By David G. McIntyre, Star-Bulletin
The raw ingredients for a cold medication are laid out in
a traditional Chinese medicine shop in Hong Kong owned
by Edward Eu, a 40-year Hawaii resident.
PRESCRIPTION FOR
CHANGE
Few people from Hawaii have launched
businesses in Hong Kong, but they say the
opportunities are still immenseDay 2 of a Special Report
By Susan Kreifels
Star-BulletinAlthough small in number, Hawaii's entrepreneurs are running businesses in Hong Kong and China that run the gamut -- from traditional medicines to cutting-edge communications technology. Some have used Hong Kong as the gateway to China, others have leapfrogged the island colony that will be handed back to China July 1. Here's a look at the impact of changes in Hong Kong and China on four businesses owned by Hawaii people.
Edward Eu guards his company's secret recipes as carefully as Coca-Cola does. The generations-old mixtures have made Eu Yan Sang (Hong Kong) Ltd. the biggest manufacturer of traditional Chinese herbal medicines in Hong Kong. His grandfather started the business 85 years ago.
"The formulas go back umpteen years," said Eu, a 40-year Hawaii resident whose Universal Motors sold European cars in the state. "We have the best effective medicine. We buy the highest quality (ingredients) in Hong Kong. Everybody knows us."
Raw products are purchased in mainland China and shipped to the Hong Kong factory. Medicines and herbs are sold in two Hong Kong stores and exported all over East Asia, except back to the land that provides the coveted ingredients.
Eu, who recently retired as the company's chairman, tried for some three years to get Beijing's approval to export his products to China. He has no explanation for why it's taken so long. And he doesn't know what will happen after the July 1 return of Hong Kong to China.
The company went public in 1992 but last December the family took it off the Hong Kong stock exchange and reclaimed private ownership. The company headquarters then moved to Singapore for "family reasons," Eu said.
"I don't know how they (China) will treat us. Beijing's idea is not to rock the boat. I don't expect any changes now," said Eu, predicting continued properity for Hong Kong.
His goal is to open a factory in China, close to the raw products he needs. Asked about the potential of selling in China, he shakes his head in awe at China's 1.2 billion consumers.
It was mainly a matter of time.
That's what persuaded Patrick and Wanda Tse to move from North Carolina to Hawaii in 1987 to start Timcorp International Marketing Co. Ltd., an industrial supply business.
Hawaii's time zone made it possible to communicate with U.S. suppliers in the morning and Chinese customers in the afternoon.
The company supplies tobacco products. But with growing emphasis on the evils of smoking in China and the numbers of smokers dropping, it's now selling equipment for cleaning up the environment as well.
In 1988 the couple opened an office in Hong Kong rather than Beijing. "Dealing directly with China sometimes is still risky," said Wanda Tse, the company's controller. "The Hong Kong office contacts another middleman to take the risk. The profit is not as high but the risk is less."
By Dennis Oda, Star-Bulletin
It's a busy kitchen at Roy's Restaurant in Hawaii Kai,
and the boss is in there doing his part. From left are sous chef
Chris Garnier, chef Eddie Wolverton and owner Roy Yamaguchi.
He opened a Hong Kong restaurant two years ago, with an eye
on mainland China. He said he's detected no change in
business leading up to the return of Hong Kong to China
Last year they opened a Beijing office. Wanda Tse said she wasn't sure the company would need to keep its Hong Kong office open after the July 1 return of Hong Kong to China. "We will test and see what happens. Nobody knows."Although China says it will not change Hong Kong, Wanda Tse -- raised in southern China under the communist government -- is skeptical. "It depends on who is in power," she said. Still, because of Hong Kong's financial importance to China, "I don't think they want to destroy it."
It is "still very important to take advantage of Hong Kong's autonomy," Tse said of Hawaii businesses considering entry into the Chinese market via Hong Kong.
But she recommended having an overseas office because "personal contact is still important. Internet is not the same. Lots of people want to know your character before dealing with you."
Timcorp also has offices in Singapore and North Carolina but headquarters are in Hawaii, a strategic location for business. Said Tse: "U.S. companies should set up here because of the good timing."
Harry Yee invested some money, took some risks and followed an untraditional path into China that bypassed Hong Kong.
It's paid off. His Asian American Publishing Group Ltd. has landed a partnership with Xinhua News Agency to provide consulting services for U.S businesses wanting to move into China.
