Hawaii Pacific Export Council

Volume 15, Issue 100

Monday, May 19, 2008

CBP Moving Toward Greater Emphasis on Trade Facilitation

U.S. Customs and Border Protection officials indicated at a recent meeting with the trade community that the agency is moving to bring its mission to facilitate legitimate trade more into balance with its mandate to protect national security. Although CBP has repeatedly stated in the post-9/11 environment that these are its “twin goals,” its focus in recent years has clearly been improving the security of the supply chain. It now appears that Customs is preparing to put more resources into trade facilitation, a move that is being welcomed by importers, exporters and others involved in global commerce.

The May 9 meeting of the Departmental Advisory Committee on Commercial Operations of CBP and Related Homeland Security Functions (COAC) addressed this and many other customs and trade-related issues.

Trade Facilitation. Commissioner Ralph Basham said that after nearly seven years of emphasizing supply chain security “we know we’re going to have to focus more of our energies at trade enforcement and facilitation.” He indicated that CBP will be relying on COAC for assistance in this effort, which will begin with the development of a new Trade Strategy. Brenda Brockman Smith, CBP’s executive director for trade policy and programs, explained that this strategy will center on four goals: facilitating legitimate trade and promoting compliance, enforcing trade laws, advancing national and economic security, and intensifying automation and further integrating it into CBP’s business processes. CBP will look to use many of its existing methods in pursuit of these goals, Smith said, including multi-layered risk management, pre- and post-arrival activities away from physical borders and the use of advance information. CBP is now in the process of consulting with the trade community, the departments of Homeland Security and Treasury, and the Office of Management and Budget to further develop the Trade Strategy, including determining the roles and responsibilities of the public and private sectors. Smith noted that one of the major challenges for CBP will be strengthening the trade expertise of its employees and that one of the ways it will seek to do this is through the active use of partnerships with the trade community.
Resumption of Trade. CBP officials said they have been working with other agencies as well as other countries to develop plans for the resumption of trade following incidents such as terrorist attacks, natural disasters, labor strikes, etc. An interagency agreement with the Coast Guard that focuses on the maritime transportation system will be tested during an exercise to be held in August in the ports of Savannah, Jacksonville and Charleston. CBP and the Canada Border Services Agency have developed general planning protocols as well as a more detailed business resumption communication and coordination plan, and the two sides recently conducted training on this plan at a number of northern border ports. Similar protocols are still under negotiation with Mexico.

At a recent congressional hearing on the resiliency of the U.S. supply chain, lawmakers and staff members said trade resumption is a primary concern for Congress and that the plans developed so far are not detailed enough. CBP executive director for cargo and conveyance security Todd Owen responded that “it is impossible to predict every significant event scenario or the details that will present themselves in an actual event” and that “our response to an actual event will depend on the facts we encounter and each response will be tailored to reflect these circumstances.”

Import Safety. According to officials, CBP has three key responsibilities with respect to import safety.

• cooperating with other government agencies such as the Consumer Product Safety Commission and the Food and Drug Administration to harmonize procedures and processes at the border

• fostering increased interoperability through the use of the International Trade Data System, refining shipment targeting policy and tracking goods via unique identifiers

• creating a new interactive network to gather additional information on product safety issues

Carol Cave, director of the CPSC’s new Import Surveillance Division, said her agency is considering the adoption of an approach similar to CBP’s Importer Self-Assessment program for product safety issues. However, she indicated that it is still early in this process and that the CPSC plans to hold further discussions with the trade before making any decision to proceed. COAC expressed concern with the idea and said it could pose substantial challenges for importers.

100 Percent Scanning. Rich DiNucci, director of the Secure Freight Initiative, said CBP is still testing 100 percent scanning of U.S.-bound cargo containers at three overseas ports and making progress toward the expansion of the test to three other high-volume ports. CBP sent its first report on the test to Congress in February and the second report is expected shortly.
Lawmakers said recently they will be interested to hear the report’s findings, particularly in light of Deputy Commissioner Jay Ahern’s recent statement that 100 percent scanning should be limited to high-risk trade lanes. A law enacted last year requires that by 2012 all oceanborne cargo containers must be scanned before being shipped to the U.S., but according to press reports at least some members of Congress are reconsidering that mandate. One factor could be the cost of scanning, which has been estimated at $20 per container by one House staffer but $500 per container by a recent European Commission study.

