Business Beyond the Reef

The U.S. Chamber of Commerce bit the big one yesterday. In their infinite wisdom, sitting a quarter of the way around the world, the Chamber inserted itself in Hawaii’s race for a U.S. Senate seat. Bear with me on the politics; this does have something to do with international trade. Let me set the scene for you, ignoring the fringe candidates.

Hawaii is overwhelmingly Democratic, has been for decades. So local and national Republicans are very excited that they have a viable candidate to take a Senate seat out here, something that has been only a dream for them since Hiram Fong left the Senate in 1977. Linda Lingle, a former two-term governor, earned good marks for supporting business and Hawaii’s economy. She is opposed in the primary by John Carroll, a former state senator, airline pilot and businessman. I know them both slightly. John is a nice guy, and I agree with his views on shipping, but Linda will be the Republican candidate. I am not sure her support for Sarah Palin four years ago will help in the general election, but Linda is a very strong campaigner with impressive financial backing.

The two main Democratic contenders are Mazie Hirono, former Lt. Governor and present Congresswoman, and Ed Case, a former Congressman. Again, I know both of them, Mazie slightly, and Ed better. It is fair to say that Mazie is the Democratic establishment candidate, which makes her rather liberal from a mainland perspective. Ed is more of a centrist, and so is viewed with suspicion by the left-leaning establishment out here. That said, they are both strong campaigners. Case vs. Lingle, or Hirono vs. Lingle, it’s going to be vicious in the fall.

There are strong, polarizing differences on economic issues among these four. Mazie Hirono, like her mentor Senator Daniel Inouye, tends to vote the party line on trade issues. (For you trade policy junkies, Hirono voted against all three free trade agreements last fall.) John Carroll and Ed Case, though in opposing parties, both want to repeal the Jones Act (or its application to Hawaii) because it raises shipping costs for anything moving into or out of the state via the U.S. West Coast (which is almost everything). Hirono supports the Jones Act and I don’t recall that Lingle did anything about it during her time as governor. Lingle was a strong supporter of trade and investment with China. Case has broader trade interests. I’m not sure about Carroll and Hirono. [Full disclosure: Ed Case is a former member of the Hawaii Pacific Export Council, which I chair, so I know his views on trade issues better than I do the others.]

There is one trade issue on which all four candidates agree, regardless of party affiliation and political spectrum. No politician in Hawaii can ignore or diss tourism – and all support Hawaii’s #1 industry and leading export earner. All have done so in state office, and both Case and Hirono have done so in Congress. If there is any topic that wins bipartisan support in Hawaii, it is tourism. Lingle, Case and Hirono have each endorsed President Obama’s new national plan to support tourism. Carroll probably has, too. Tourism is NOT a differentiating issue.

So the U.S. Chamber of Commerce decided to endorse Lingle and yesterday began fielding TV ads in her favor. What issue did they pick to emphasize? Her support for tourism! Nice flashy ad. No substance, and no suggestion of how Lingle’s support for tourism is different from her opponents, but the photography is good. There must be another agenda at work, since this is perhaps the only issue on which all the candidates can agree.

I suspect the Chamber’s support for Lingle will backfire, as she was already being accused of relying too much on financing from outside Hawaii. The Chamber ad will tend to reinforce that whether the charge is true or not. That’s not a problem for her in the primary, but could be a big issue come November. If there is an impact in the primaries, it may be to foster a suspicion of business, which would tend to favor Mazie Hirono over Ed Case. And that could put Mazie Hirono in the U.S. Senate – probably not the U.S. Chamber’s objective.

Johnson Choi is a Honolulu businessman who does much of his work in China, Hong Kong and with Chinese in California. Johnson has been taking an informal survey of his Chinese contacts to find out what seriously rich travelers from China are looking for. His major intent, I think, is to find some evidence that Chinese tourists might be attracted to Hawaii by Hawaiian culture. You know, hula, slack-key guitar, poi, grass skirts – all that stuff Hawaii stresses in its tourism marketing. Johnson has come up with five questions for his unscientific survey and has kindly shared the comments of his Chinese friends.

What role does Hawaii’s unique culture play in attracting Chinese visitors to our islands? While sun, sea and surf are part of the equation, Hawaiian culture and history are not. The fact that Chinese officialdom has come to Hawaii (e.g., for APEC last fall) counts for something, but so does Hawaii’s relative isolation. It’s almost humorous, but Johnson tells me that China’s super rich come to Hawaii because they know they won’t attract any press while they are here. He suggests they can walk the beaches with their girlfriends and no one will recognize them. Probably true.

