Business Beyond the Reef

I thought of Cannonball Adderley’s title when we were climbing about ten decks on Saturday to the bridge of USNS Mercy, one of the U.S. Navy’s two giant hospital ships.  You may wonder why this is in a blog that is normally about international business, but it is Business Beyond the Reef and a great opportunity for medical equipment suppliers.  So read on.

Mercy departs San Diego for Pacific Partnership 2010 (U.S. Navy photo)

Mercy made a brief stop at Pearl Harbor this weekend on her way to a multi-month humanitarian mission (Pacific Partnership 2010) in the Western Pacific and South East Asia.  Her combined military and civilian crew and medical staff will provide health care and training in Vietnam, Cambodia, Indonesia, Timor-Leste and Palau.  Home-ported in San Diego, Mercy is one of two hospital ships under the U.S. flag, the other being her sister-ship USNS Comfort that scored headlines and praise for her work as a first-responder after the Haiti earthquake.  Mercy did similar work after the Indonesian earthquake and tsunami.

She is a remarkable ship, built as a 69,000 DWT tanker, but converted in the 1980s to a new career as a complete floating hospital.  Normally operating as a 250-bed hospital, she can quickly be configured for 900 beds.  She needs that ability in a humanitarian crisis or for wartime.  Mercy boasts all the services that a well-equipped hospital offers: complete operating rooms, recovery, x-ray and advanced imaging, a dental suite, an optometry laboratory, physical therapy, a huge pharmacy and much more.  She is even carrying a veterinary team on this mission.  Mercy’s mission is strongly supported by medical NGOs, who bring their own expertise, including provision of many of the interpreters needed during this voyage.

During the Pacific Partnership mission, Mercy will be the centerpiece of humanitarian programs that include not only operations and care on board Mercy, but construction and repair of clinics and other medical facilities, training for local medical personnel who will have the chance to work alongside Mercy’s professionals.  And the ship carries a full medical equipment repair shop that will fix broken gear, including advanced electronics, and providing training at all her stops.

This is where the business angle comes in.  It’s not just host country medical personnel who will be on board Mercy and seeing the equipment and supplies she uses.  Hospital administrators and Health Ministry officials will also be on board, working with Mercy’s hospital administrators.  These are the people who make decisions on what to procure for their own hospitals and clinics.  As I gazed around Mercy’s surgical suites, recovery rooms and medical labs, I saw equipment from General Electric, Welch Allyn, Stryker, Allied Healthcare, Beckman Coulter and Johnson & Johnson – all outstanding U.S. competitors.  Of course, there was equipment from other countries, too.  The star of the show was a brand new GE CAT scanner that looks like something right out of Star Trek.

Foreign administrators and officials are likely to pay attention when they see this equipment in action, and see their own medical personnel using it, in a non-commercial situation.  This is soft-sell, no salesmen present – but none are needed if your equipment is good enough to be selected for Mercy or Comfort.  We are not likely to be able to quantify the results, but medical equipment manufacturers should think of missions like Pacific Partnership 2010 as a floating trade show for their products.  You don’t need to pay for a booth or a trade show staff, but you do need to bid on Mercy’s future needs.  Offer the winning bid and your company can do well by doing good.