C-TPAT. Bradd Skinner, CBP’s director of industry partnerships, provided an update on the Customs-Trade Partnership Against Terrorism. Skinner said that as of April 17 there were 8,322 certified participants, 7,269 of which had been validated and 252 of which were receiving Tier 3 benefits. CBP has suspended 531 companies from the program, about half of them truck carriers, for failed validations or security incidents. Three joint validations have been conducted with China Customs since March and a pilot test of third-party validations in China is due to expire in June. CBP expects to issue a document on the benefits of C-TPAT participation sometime this year.

Skinner also addressed the status of mutual recognition efforts concerning other countries’ supply chain security programs. Mutual recognition has already been extended to New Zealand and agreements are expected to be signed with Canada and Jordan in June. Australia, Japan and Singapore are possibilities as well.

In-Bond. Director of cargo control Greg Olsavsky told meeting attendees that CBP is pursuing a number of efforts to improve its oversight and enforcement of the in-bond system, which were criticized in a report issued by the Government Accountability Office last year. For example, an improvement to the QP in-bond filing procedure is planned for ACE in late August. CBP is also considering regulatory changes, such as allowing 100 percent electronic filing, shortening allowable delivery times and imposing a single time period for all modes of transport, adding data to in-bond requests to better enable screening of restricted shipments, and requiring notice of diversions. Technological solutions are being explored as well. CBP is currently pilot testing the use of radio frequency identification on in-bond shipments between Los Angeles/Long Beach and Laredo. But Olsavsky said RFID is only an interim solution and that ultimately CBP will use container security devices to better control in-bonds.

ACE. Executive director for cargo systems Lou Samenfink said CBP is continuing to refine the electronic truck manifest module of the Automated Commercial Environment. Nearly four million truck e-manifests have been submitted already this year, he said, and truck processing times are down to 105 seconds. Ensuring the reliability and performance of this module is a priority for CBP.

Samenfink also announced that CBP will program 24 “hard edits” into ACE. CBP had identified 63 edits (which automatically make corrections to import entries) for possible elimination in the transition from the Automated Commercial System to ACE but has agreed to a trade community request to retain 24 of them.

WCO Framework. Assistant Commissioner for International Affairs Mike Mullen told the meeting that CBP has submitted to the World Customs Organization a proposed amendment to the WCO’s Framework of Standards to Secure and Facilitate Global Trade that would reflect CBP’s “10+2” security filing proposal. This amendment, which could be approved as early as next month, would only require the addition of five new data elements to the SAFE Framework.
In addition, Mullen said, CBP has recommended three criteria for approving any future changes to the framework: they must be in response to a national or legal mandate, there must be consultations with the trade community and the data elements to be added must be part of the WCO data model.

Why Do Economists Make Such Dismal Arguments About Trade?

