Business Beyond the Reef

I admit to skepticism about statistics and business news that come out of China, and I don’t pay much attention to the rhetoric from Chinese officals (though the Chinglish translations can have immense entertainment value).  My skepticism has been vindicated.  This morning I read a wonderful post by Michael Pettis on GreenFaucet, an investment blog I read daily, about a study that shows the Chinese themselves put their trust in farmers, religious workers, sex workers, soldiers and students.  The study was based on an on-line poll of more than 3,000 Chinese, who also felt that the least credible people in China are real estate developers, agents, secretaries, entertainers and directors.  Groups such as teachers, scientists and government officials came somewhere in between.  I saw no mention of my own personal favorite sources of information: taxi drivers.

I can understand about some real estate developers – and entertainers have been known to do pretty awful ads on television, so I wouldn’t trust them either.  Like Michael Pettis, I am baffled about why the secretaries came out so badly.  But the study might give you a clue as to why the prospects claimed by your Chinese agent don’t match the orders you see.  You might try asking a local hooker what your agent has been doing lately.

You can see the original report of the study in the China Daily.

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Actually, it is British Airways making the offer, but it can’t be refused if you are a small business looking to break into international business in 2010.  BA will make grants to 100 small businesses consisting of FREE flights to anywhere in the world in the British Airways system, FREE global shipments for up to 500 kilos, and much more.  The grants are competitive and your company must apply by September 30.  Fly to British Airways!

Kudos to Tom Moore of Tropical Telecom for tipping me off to this one, and to Jürgen Thomas Steinmetz of ETurboNews, for reporting it.  Both are fellow members of the Hawaii Pacific Export Council.  You can see the ETurboNews article here.

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The United States long ago negotiated free trade agreements with South Korea and Colombia, but neither the Obama nor the Bush administrations have been able to get them approved by the U.S. Senate.  Now is your chance to give a hand to increasing U.S. trade with these markets.  The Office of the U.S. Trade Representative has opened a public comment period on the FTA agreements and you have until September 15 to make your views known.  Past FTAs have shown huge beneficial effects for America’s trade and there is no reason to think that the FTAs with Korea and Colombia would do otherwise.  Comment on the agreements here for Korea and here for Colombia.

Here in Hawaii, we naturally think of the Korea FTA first, but the Colombia FTA could prove useful as well.  Hawaii has good trade with Korea already, and has many historical, cultural and business ties with Korea.  Past FTAs have benefited Hawaii’s export industries, witness the increases shown in Hawaii’s exports from these past FTAs (since their inception years):

U.S.-Chile Free Trade Agreement               125% increase since 2004
U.S.-Singapore Free Trade Agreement        120% increase since 2004
U.S.-Australia Free Trade Agreement        1,342% increase since 2005

I suspect the impact of the Korea FTA will be similar to the boost we got from the U.S./Australia agreement!

You can find more about the Korea FTA here and the Colombia FTA here, including the full texts of the agreements.

And write to your senators, too!

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You may have heard about the move of more than 8,000 U.S. Marines from Okinawa to Guam.  There are scads of business opportunities arising from this for architects, engineers, building contractors and more – but there is one opportunity I haven’t heard publicized.  All those Marines, not to mention the contractors and support personnel, and their families, are going to get thirsty.  And there are no microbreweries on Guam so far as I can tell.  Guam has about 175,000 people and is about to get a large influx of young drinkers.  Hmmm … perhaps this is why Hooters opened its first Guam franchise in May.  Ya think?

Hawaii always experiences battles between its Governor and the state legislature.  The state has a Republican governor, Linda Lingle, but is otherwise almost totally Democratic.  It is inevitable that everything becomes a political battle with each party seeking to score points off the other.  The latest twist – and there is an international connection here – is the fight between the Governor and the state’s heavily Democratic government employee unions.

Like many other states during this recession, Hawaii is woefully short of funds.  It has reached the point where it is simply not possible to continue paying state employees without more revenue – or without axing entire state programs.  Hawaii’s private sector has already faced huge layoffs and – trying to avoid the same for the state government – Governor Lingle proposed that state employees be furloughed for three days each month until the crisis is past.  The unions reacted with dismay and went to the courts to get the furloughs canceled.  The unions argued correctly that furloughs are an implicit cut in pay and that the state must negotiate anything like that before they can be implemented.  The courts agreed and I must assume that the unions are legally in the right.  The resulting “negotiations”, unsurprisingly, have stalemated.

Here’s where shooting oneself in the foot comes into it.  By obviating the furloughs, the unions have left the Governor with no choice but to lay off more than 3,000 state employees by October.  I don’t see how this can endear the unions to their rank-and-file members, nor does reducing the number of union members seem in their best interest.  But I am even more concerned with the unintended consequences of the lay-offs.  (Here comes the international bit.)

The layoffs will, inter alia, mean that the Hawaii Department of Agriculture will lose 118 positions or about 36% of its workforce.  This includes most of the state’s agricultural inspectors, including those in the Quality Assurance Division, which inspects agricultural and aquaculture products before they are exported.  Many export markets, of course, require such inspections to protect their citizens from tainted foods or their own agricultural industries from dangerous pests.  If Hawaii can’t properly inspect its ag exports, then it is unlikely that it will be able to sell much overseas, particularly to strict markets such as Japan.  Hawaii exported over $100 million last year in fruit, macadamia nuts, coffee, cut flowers and live plants – close to 15% of the state’s total agricultural output.  That’s an awful lot to put at risk for the sake of avoiding temporary furloughs.  The government employee unions have not only shot themselves in the foot, they are taking dead aim at farmers’ feet, too!

Welcome to Business Beyond the Reef!  Some of the posts will be international business news and comments about that news, some may be musings about international trade policy, and others may focus on events in Hawaii or the United States that have implications for international business.  Some posts may tell you about my own business activities, most of which are also “beyond the reef”, whether educational videos about the oceans or projects involving deep ocean pipes.  And there may be occasional post that is simply about my love for outrigger canoe paddling.  It’s all Business Beyond the Reef when you live on an island in the Pacific.