• You really should take your own bags to the store, folks.  And now you have added reason.  The U.S. Department of Commerce this week  issued final antidumping duty determinations on plastic carrying bags from Vietnam, Indonesia and Taiwan.  The duties vary by manufacturer, but will go from a low of 36.54% to a high of nearly 96%.  You can bet your grocer will start charging for plastic bags.
• Hawaii’s visitor industry is paying close attention to China’s development of Hainan as a massive destination resort.  Just as Hawaii seems on the verge of attracting large numbers of Chinese tourists, Hainan poses a competitive threat to convince Chinese that they can get to a tropical paradise more quickly and easily at home.  Now come the rumblings of over-development on Hainan and a massive bubble in housing prices.  Looks as if Hainan’s developers are going over the top.
• Have you seen Hong Kong recently?  The magnificent views from the Peak are increasingly blanketed by air pollution, worse than it has ever been before. Fifteen years ago, when I was working in Singapore, companies were already moving regional HQ operations from Hong Kong to Singapore to escape Hong Kong’s air pollution.  Look for this to pick up again – and look for plenty of Singapore ads in Hong Kong featuring clear landscapes, and the new casinos.  Good business for Singapore’s property managers.
• Bad news for Honolulu, but we’re used to this one.  Another report was issued this week that says Honolulu is the most expensive city in the United States for doing business.  No surprise, as we have to ship in nearly everything we use, and we have a state legislature that doesn’t hesitate to raise taxes on business.  This is a hangover from the days, more than 50 years ago, when five big companies virtually ruled these islands.  The Big 5 are dead and gone, but the political response persists.  Local politicians think any business is a cash cow.  On an international scale, Honolulu comes out somewhere between Tokyo and Osaka.  Ouch!
• Those of you who do business on the many trade lead sites (Alibaba.com, TradeIndia.com and all the others) need to check out TradeFeeds.com.  TradeFeeds aggregates leads from virtually all the others, saving you a heck of a lot of time.  I have never found these sites very useful, producing stale leads or fishing expeditions.  But others have made a bundle using them.  If it works for you, give TradeFeeds a try.  And let me know: Do you get sales from these sites?

Might save a little time.

Admin Note: The spammers are really out of control, so I added a CAPTCHA feature to our comments form.  Sorry for the inconvenience, but the bad guys make it necessary.

China & ASEAN

Economic diplomacy can be blatant.  China Daily carried a report this weekend about a huge aid package that Beijing is offering the ASEAN countries, collectively or individually.  Foreign Minister Yang Jiechi announced the package Sunday:

1. Launch of a $10 billion China-ASEAN investment cooperation fund to focus on infrastructure, energy, resources, communications and information technology.
2. $15 billion in credit lines to ASEAN countries over the next 3-to-5 years.
3. $39.7 million to Myanmar, Cambodia and Laos to meet “urgent needs“.
4. $5 million to the China-ASEAN Cooperation Fund.
5. $900,000 to another China-ASEAN fund that (confusingly) includes Japan, South Korea and China.
6. 300,000 tons of rice to the Emergency East Asia Rice Reserve.  And …
7. An additional 2,200 scholarships in government and public administration over five years.

I don’t know how much of this package is really new, since politicians tend to wrap old presents in new gift wrap many times.  And such gifts don’t often come without strings.  Even China Daily mentioned that the package will result in “profound and active influence” on China-ASEAN cooperation.  I’ll bet.

It will be interesting to discover what projects eventually emerge from this aid package and how procurements for those projects are managed.  I expect the lion’s share of the contracts will go to Chinese construction companies, but perhaps I am overly cynical.  There may a few dribbles for the rest of us.

• Don’t know why these things surprise me, but it turns out that China’s water pollution stats are useless because they forgot to include agricultural runoff in the numbers.  With China’s huge agrarian sector and aggressive fertilizer, fungicide and pesticide use, that means that we can double the water pollution that Beijing claims as official.  See the New York Times. Or the Wall Street Journal. Hawaii’s water resource engineering companies have been trying to break into the China market for several years, with only middling success.  With their experience in the sugar and pineapple industries, maybe they are finally positioned to make some money (and do some good) in China.
• It’s easy to find lists of the best hotels, resorts, airlines and so forth, but rare to see lists of the worst.  TripAdvisor has published their 2010 lists of the Top 10 Dirtiest Hotels in the world.  There are separate lists for the Top 10 in the United States, Canada, Asia, Britain, France, Italy and an overall list for Europe.  Be warned.
• Old Singapore hands are still amazed.  The first of Singapore’s casinos opened just a couple hours ago as this is published, taking an auspicious start with the Year of the Tiger.  It’s not simply a casino, but four new hotels and a theme park, too.  And I remember when Sentosa Island was still somewhat empty, and I had delightful times at the Beaufort Hotel.  Guess I’ll have to take a look.
• Business occasionally trumps politics.  Taiwan ended long-standing restrictions this week to let its manufacturers of flat screen panels open production facilities in China. China is on track to become the world’s top market for flat-screen televisions next year, and Taiwan’s Korean competitors have been gobbling up market share using factories in China.
• Good news from NAFTA.  Canada and the United States have resolved a trade dispute over government procurement practices, Canada agreeing to open up government construction contracts and the U.S. allowing Canadian firms to compete for Stimulus Package business.  The two countries handled this through the WTO’s dispute settlement process.  And, word is out that the United States and Mexico are near agreement on the long-term problem of allowing Mexican 18-wheelers to operate on U.S. soil.  This one has soured relations for years now.