By Robert Driskill May 2008

www.foreignpolicy.com

My fellow economists are manning the barricades to defend free trade from a growing public backlash. But with globalization increasingly seen as a threat, our arguments are falling on deaf ears. Maybe it’s time to stop claiming we know what is best for everyone?
Hard case: Economists’ arguments for free trade are often little more convincing than this sign on a closed GM plant in Lansing, Michigan.
Trade is proving to be an unexpectedly potent political issue these days. A number of free trade deals have stalled on Capitol Hill, with little hope of quick passage. On the campaign trail, the U.S. Democratic presidential candidates Barack Obama and Hillary Clinton have sought to outdo one another to express their concern about everything from NAFTA to outsourcing. My fellow economists have watched this show with growing unease, and many have made it their mission to defend free trade from what they see as ill-informed, scurrilous attacks.
As one prominent economist framed it:
No issue divides economists and mere Muggles more than the debate over globalization and international trade. Where the high priests of the dismal science see opportunity through the magic of the market’s invisible hand, Joe Sixpack sees a threat to his livelihood.
This was written in a New York Times column by one of those high priests, Harvard University’s Gregory Mankiw, and it accurately reflects the views of most economists.
A non-economist might ask: What are these opportunities, and how do these economists judge them as more important than the threats?
At bottom, trade is responsible for creating opportunities in some sectors of the economy and reducing opportunities in others. By the same token, restriction of trade reduces opportunities in some sectors and expands them in others. Without a doubt, this means that trade helps some people and hurts others.
In such a situation, why do economists claim that trade is good for the country? After all, the Joe Sixpacks are citizens of the country, and their losses are often large, painful, and traumatic, requiring dramatic life changes. Why should people think economists can be, in effect, high priests who tally up benefits and losses to different individuals and pronounce the outcome good or bad for the group as a whole?
In fact, people shouldn’t. Any time a change in economic circumstances creates both winners and losers, the judgment of whether such change was good or bad for the group as a whole is problematic. It becomes a matter of moral philosophy, not number crunching. Economists, as a result of their training, have no more claim to know what is “good for the country” than Joe Sixpack. It’s really that simple.
Do economists know something, though, that Joe Sixpack doesn’t, and does this knowledge inform their thinking about free trade? What they know that Joe Sixpack doesn’t is a basic but not obvious result from economic analysis: The gains to winners from free trade are sufficiently large that a hypothetical redistribution of these gains from winners to losers could make everyone better off. Note that economic analysis doesn’t say that these compensations actually take place. In fact, everyday experience shows us they don’t, and economists know that there are practical problems that make it virtually impossible to carry out such redistribution schemes. Why, then, do economists support free trade?
To answer this requires speculation, of course, because the arguments economists frequently present in favor of free trade are poor and simply cannot be a basis of support. In particular, they almost all in some form or another are a variation of the above-mentioned compensation criterion. For example, in an op-ed in the New York Times, the University of Rochester’s Steven Landsburg writes:
All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices. In other words, the winners can more than afford to compensate the losers.
A quick thought experiment shows why this argument is problematic. What if free trade is making a small percentage of the country much better off, but is hurting a much greater percentage (the “Joe Sixpacks”), as some argue is the case? Even if the total gains to the few winners are sufficiently large that they could hypothetically compensate the losers, why would it be obvious that “Americans as a group are net winners”?
Some arguments are even worse. They take the form: “We have a model that shows that everyone is made better off by free trade.” Joe Sixpack doesn’t need a Ph.D. to understand the uselessness of a model that doesn’t apply to the world of actual experience, or to understand the problematic nature of a judgment that relies on hypothetical redistributions.
So, one explanation for why economists are free traders is that their argument for free trade has become an institution: 200 years of tradition that has short-circuited their critical thinking. That would explain why economists seem to cherry-pick the implications of trade that support their case. For example, economists frequently point out that import competition leads to lower prices for things like baby clothes, athletic shoes, and toys. They never point out that these imports are fundamentally paid for by exports, such as food and pharmaceuticals, the price of which must rise to generate the increased sales. These higher prices are certainly bad for those domestic consumers who spend a greater proportion of their income on drugs and food than on baby clothes and toys.
It would also explain why economists employ such rhetorical sleights of hand as pointing out the unambiguously good things that come to an individual from trade with the wider world, and then arguing that, by analogy, trade must always be good for a country of distinct, heterogeneous individuals. They love to quote Adam Smith:
What is prudence in the conduct of every private family can scarce be folly in that of a great kingdom. If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage … .
But this famous analogy doesn’t quite hold water. Families are composed of relatively small numbers of intimately connected individuals. A move from autarky to trade for a family might create some “losers,” but these could be easily identified and compensated. That is just not the case for a nation with many millions of people.
Perhaps the deeper reason economists favor free trade so strongly is that they do use the compensation argument to inform their thinking about free trade, technological progress, and other economic changes. Their craft tells them that, if societies embrace economic changes that satisfy this criterion, such societies will have a “bigger pie” over time. Observation of economies over long periods of time suggests that the benefits of the bigger pie are widespread. The rising tide eventually raises most boats.
Is this, then, the priestly knowledge that allows economists to be certain that free trade is good for the nation? Not at all. Who are economists to judge whether benefits to future generations justify current hardships? That’s a question for philosophers. But it is the kind of useful knowledge that economists can present to the world to help people make up their own minds. It clarifies the trade-offs that societies face when they follow different policies. That is what economists are trained to do: see the pros and cons of different policy choices, trade-offs that are not obvious to non-economists. But they don’t have to practice philosophy without a license to do that.

