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Pacific Perspective

TUNG BUI

Friday, December 7, 2001


Hawaii should intensify
its race for a piece of China


The world's business community has recently accelerated its courtship of China. The new WTO member and second largest economy in Asia opens its doors next week to global competition. China announced this week that its economy would achieve a spectacular 7 percent growth at a time when the rest of the world has yet to figure out how to improve a sluggish economy. Also, China's request for assistance with organizing the 2008 Olympic games in Beijing means big money for those who know how to do business there.

As part of the WTO framework, China will drastically cut import duties for a wide range of products and services and also gradually allow foreign companies to invest and compete on an equal basis with domestic enterprises. This economy in full transition is set to become a daunting place for cutthroat global competition with massive profit potentials and enormous failure risks.

Hawaii -- with an entire population that is about equal to the number of monthly Chinese newborns and facing global and national competitors with large resources -- has no choice but to intensify efforts to obtain Chinese business. These efforts must be strategically and culturally crafted to align our capacities with China's needs.

China's low labor costs might not be sufficient to offset inefficient and ineffective organization structures and lack of modern management skills. Education and training are national priorities. Although Chinese prefer brand name institutions whenever they can afford them, Hawaii does have a few centers of excellence in the areas of tourism, business and public administration, that can help the drive toward economic reform. China's high-tech sectors lack the know-how to conduct business overseas and are looking for partners with R&D and marketing expertise. Some Hawaii companies can form such alliances.

Not surprisingly, the Aloha State remains primarily known in China as a tourist destination. It is expected that among the 200 million to 300 million middle-class citizens, an increasing number of them will travel overseas. Securing partnerships to promote tourism will help diversify the Hawaii travel industry sector. This is largely dependent on the State's ability to create a sustainable Hawaii-China business network supported by both governments. Relationship building has always been the first step to doing business China.

The numerous trade contacts and agreements that have been realized during this week's Aloha trade mission -- led by the governor, organized by the State of Hawaii Department of Business, Economic Development and Tourism, with the University of Hawaii, East-West Center, and members of the private sector participating -- are exemplary moves to give Hawaii the chance to compete in the global race for a piece of Chinese gold.


Tung Bui is the Matson Navigation Co. Distinguished Professor of Global Business, at the University of Hawaii at Manoa College of Business Administration. Reach him at tbui@cba.hawaii.edu.



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