could you describe some of the impacts you found?

During the pandemic, we saw that Asian restaurants experienced a drop in traffic of 18.4% on average relative to comparable non-Asian restaurants in the same areas. Furthermore, unfortunately, former President Donald Trump was creating a lot of stigma through rhetoric like “the China flu” or “Kung Flu.” And in areas where Trump support was over 75%, we saw relative avoidance as high as 30%. Whereas in low Trump support areas, that relative avoidance was less than 10%.

One other thing that I want to highlight from our results is that this anti-Asian sentiment tends to be relatively nontargeted. It would be one thing if consumers were only avoiding Chinese restaurants, but more broadly, they are avoiding all Asian restaurants.

There wasn’t a lot of difference between avoidance of non-Chinese Asian restaurants—Japanese restaurants, Korean restaurants, Vietnamese restaurants—vs. Chinese restaurants. Furthermore, that degree of spillover was also moderated by the level of Trump support. So the more Trump-supporting the area was, the more individuals also tended to avoid Korean restaurants too, perhaps out of this misidentification.

Did any of these results surprise you at all?

When we say an 18.4% relative drop, what does that really mean? Our back-of-the-envelope calculations concluded that this cost Asian restaurants around $7.42 billion in lost revenue in the year 2020. That really is a large impact for a large swath of small businesses.

What would you say is the single biggest takeaway from this research?

The biggest takeaway is the responsibility of politicians and, unfortunately, media outlets as well. Early in the pandemic, there was an unfortunate article in The New York Times that was reporting on the first COVID-19 case in New York City. And it was reportedly a passenger traveling from Iran. They didn’t identify the individual, but the imagery that they utilized to represent this was a picture of a large number of masked Asian Americans just walking around Chinatown minding their own business. This and similar articles from the time made Asian Americans the face of the pandemic in a lot of consumers’ and readers’ minds.

That was combined with Trump’s rhetoric around “The Chinese are bringing the virus into our country,” and there wasn’t the correct amount of nuance around distinguishing between overseas vs. domestic, distinguishing between the Chinese government vs. Chinese individuals vs. Chinese Americans.

This really created the perfect storm of an environment for dehumanization and stigmatization, which can lead to attacks, vandalism and consumer discrimination. So in short, this research underlines the responsibility of a lot of public-facing individuals to make sure to not create stigma around geopolitical events or diseases.