Robert Driskill is professor of economics at Vanderbilt University.

May 18 2008

Honolulu Hawaii USA: May 16 2008 Keynote Speech to 300 guests – Titled “I believe that Children are our Future” Presented by Johnson Choi at the Dole Cannery HACTE “Hawaii’s Future Fortune 500 Luncheon”

Mr. Soma, President of the Hawaii Association for Career and Technical Education, Fellow UH TIM Alumni, honor guests, friends and students.

Leaders from the East and the West frequently saying “Children are our future” and Singer Whitney Houston has a song start out saying “I believe that children are our future”. When I was at the white house meeting with President George Bush a little over two (2) weeks ago, our President also talk about the future of our Children and Small Business who is providing more than 75% of the new jobs in the United States.

We must help our Children to understand and believe that they are the stake holders and future for Hawaii. We as businessman, businesswoman, educator, politician, union leader and voters must take a practical approach to provide the necessary tools for our Children to excel to bring positive impact to the State of Hawaii. A well educated work force is crucial on the ability of a City, a State and a Country to compete and survive in the increasing competitive world economy.

What is Hawaii’s future in the context of the boundaries of our State surrounded by water?

I have witnessed the changes since I arrived in Hawaii in 1974, the Big-5s of Hawaii, the Alexander and Baldwin, the Amfac, the Castle and Cooke, the C Brewer and the Theo Davis. Today, Alexander and Baldwin is the only Hawaii Company running the successful Matson Container ship with the protection of Jones Act and developing valuable Hawaii Real Estates.

When I attended Kauai Community College and Leeward Community College, the tuition per semester was only $25. When I transferred to University of Hawaii School of Travel Industry Management, the tuition per semester was only $145. The tuition fee charged by Chaminade University of Honolulu was $60 per credit hour for my MBA degree in 1977.

When I attended the UH School of Travel Industry Management in the 70s lead by Dean Emeritus Chuck Gee, in order to prepare us for future Hotel and Restaurant Management position, we are required to attend food and beverage courses, Food Lab, 800 hours of practical work experience as part of the degree requirement. The School had given us the tools and the means for UH TIM graduates to compete and win good paying jobs against Schools such as Cornell and University of Denver. TIM Night which was the hallmark of UH TIM until 2005 had connected our alumni in Hawaii, Asia, North America and Europe helped brought in 100s of thousands to the School. Two years after it was discontinued, our survey still show 89% of our alumni support TIM Night with the majority of the of the faculty and staff felt the same way. The pride of the UH TIM School is the Sunset Library, the computer lab and the Gee Technology Center that make us shine funded by 100s of thousands of dollars donated by 100s of UH TIM Alumni and donors around the world wanting to leave a permanent mark on UH Campus. Almost 1/3 of the donation has strong ties or came from alumni connected to major financial centers in Asia such as Hong Kong, China, Taiwan and Japan.

I was the Vice President of a software company in Hawaii in the late 1990s. During a visit to a software company located at the Silicon Valley who wrote the computer code for the Intel Chips. The Company has 2,300 employees. The CEO and Founder of the Company have told the investment bankers in the room that his Company asset is the people. They go home every night. If his people do not return, his Company will be gone tomorrow. Buildings and Hardwares could be replaced easily, but not the people who work and loyal to him. Therefore for a University, it is not the Dean, but the Professor, Staff and alumni that make a School shine; for a State, it is the people and many of you in the room, our Children who help chart the destiny of the State of Hawaii.

Today, Hawaii depend heavily on Federal money, they are the billions of military funded projects, millions of military related research projects going to the University and private sectors. Therefore if you are contractors, developers and scientists attached to this federal money, you will continue to live a good life, earning high income.

Despite the talk of 100s of thousand of tourist from Countries like China to visit Hawaii in the coming years, today, Hawaii is ill prepare to receive foreign tour groups, except Japan. Lack of new hotel developments limit our ability to offer management position to graduates from our Universities. A fresh graduate to begin his/her career is Asia could make management 3x faster putting in the same time and efforts. The pay could be 200% higher when you take into account of cost of living and favorable tax breaks offered by the Federal Government.

