Business Beyond the Reef

The State of the Union was kind of an anti-climax for international traders. President Obama didn’t enlighten us further on his trade reorganization plans, made several populist references to the adverse impact of trade with China, and proposed a new organization to ensure that foreign governments play nicely in the trade sandbox. And his speechwriter is smoking some really good stuff if he truly believes that the tire tariffs directed at China saved a thousand American jobs. All the evidence is that China may have lost some jobs and that producers of other low-cost foreign tires probably benefited. American are now paying higher prices for tires than they were before the tariffs.

Tonight, I’m announcing the creation of a Trade Enforcement Unit that will be charged with investigating unfair trading practices in countries like China. (Applause.) There will be more inspections to prevent counterfeit or unsafe goods from crossing our borders. And this Congress should make sure that no foreign company has an advantage over American manufacturing when it comes to accessing financing or new markets like Russia. Our workers are the most productive on Earth, and if the playing field is level, I promise you -– America will always win. (Applause.)

Either this is a clumsy attempt to get the anti-China forces off the President’s back, or the White House is blissfully unaware that the U.S. Government is already loaded with agencies whose task is to make sure that other countries behave as we think they should. (There are no agencies, however, to make sure that we behave in ways that we think others should.) I suspect the intent is to assuage the China bashers, but raising it implies that the federal government hasn’t being doing its job. In fact, the job of making sure that others comply with agreements has been a major thrust of administrations of either party for decades.

The Office of the U.S. Trade Representative oversees the Section 301 process, which refers to Section 301 of the Trade Act of 1974 – so it has been around for a while. In fact, it is our basic procedure for bringing and resolving international trade disputes. The whole of USTR is effectively a Trade Enforcement Unit.

So is the International Trade Commission, which is directed to “administer U.S. trade remedy laws … in a fair and objective manner“. It has been doing that job since 1916.

Less known is the Commerce Department’s Market Access & Compliance unit, specifically established to “defend, expand and promote market access for U.S. goods, services, and investment abroad“.

MAC executes this mission in two principal ways: 1) by developing specific and tailored country engagement strategies; and 2) by pursuing a range of cross-cutting policy initiatives to address international market access challenges, such as corruption, failure to enforce intellectual property rights, and discriminatory standards and regulations that unfairly restrict American exports.

Seems to me that we already have plenty of Trade Enforcement Units. Barry, did Punahou teach you what a “shibai” is?

President Obama swung by Disneyworld Thursday to announce his new executive order on promoting travel and tourism to the United States. Finally, it seems, somebody is taking this magnificent export industry seriously. Crippled by post-9/11 restrictions on visas and the TSA’s constant hassles at airports, travel and tourism still account for 7% of total U.S. exports and are by far our leading service export. What’s that in real money? A cool $134 billion. The industry as a whole employs 7.5 million people, with overseas visitors providing much of the profit margin that enables the industry and its jobs to grow. Unlike more stingy domestic travelers, or foreign travelers who can walk or drive into the country, long-haul international visitors spend, on average, about $4,000 per trip to the United States.

The White House press release emphasized three markets for growth in U.S.-bound tourism: Brazil, China and India. But India somehow got left out of the specific plans and proposals. There is much in the executive order that will boost travel from Brazil and China, some that is global, and a big potential boost to traffic from Taiwan.

Tourism promotion has largely been left in the hands of the states and individual destinations. True, there have been Federal boosts to tourism over the years, often at the behest of Hawaii’s Senator Inouye, but Washington support for tourism has hardly been consistent. It makes supreme sense to do some joint marketing for the whole country. After all, few tourists are interested only in Mount Rushmore, but they might be attracted by a trip that would also take in Yellowstone, the Grand Tetons, Devils Tower and Glacier National Park – none of which are promoted by South Dakota. So I am pleased to see a new national approach.

The executive order doesn’t say much about tourism promotion beyond ordering the secretaries of Commerce and Interior to come up with a strategy. The order does, however, address some of the major impediments to attracting foreign visitors to our country and its sights. The departments of State and Homeland Security have been ordered to increase visa processing capacity in China and Brazil by 40% in 2012, presumably based on the successful visa processing program piloted at the American Consulate in Shanghai over the past couple years. Both China and Brazil have a huge backlog of non-immigrant visa applications and the goal is to be able to process 80% of applications within three weeks. No more waiting months to even see a consular officer.

The Global Entry Program is a “trusted traveler” program in which frequent visitors to the United States can have background checks done in advance so that processing through immigration at U.S. airports is accelerated. They scan their passports and their fingerprints, and they are on their way. Despite the pilot nature of the program and its availability at only twenty airports, nearly a quarter million foreign travelers have signed up. The executive order makes GEP permanent and orders expansion to more airports.