What do Chinese visitors think of the Bishop Museum and ‘Iolani Palace? They don’t. These are two of the most important sites in Honolulu if you are remotely interested in Hawaiian or Polynesian culture and history. Johnson’s friends are unimpressed. Few Chinese care about Hawaii’s history – except maybe for the years that Sun Yat-sen spent here – and virtually none want to spend more than thirty minutes at historic sites – except for the U.S.S. Arizona memorial. (The same has to be said for the vast majority of Hawaii’s visitors, wherever they come from. If it comes to a choice between spending time at a museum or on the beach …)

What do they want to see more of in Hawaii? Salespeople, hotel staff or others who speak Mandarin. To be fair, Hawaii is working on this. Sheraton has been in the forefront, and more and more of Waikiki’s high-end stores are looking for Mandarin speakers. It seems particularly frustrating at the airport. Hawaii had the same problem when Japanese visitors first came, managed to catch up and turned catering to Japanese into a very profitable business. These aren’t languages picked up quickly. (I know, it took me quite a while to learn to order lunch or give taxi instructions as an expat in Taipei.)

What is missing in Hawaii? Good Chinese food. Hawaii has some decent Chinese restaurants, but most are old-style Cantonese – and they are not in Waikiki or in major hotels where rich Chinese visitors will find them. We need top-of-the-line restaurants in Waikiki that feature the rest of China’s cuisines. And I defy you to find a decent Chinese breakfast in our hotels. Chinese visitors will try other foods, but, like most people, they want their own comfort foods.

We have plenty of Korean bars, but little other late-night entertainment. Chinese visitors tend to fly in from the west, so jet lag leads them to be up late. And they expect Vegas-style, big-name shows. Most of Hawaii’s entertainment is geared to travelers from North America who go to bed early. We have had the same complaints for years from our Japanese and Australian visitors, but little has been done about it.

As a final question, Johnson asks his Chinese friends what they think of the idea of doing business in Hawaii. He says they try to be polite, but their comments and facial expressions boil down to “Are you kidding me?”.

Seems like Hawaii has some work to do.

The Commonwealth of Guam has been granted parole authority for Russians. No, that has nothing to do with releasing them from some gulag. Parole is a special geographically limited visa waiver program. You see, Guam – though part of the United States – has a separate, though related visa system for foreign visitors. Most countries are subject to the same visa requirements as for the United States itself, but there are exceptions made because a visa to visit Guam does not entitle the holder to travel on to the United States itself. That’s why when a flight from Guam arrives in Honolulu, the passengers have to go through Customs and Immigration.

Washington granted parole authority to Guam as of January 15. Only about 500 Russians visited Guam in 2011 when they had to go to American consulates to get visas. The visa process typically took a couple weeks and, of course, the United States charges for visas. Now, with parole authority, a Russian family can board a flight to Guam without visas, with the assurance of being “paroled” at the airport in Guam. Once paroled, they can stay for up to 45 days enjoying the fun and the sun. Folks on Guam expect visitor numbers from Russia to triple this year. A local hotel, the Pacific Islands Club, has Russian-speaking staff, and Guam’s DFS – I’m told it is the largest in the world – is preparing for Russian buyers. Guam tourism has subsisted on Japanese tourists for years, but they tend to stay only for a few days, perhaps only a long weekend. Russians, many coming from eastern Siberia, tend to stay for two weeks, especially in winter.

The Commonwealth of the Northern Marianas received parole authority for Russians and Chinese in 2009. This has boosted the local tourism industry, but not as much as had been hoped. Most of the Russians and Chinese want to go to the casinos on Tinian – and there was hope that charter flights would be allowed to fly directly to Tinian. This never happened because the Department of Homeland Security, responsible for immigration, only has enough officers in the CNMI to staff the airport on Saipan. Thus, flights from other countries are prohibited from landing on Tinian. Tinian is close to Saipan, but transferring between the two can be a nightmare. There are only small commuter aircraft to do the job, so the looked-for 747s full of rich Chinese and Russians never materialized.

Guam should do better. The island has a more developed tourism infrastructure, better shopping, more restaurants, historic sights – though no casinos. Guam is already working to obtain direct flights between Guam and Vladivostok. But Guam wants more. Unlike the CNMI, Guam does not have parole authority for China, so …

The next step is China.
- Guam Governor Eddie Baza Calvo