You could also consider working for the Government. The challenge is your ability to find jobs in the private sectors as most private sectors employers do not like to hire former government employees.

What is Hawaii’s future in the context of our country, the United States of America?

It will depend on how long we can keep the Federal money coming.

As an Island State, we have limited resources. Almost everything we use in our daily life must be shipped in or flew in.

During the past 15 years, Hawaii has experience serious brain drain. Many of our best educated children left Hawaii for greener pasture in the mainland USA. Some have also moved to Asia. This is actually not unique to Hawaii. Let us use China as an example, workers from the poor country side of interior China moved to factories in Southern China for 3 – 5 times better pay. Another example is the Philippines. Many gave up their professions as Nurses and even Doctors, moved to Hong Kong to become maids for 3 – 6 times better pay.

Unless our graduates are getting better pay, we do not see the out migration to stop anytime soon.

How can we pay our graduates more? When Hawaii rank as the top 5 most expensive place to do business in the United States, it is rather difficult to attract new business to come to Hawaii.

Couple of days ago, John Rutledge, an economist for President Ronald Reagan and George Bush interviewed by the Honolulu Advertiser Newspaper has a house on Maui wondered why Billions of dollars flying around the world not landed in Hawaii. We have a growing list of wealthy individuals from around the world; many former Hawaii residents now own properties in Hawaii. For the past 10 years, I must have run into no less than 200 such wealthy individual. Each time, I have made an effort to ask them one question when they made similar comments such as John Rutledge. Their general comments are as follow:

1) My business in not in Hawaii, I come here to relax to enjoy the Sun, Sea and Surf,
2) Yes, I was born and raised in Hawaii, but now I am in my late 50s or early 60s, I think I should leave it to my Children to get involved on the future of Hawaii. My follow up question soon found out, for many of them, most of their children do not live in Hawaii. Many felt the Hawaii business climate has not improved since they left 10, 20 or 30 years ago.

Our challenge is how to attract those that come here for the Sun, Sea and Surf to stay longer to smell the roses and share their expertise with us.

For those successful returning former Hawaii residents, what can we do to encourage them to teach and share with us their formula of successes helping us to connect with the mainland USA economy beyond the Federal funding?

What is the Hawaii’s future in the context of the World economy?

We had our opportunity in the 70s to have an open sky policy for Hawaii when most airplanes must refuel in Hawaii. We had also an opportunity to ask for an exemption to the Jones Act in the 70s, allowing better and competing non-USA shipping companies to enter the Hawaii market. The challenges is for the policy makers in Hawaii to understand and to convey the message to Washington DC to help them understand that we are the only state that everything must be shipped in/out of Hawaii by Air and Ship only. Hawaii has no natural resources. We need to import almost everything from outside of Hawaii and cannot be treated same as the other 49 States.

Hawaii has an excellent reputation in tourism and our natural beauty, rank top 5 worldwide. In terms of Hawaii as a business destination, we are nowhere to be seen. Many corporations in North America and Asia do not want to hold conferences in Hawaii as shareholders have difficult times believing that serious meetings will be conducted in Hawaii. It is not unusual when we conduct serious business in Asia; we are asked “Where is the hula girl”, took the focus away from serious business discussions. Our business partners in New York and San Francisco are able to zero in serious business discussion without distractions.

We still see quotes from top Hawaii government officials saying that companies should come to Hawaii since we are the gateway to the Pacific because we are in the middle of the Pacific. It is only true geographically, no longer in business sense as we lost our advantages more than 15 years ago.

I am still seeing promotional material advocating that Hawaii’s high percentage of Asian population such as the Japanese, the Filipino, the Korea, the Chinese, and the Vietnamese and so on qualify us for direct ties and understanding to the countries I just mentioned. Since majority of our Chamber members and clients are from Asia. We found out after the 2nd generation, most of the immigrant families have no idea where their relatives are from their home country.

If the majority of the People live in Hawaii want a better life for our Children and our Grand Children, private sectors businesses must take the lead. The government and the power of government which can be addictive must step back allowing the private sectors to take its place gradually. Government should monitor, regulate and oversee without direct involvement of the day to day business operation.