Listed last, but certainly not least, is a decision to add Taiwan to the 35 countries that already are covered by the Visa Waiver Program. Technically, Homeland Security has to approve this, but with an instruction from the President, it seems likely to happen quickly. We already see a lot of visitors from Taiwan, but expect a profound increase when they get the visa waivers.

One small thing puzzles me from my parochial perspective in Honolulu. The President announced new appointments to the U.S. Travel & Tourism Advisory Board, an advisory committee housed in the Commerce Department which should be heavily involved in developing tourism promotion strategies. There are 32 private sector members of the board, not one of whom comes from Hawaii, which I understand is a major U.S. tourism destination. Four out of the 32 come from Florida – and the announcement was made at Disneyworld. Now, let’s see, Hawaii is a safe state for Obama and has few electoral votes. Florida, on the other hand, … Silly me! The President wouldn’t play politics, would he?

Guest author: Jonathan Poston
A new trend for U.S. universities these days is recruiting mainland Chinese students to attend undergraduate and graduate programs. It’s not just an opportunity for American universities to show off their cultural diversity IQs either. There’s big money being made in China now and middle / upper class families are falling over themselves to give their children the absolute best educations. (Chinese families save vigorously for many years for two things: educations for their children, and to care for their parents during retirement). Naturally, U.S. universities have carved out plenty of space to help satisfy this growing demand, sometimes though to their own detriment. Don’t think for a minute universities are beyond overlooking a few entrance requirements to bring in the big spenders. It’s nothing as blatant as accepting Chinese students who score very poorly on the test scores, but more of knowingly accommodating Chinese students who have always learned by rote memory, and in some cases find it impossible to make decisions for themselves (you see problems in the China workplace stemming from rote-learning mentality– needing managers to tell them exactly what to do).

Chinese students do fine when it comes to accounting, finance, or anything which requires them to memorize and apply formulas, but ask them to discuss why Taiwan is considered China or to discuss the ethics of Communist Government leadership. If you were in China teaching business like I was, you’ll barely get the word Taiwan out of your mouth before they all stand up and yell in unison: TAIWAN IS CHINA. Chinese students are extremely hard workers and prove to be intellectually qualified to crack any code, but there must be a precedent or formula to apply. All their lives they’ve been taught precisely to the test (the big Gao Cao test determining their fate after high school demands it), so when they come to American universities and are expected to discuss a problem and arrive at a unique conclusion, a severe paralysis sets in.

The first signs of how a lifetime of rote memory affects Chinese students in an open American university environment is during lecture. Many of them simply cannot understand English. This is because they have studied all the right words to pass the language tests, but really haven’t had much practice with free form conversation. They have no sense of how to improvise or shoot from the hip, and may TAKE on an android-like quality when articulating beyond customary greetings. But you try learning Mandarin Chinese and you’ll see why rote-memory techniques are necessary. Their memory skills are absolutely amazing. I’ve witnessed Chinese students regurgitate five single spaced pages of business term paper content in front of an audience, without knowing what 10% of it meant.

Universities who are frantically recruiting Chinese students make accommodations like offering three or four week American language and culture classes to compensate primarily for language deficiencies, but there really hasn’t been a mainstream initiative to teach creativity to the Chinese, probably because that would put schools in the very awkward situation of implying that Chinese aren’t creative people. That’s not true. Look at the inventions the Chinese have given us in this Creativity for Chinese Businessmen article. The issue is that to be successful, modern Chinese have been forced to hew to social standards and authoritative government mandates that put more emphasis on rote-learning methods than creative free thinking patterns.

American universities who want their Chinese students to be successful should offer creative thinking classes that reflect the student’s area of professional interest (and yes, Chinese students go into universities knowing exactly what degree they are after, so support their path by giving them academic tract-relevant creativity courses). Creativity course titles might be: Product Innovation, Creative Writing, Analyzing History w/ Logic, Emotion & Intuition, Law & Freedom, Ethics of Deception etc.

Ironically, teaching creativity isn’t as unstructured as it might seem. Cultural and personal learning style differences must be assessed and the course should teach in terms of creative tools, not processes–lest you want students to believe creativity can be memorized, like a math equation. Workshops using meditation, open debate, mind mapping, brain storming, etc. make for a great start, but best to take it slow and be sensitive to decades of rote-learning conditioning. And be careful not to take it too far, no one should come away learning Enron-style creative accounting or finance.

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Jonathan Poston has taught business courses at universities around the world (USA, China, Ecuador, Belize) on a variety of topics, including creativity. He currently serves as the editor-in-chief at Learn Chinese Business Blog and works full-time as an internet commerce marketing specialist at FastPivot.com. Contact him at JonathanPoston@gmail.com.