Monday is President’s Day in the United States, a national holiday.  That seems an appropriate time to work on my income taxes, so I may not post this Monday.  Of course, if some irresistible topic arises …  Otherwise, I hope to see you here on Tuesday.

Cambodia's National Road No. 6

Cambodia’s new highways are being rolled out quickly – and may have a profound impact on regional trade in S.E. Asia.  Refurbished highways between Phnom Penh and Thailand were opened December 28, and are only a small part of the tremendous road building going on in Cambodia.  Ten projects, totaling 730 miles, are currently underway and at least another eleven projects are in the pipeline.  Good business for those who can get there.

Prime Minister Hun Sen calls these roads “elephant steps, not mouse steps” in terms of their speed and their potential impact on his country.  Clearly, the roads will benefit tourism, making it easier to visit sites such as Angkor Wat from Bangkok.  Cambodia will make money out of day-trippers from Thailand, plus the roads will encourage more tourists to stay in Cambodia to see sites that have been unreachable from Thailand.

The new roads are already easing logistics and spurring trade, linking Cambodia to the highway systems of its neighbors.  Thai firms are already pushing everything from construction materials to instant noodles into Cambodia.  Japanese companies are using the new routes to link operations in Bangkok to Ho Chi Minh City.

The competition to build Cambodia’s new highways is intense, reports the New York Times.  The Asian Development Bank is financing some of the roads, while China is building others.  The new road to the Thai border was built by a Thai company using ADB funds.  Mr. Hun Sen has commented how the Chinese build more quickly than do the companies doing the ADB projects.  I wonder what he will say when the maintenance bills come in.

Things you might find interesting, but I haven’t had the time or inclination to blog about:

• Interesting that Google’s threat to withdraw from the Chinese market received very little coverage in China while it made headlines elsewhere.  The only comments I have seen out of China come from people who appear to have found ways around the Great Firewall.  In fact, the New York Times has a good article up about the world market for software that gets around government censorship.

• The January 2010 edition of National Geographic is a must read.  The article on Asia’s illicit wildlife trade reveals the arrogance of the traders and the apparent complicity of some governments.  The story is an indictment of Malaysia’s government in particular.  This is the sort of thing that gives all business a bad name.
• The same issue of the National Geographic gives an update on how Singapore works.  Should be of interest to anybody thinking about doing business in S.E. Asia.
• I have been skeptical about the China-ASEAN free trade agreement that went into effect January 1 -  and some businesses in the ASEAN countries are in open opposition, fearing Chinese competition in their home markets.  On Tuesday, the Wall Street Journal reported that Indonesia has asked for a delay in going to zero duties for Chinese textiles, steel and chemicals. Some are lobbying in Jakarta to get an exemption for clothing, toys and electronic goods.  I imagine Indonesian smugglers, and those they pay off, fear for their business.
• Hawaii is a small business state, so I was struck by European Union data on the percentage of privately-owned firms that have less than 250 employees.  They show the United States at only 49%, compared to the EU at 70% and Japan with 67%.  I recall being told once by a Brussels Eurocrat that small business is a disease, and that the EU would be the doctor to cure it.  Hmmm … the vaccine must still be in the lab.
• Luxury car sales are picking up in India according to Time Magazine.  I was intrigued that BMW had to change its marketing in India.  Instead of emphasizing their vehicles’ driving prowess, they stress how comfortable the backseats are.  Rich car owners in India don’t drive, but hire others to do that for them.
• Mainstream media, most bloggers and populist politicians all love to denigrate big business – and the condemnations are too often deserved.  So give them credit when they do things right.  Take a look at the Huffington Post‘s list of the contributions by major corporations for Haitian relief.  Many of the companies we love to vilify are stepping up to the plate.  By my count, they have pumped in more than $18 million and that is growing hourly.  Have you stepped up?