Let us use the Honolulu Mass Transit as an example, if the City will use the Tokyo or Hong Kong business models, we do not have to pay the ½ % general excise tax with millions of annual deficits by allowing the private sector to build the entire system at no cost to the City in exchange for development rights at the transit stations. Development on top of the transit stations could ensure ridership. By using the Government business model, it has increase the cost for all of us doing business in Honolulu. Future operational deficit may result in increase of our Real Property tax.

Given the opportunity working with the 4 major Universities in Hawaii (not to mentioned a number of ivory league college in Asia we work with frequently), we found each of them offer different ways to put a degree or program together. If you plan to get your college degree from one of the colleges in Hawaii, I will suggest you to talk to the alumni in the field of your interest to find out what they like or don’t like about the program they had attended. You should do one more thing, share with the alumni the courses being offer now as it could change, sometimes substantially from time to time. For example, if you want to become a hotel manager and one day manage one of the 500 new hotels being built in Asia each year. A school that only offer tourism or a course or two in transportation may not be the right school you want to go to as it will ill prepare you in the field of your interest.

Beside Hong Kong.China.Hawaii Chamber of Commerce, there are two (2) organizations you may want to consider joining. They are the Tax Foundation Hawaii and Small Business Hawaii. Tax Foundation Hawaii provide timely advise for many challenging issues we are facing today as a State and Small Business Hawaii like its name said represent the Small Businesses in Hawaii and many issues they are facing daily.

I will also encourage our student to get involved in non-profit organization and support your school. The School is only as good as its alumni. Many of the alumni with the best idea may not live in Hawaii. They have so much to offer, please do not treat them as second class citizen. I see people giving to non-profit expecting pay back, helping non-profit and your school with no expectation of pay back, avoid conflict of interest. You will find your life more enriched and rewarding.

In time of natural disaster, reach out to those alumni that live there. Let us use UH TIM School as an example, ¼ of our alumni now live and work in China, Hong Kong, Taiwan, Japan and Singapore. The good will you offer in time of need like the horrify earthquake in China last week, for every dollar you spent, you could get 100s or even 1,000s of times back to benefit your school and the State of Hawaii in the future. Think long term, do not let politics to get into your way, reach out with our Aloha spirit.

To our students, venture out to see the world, come back during the prime of your life and help Hawaii to become an even better place to live, to work and raising our children. Do not forget to give thanks to your Parents and teachers. Many have to work very hard and gave personal sacrifices to send you to high school and college.

I would like to share with you “The Paradoxical Commandments” written by Kent Keith, a White House Fellow in the 60s. I have felt very warm about it. It has shared many of my father’s life philosophy in our daily teaching and dealing with people.
1. People are illogical, unreasonable, and self-centered, Love them anyway.
2. If you do good, people will accuse you of selfish ulterior motives. Do good anyway.
3. If you are successful, you win false friends and true enemies. Succeed anyway.
4. The good you do today will be forgotten tomorrow. Do good anyway.
5. Honesty and frankness make you vulnerable. Be honest and frank anyway.
6. The biggest men and women with the biggest ideas can be shot down by the smallest men and women with the smallest minds. Think big anyway.
7. People favor underdogs but follow only top dogs. Fight for a few underdogs anyway.
8. What you spend years building may be destroyed overnight. Build anyway.
9. People really need help but may attack you if you do help them. Help people anyway.
10. Give the world the best you have and you will get kicked in the teeth. Give the world the best you have anyway.

Last, but not least, I would like to thank my Wife, Carmen, allowing me to spend no less than 20 hours per week on non-profit organizations such as the Hong Kong.China.Hawaii Chamber of Commerce, T.I.M. International Inc – the alumni association of the UH School of Travel Industry Management and others. Without her support and continuous encouragement, I will probably not able to do what I am doing.

Thank you.

Johnson Choi, MBA, RFC.
2008 SBA Minority Small Business Champion of the Year - National Winner
http://www.hkchcc.org/sba.htm
President
Hong Kong.China.Hawaii Chamber of Commerce
“Hawaii-China Guan Xi, We Get Things Done™”
Offices in Honolulu, San Francisco, Hong Kong and China
http://www.hkchcc.org
Vice Chair - Hawaii Pacific Export Council (HPEC)

India, Land of Opportunity
DJ Halcro

In such a richly diverse and complex country as India it is difficult to impart generic conclusions that can be used by those doing business there. Regionalism, religion, language and caste are all factors that need to be taken into account when doing business in India.