Xinhua, China's official news agency and often representative overseas, will provide up-to-date, comprehensive business information on China, specifically looking at opportunities for small- and medium-sized businesses.
Yee, whose fledgling company "hasn't paid the bills yet," had been buying news from Xinhua on Guangdong Province, one of the first areas developed as a special economic zone. Last October he started distributing the economic news on a website, hoping his free service would attract advertisers. Instead Xinhua invited the company into a new venture.
Yee said Xinhua believed his firm shared the same vision of opening up U.S. and China business to others besides multinational corporations. But also "they see Hawaii as an important part of commerce with the rest of the world," partially due to the time zones that allow Hawaii to communicate with both the United States and China in the same working day.
Yee also said fiberoptic communications from East Asia must pass through cable lines via Hawaii to the U.S. mainland and Europe. "Hawaii will be one of the major terminuses for communications in the world."
Besides communications, Yee believes selling Hawaii's agricultural and aquacultural expertise to South China is promising. "We could help bring a whole new era to producing agricultural products in China," Yee said.
Selling other Hawaii talent in engineering and architecture also has great potential.
By Dennis Oda, Star-Bulletin
Harry Yee is president of the Asian American Publishing
Group, which has landed a partnership with China's
Xinhua News Agency.
"In terms of how people view economic goals in Hawaii, they are behind the curve. There needs to be an infusion of possibilities in dealing with China."When Roy Yamaguchi opened a Roy's Restaurant in Hong Kong two years ago, he also had an eye on mainland China, particularly Shanghai.
The leap from Hawaii to Hong Kong will make the step into China easier.
"Hong Kong was not part of the plan necessarily, but it's a closer proximity to go into China," said Yamaguchi, who owns 13 restaurants in the Pacific Rim, including Hawaii, Guam, the Philippines, Tokyo, California and Seattle.
He expanded his Hawaii-based chain of Eurasian-cuisine restaurants to Hong Kong, a high-profile metropolis where business is steaming. But it's a competitive city with tons of restaurants. Not to mention the "extremely expensive" rent he must pay.
In a city where connections can mean everything, high-powered partners are perhaps Yamaguchi's biggest asset, especially with the upcoming change in politics.
His Hong Kong partners run a "huge conglomerate" that focuses on textiles and hotels. They also own commercial real estate in mainland China, which may help when Yamaguchi heads north.
So far he's detected no change in business leading up to the return of Hong Kong to China. "We can't discount anything," he said. "We're there to stay but you never know."
Yamaguchi said the levels of concern about the future are as varied as the Hong Kong people.
The rich and powerful with big money invested in China may be left alone and worry less. The expatriates can pack up and move if things get tough. "Then you have the working forces," he said. "They survive on a month-to-month basis with no disposable income to take off and run if something happens."
WHAT THEY SAY
ABOUT HONG KONGWho: Matthew Chapman, Asia programs manager for The Nature Conservancy; 1983 Punahou School graduate; worked in Gov. John Waihee's Office of International Relations in 1994. MATTHEW CHAPMAN
Hawaii-Hong Kong connection: The best linkage I see is Hawaii playing on its role as a health state where people can get premier medical treatment and attain a healthier lifestyle. Asia, with its growing stress, pollution and wealth could be a very lucrative market for such services. Hawaii faces serious obstacles of geography, land and labor costs and other hindrances in competing.
Job opportunities for Asian Americans: One of Hawaii's strong points is its multiracial aspect. An Asian American who has grown up in Hawaii and is comfortable in both Chinese and Western business and social situations, and speaks either Cantonese or Mandarin, will do very well in Hong Kong. Those who also read Chinese and have skills such as marketing, law or engineering are in great demand, particularly as the British leave and Hong Kong becomes more local in its power structure and business relationships with mainland China.
The turnover: A lot of the Western media fail to understand how important Hong Kong's return is to China and how emotional the issue is for them. Generally the system will continue as before with lots of safeguards and firewalls built in to keep Hong Kong's system, its free press, rule of law and an efficient and clean civil service continuing.
Hong Kong's future: It looks bright. The unprecedented economic explosion taking place in China will ensure Hong Kong's place as a pre-eminent Asian financial center.
Hong Kong Series Archive
Tomorrow: Living and working in Hong Kong,
plus a look at opportunities
