Pacific Business News (Honolulu) - November 27, 2000
http://www.bizjournals.com/pacific/stories/2000/11/27/focus1.html

In Depth: Asia-Pacific

From the November 24, 2000 print edition

Hawaii entrepreneurs finding their way into China

Heather Tang

Len Fukushima doesn't know how to make pizza, rarely even eats pizza, and sure as heck never dreamed he'd make a career out of selling pizza. Yet he's done all of the above -- in China.

More and more Hawaii residents like Fukushima are turning their eyes toward business opportunities in the region, says Mike Murphy, director of the U.S. Department of Commerce's Export Assistance Center. With a Chinese entry into the World Trade Organization closer, the doors of trade could open up significantly in the next few years, he says.

To position themselves for that surge, Hawaii-based businesses are becoming more proactive in their overseas expansion efforts, says Puongpun Sananikone, president of international consulting firm Pacific Management Resources Inc., which has conducted business in China since 1988. He says part of the increase is due to China's possible entry into the WTO.

"Increasingly I see more firms go on marketing trips whereas traditionally, overseas business have always come to Hawaii shores. People are realizing the need to bring Hawaii to Asia rather than wait for Asia to come to Hawaii," he says, adding stiff competition from other cities like San Francisco, Seattle, New York and Boston is also heating up the industry.

Since the economic downturn in Hawaii, many local firms also can no longer be dependent on Japanese investment and tourism, he says.

"That's motivating them to diversify their marketing efforts out to Asia," he says. "In the long term, it's a healthy structural adjustment."

Local residents like Fukushima are an example of those reaching out to Chinese markets. Fukushima, for one, is so confident of the business potential and fast pace of Chinese markets like Shanghai that he's poured tens of thousands of his life savings into the possibility.

Armed with pizza recipes and seasoned experience of Bob Lee, owner of Pizza Bob's restaurant, Fukushima will open his Pizza Now catering and delivery business in Shanghai next week.

"I'm not an economist or a financial wizard, but I think the timing and place is right ... Shanghai is the place to be for business in Asia right now," he says. "The potential of the market is unbelievable. Our construction isn't even finished yet and we already have our first order."

Although he says China's entry to the WTO will not have an immediate impact, Fukushima adds that buzz about the membership is already having an impact on government in Shanghai.

One example: He was able to speed through the permit and joint-venture process in months with relatively small start-up capital. (Normally, the government requires $200,000 minimum capital to set up a foreign joint venture, he says. He only had $30,000.)

And the employment market is prime, with starting pay about one-tenth of Hawaii wages. Just days after posting a notice for employment, Pizza Now was flooded with about 1,000 e-mail inquiries, he says adding that he can afford to hire about 25 employees because of the lower pay scale.

Positioned for growth

With its cultural affinity and geographic proximity, Hawaii is well positioned to profit from and gain new Asian partnerships and joint ventures, Murphy says.

"Knowledge of doing business in Asia is paramount as well as understanding the culture -- that's some of the value-added services Hawaii can bring," he says. "Connectivity is the key word here. Hawaii has such a diverse population. There's an understanding of Asia from a basic Confucian ethic and how you do business over there."

It's that kind of understanding of Chinese language and culture that encouraged Elvira Lo toward expansion in Asia.

"I understand the culture. I was raised in a Chinese environment. I'm able to listen and read between the lines," says Lo, president of Hibiscus Aloha Corp.

About 10 percent of her chocolate sales are now from sales of chocolate-covered macadamia nuts at chain stores and shops in China, Hong Kong and Taiwan.

Having contacts and being familiar with Chinese business acumen are valuable tools, agrees Johnson Choi, chief operating officer of China-focused high-tech startup company ProjectOnNet.Com and president of the Hong Kong Business Association of Hawaii.

Although Choi is fluent in both Mandarin and Cantonese, he still prefers to conduct his business deals and contracts in Hong Kong.

"Hong Kong is not as difficult," he says. "In China, even if you speak the language, you should bring an interpreter. The legal situation in China makes it ripe for misunderstandings."

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