Most people from the west doing business in India will do so in cities such as Delhi, Mumbai, Bangalore and Hyderabad and with a particular socio-economic class. This short guide to doing business in India will explore a few cultural facts and their influence on business culture.

India - with its consistent growth performance and highly skilled workforce provides enormous opportunities for business opportunity and investment. India is the largest democracy and tenth largest economy in the world. India is the fourth largest economy in the world in terms of purchasing power parity.

Cultures define our fundamental beliefs about how the world works and forms ways in which we interact and communicate with each other, develop and maintain relationships. Doing business with another culture requires a focus on a multi-dimensional understanding of its culture and business practices. Understanding those differences and adapting to them is the key to success.

In the United States, efficiency, adhering to deadlines and a host of other similar habits are considered normal and are expected. In India one needs to understand that one is dealing with people from a different cultural background that think and interact differently. What is considered to be reasonable and feasible in the west may not work so in India

Aggressiveness can often be interpreted as a sign of disrespect. This may lead to a complete lack of communication and motivation on the part of the Indians. One needs to take the time to get to know them as individuals in order to develop professional trust. Indians are very good hosts and will therefore, invite you to their homes and indulge in personal talk often. All this is very much a part of business.

When negotiating for business you should avoid high pressure practices. Do not be confrontational or forceful. Criticisms and disagreements should be expressed only with the most diplomatic language. Indian society has an aversion to saying “no” as it is considered rude due to the possibility of causing disappointment or offense. Listen carefully to Indians’ responses to your questions. If terms such as “We’ll see”, “I will try” or “possibly” are employed then the chances are that they are saying ‘no’.

One is expected to accept the invitation gracefully. Taking a box of sweets, chocolates or a simple bouquet of flowers would definitely be a welcome gesture. Indians respect people who value their family. They will allow family to take priority over work, whenever necessary.

Most traditional Indians abstain from alcohol and are vegetarians; their eating habits need to be respected. Westernized Indians are more outgoing and do socialize and drink alcohol.

In a group discussion and meetings, the senior most people are looked upon to lead the discussion, but that does not mean that the others agree with them. People may maintain silence, without contradicting out of respect for seniority.

Women are treated with respect in the work place. They feel quite safe and secure in most organizations in India. Foreign women working here will find it easy to adapt to an Indian work environment. However, they need to plan their wardrobe carefully, keeping in mind the conservative dress codes in India.

When doing business in India, meeting etiquette requires a handshake. However, Indians themselves use the namaste. This is where the palms are brought together at chest level with a slight bow of the head. Using the namaste is a sign of your understanding of Indian etiquette.

Names speak volumes about an Indian’s background. For example, a Singh will always be a Sikh. The suffix “-jee” (as in Banerjee) is a sign of a high caste. “Kar” (as in Chandraskar) denotes that person is of Maharashtan high caste. Arabic sounding names will be used by Muslims.

When addressing an Indian whom you know personally, always use the appropriate formal title, whether Professor, Doctor, Mr, Mrs. or if you do not know their names then Sir or Madam will suffice.

When doing business in India, business cards should be exchanged at the first meeting. It is a good idea to have it translated on one side into Hindi, more as a sign of respect as opposed to linguistic necessity. Be sure to receive and give with your right hand. Make sure the card is put away respectfully and not simply pushed into a trouser pocket

India has the most liberal and transparent policies on foreign direct investment (FDI) among major economies of the world.

100% FDI is allowed under the automatic route in all sectors/activities except in few areas, which require prior approval of the Government.

Under automatic route, investors are required to only notify the Reserve Bank of India within 30 days of receipt of inward remittances.

Indian economy has been growing at an average growth rate of about 8.6% annually over the last three years; the growth rate in 2006-07 was 9.4% and the growth rate in the first quarter of 2007-08 was just under 10%

• Imports in 2006-07 grew by 21.59% and exports by 20.9%.
• Manufacturing sector grew by 12% and services by 11%.
• India has a large middle class and 55% of its population is below the age of 25.
• High economic growth and rising per capita income has resulted in high growth in the domestic market, which is the prime growth engine for Indian economy.