Things you might find interesting, but I haven’t had the time or inclination to blog about:

• Anything involving counterfeiting, fraud, or commercial piracy gets me excited, so you can imagine my reaction to Monday’s reports of massive piracy of the hit film “Avatar“.  According to the London Times, Avatar set a new record for number of pirated copies in its initial days of release: 980,000 illegal copies in the first five days – half a million in the first two days!  The studio expected nothing like this, having convinced themselves that nobody would pirate a 3D film since they couldn’t copy it in 3D.  Wrong.  And it will get worse when Avatar comes out on DVD.
• I’m glad their sales grew somewhere.  General Motors said Monday that its sales in China grew 67% in 2009 over 2008. I assumed this was from very low volume, but was blown away when I saw that GM sold 1.8 million vehicles in China last year.  Good on you, Detroit!

• The Huffington Post carried an outstanding article January 5 by Michael T. Klare of Hampshire College, entitled “The Blowback Effect: 2020″, which examines likely trends over the next decade.  While I may not concur with all the details, Klare’s trends are spot on and should be the basis for many an international business plan in the next ten years.  Klare discusses the rise of China, the relative (but only relative) decline of the United States, the continued emergence of developing countries, and climate issues.  Well worth a read.

• Another good read is an article at Asia Times by Brantley Womack of the University of Virginia.  Womack examines the good and the bad of the new China-ASEAN free trade agreement, with some especially interesting analysis of potential issues between China and Vietnam.  Look for “China-ASEAN Pact Offers More Than Win-Win.”

• U.S. software firm Cybersitter, known for its award-winning parental filtering software, has filed suit in California against the government of China and two Chinese software firms for stealing code to block access to “politically undesirable” websites by Chinese Internet users.  The suit alleges that more than 3000 lines of code were copied into China’s control software, Green Dam.  Cybersitter says that more than 56 million copies of the pirated software were distributed after China required that Green Dam be bundled with new computers sold in China.  See the full story in the New York Times.
• International Living has issued its 2010 Quality of Life Index of the best places to live, ranking a whopping 194 countries.  The top five are France, Australia, Switzerland, Germany and New Zealand.  The United States did well, coming in with a tie for 6th with Luxembourg and Belgium.  Then there is the other end of the scale.  The bottom five, predictably, are Somalia, Yemen, Sudan, Chad and Afghanistan.
• It finally happened, but don’t get excited yet.  China is now the world’s largest exporter – at least for the first 11 months of 2009.  China sold $1.07 trillion during the period, while the long time title holder Germany slipped to second with a mere $1.05 trillion.  Germany’s exports were picking up toward the end, so adding December may reverse China’s title hopes.

Things you might find interesting, but I haven’t had the time or inclination to blog about:

• My protectionism alerts go off loudly when U.S. auto companies complain to Washington, but this time they have a point.  Japan has created a “cash for clunkers” program that, like the U.S. program last year, links the payment for the old car to purchase of a new one.  The difference is that Japan’s rules favor Japanese-made vehicles over imports – a pretty blatant violation of the national treatment principle.  For the record, the U.S. “cash for clunkers” program was wide open and non-discriminatory.  The top ten models purchased were: Toyota Corolla, Honda Civic, Ford Focus, Toyota Camry, Hyundai Elantra, Toyota Prius, NissanVersa, Ford Escape FWD, Honda Fit and Honda CR-V AWD.  Anybody see a pattern here?  Washington, Seoul and Brussels should take Tokyo on over this one.
• The European Union and the United States have joined together to challenge China’s export controls on bauxite, coke, silicon metals, magnesium and other raw materials.  China has export quotas on these products, ostensibly for environmental reasons, but Brussels and Washington are making the case in the WTO that the quotas are meant to reduce costs for Chinese exporters while raising input prices for their overseas competitors.
• In other WTO action, China has asked for a review of the egregious (at least in my opinion) Obama Administration action against tires from China.
• New Year’s Day marked the advent of the new ASEAN/China free trade area, which will follow the European Union and NAFTA as the third largest free trade area in the world.  Business between the ASEAN countries and China is growing quickly and most observers see the new free trade area as an unalloyed good thing.  Undoubtedly, it will be of net benefit, but there are some in ASEAN who worry about rampant Chinese competition in their home markets.  Take a look at a good summary of their views in the New York Times.

I’m still traveling, currently in Colorado, but will try to post as often as I can this coming week.