The Government of India accords high priority to development of infrastructure in highways, ports, railways, airports, power, telecom, etc. Government is actively seeking domestic and foreign private investment, for infrastructure sector development. This is where there is great opportunity for western business to develop relationships.

Land of
Opportunity

Indian Embasey

Hawaii Pacific Export Council

Stand Up to Economic Downturns with Good Financial Practices
They will help you survive

Broad economic slowdowns can often trickle down to small businesses, including those in relatively stable industries or geographic locations. Individuals tend to cut back on discretionary spending while corporations curb routine activities, delay major purchases, and shelve new initiatives.

For many small businesses with limited resources, these and other factors often combine to pressure bottom lines past the breaking point, creating a domino effect of other dilemmas such as a credit crunch or layoffs.

A downturn doesn’t have to spell disaster for your small business, it may actually be a great time to expand and / or increase market share or prepare yourself to be ready when the market improves so you are positioned to take advantage. Good financial management practices will help you weather even the worst of economic times, and be ready to capitalize on new opportunities that will inevitably come when good times return.

Begin with the basics. Even when times are terrific, no small business can survive without good recordkeeping, budgeting, cash flow monitoring, and credit management. Have strong systems in place.

Consult your bank. Lenders can tap their vast experience in economic cycles to advise you on issues specific to your business and industry. Depending on your projected long-term expenses, consider arranging a line of credit in case a cash flow gap occurs.

Be on good terms with your creditors. Falling behind on payments is never the answer, even if it’s “just this once.” Creditors will be more amenable to renegotiating terms to small businesses they consider to be conscientious and reliable.

Watch your receivables. By the same token, you need to stay on top of any outstanding debts to your company, particularly problem accounts. Be firm, but also willing to negotiate where appropriate. As a small business owner, you do you best to meet your obligations to your customers. So it’s only natural to expect them to pay their bills on time, right?

Unfortunately, the answer is not always. Most customers are conscientious about making timely payments, but others may require some extra effort. Though frustrating and time-consuming, collecting from delinquent accounts is not something you should put off or simply hope will work itself out. Every dollar of revenue counts toward keeping your small business afloat.

Obviously, prevention is the best way to avoid having to deal with collections in the first place. Establish a standard payment policy and make your customers aware it before starting work. Your invoices should also clearly state when the total amount is due and the fee for late payments.

Scrutinize your spending. Rather than arbitrarily slashing your budget, strive to spend only on those things that have a justifiable positive effect on your business. That will make it easier to redirect money to areas that enhance business performance.

Step up your review of financials. Assessing your reports weekly or biweekly rather than monthly will put you in a better position to make informed decisions. Similarly, a monthly or quarterly review your business plan enables you to adjust your strategy and direction to changing market conditions.

Keep marketing in the mix. Look for cost-effective ways to keep your company visible to current customers and potential new markets. They may be ready to restart their spending long before the headlines proclaim an end to the economic crisis.

Keep your company, product, service, and name in the media and in front of the consumer. A low cost way is press releases.

Aside from the news item itself, the most important parts of a press release are the headline and first paragraph. Editors sift through dozens of press releases a day; they rarely read anything that doesn’t immediately grab their attention. Get to the point by organizing the first paragraph around what your news is, who it’s about, and why it’s important. Then, use brief supporting paragraphs to add detail.

Remember that like a resume, a press release is designed to pique interest, not tell the entire story. As such, limit your release to no more than two double-spaced pages.

Your company’s logo and contact information should be at the top of your press release. It’s also helpful to include a name, address, and phone number or email in the text.

Once your release is ready, contact the publications or media outlets to identify the right editor, and whether they prefer to receive releases by regular mail or electronically. Make sure you spell the editor’s name and title correctly. Releases with errors or addressed to long-departed predecessors often go into the trash unread.

www.hawaiipacificexportcouncil.org

Hawaii is in such a great place at this time with the opportunities created by world events.

Ideal climate, great broadband connectivity due to the military presence based here, our proximity to large, new, emerging markets, our population diversity, multi lingual citizens and many other reasons. We are able to work across cultures and time-zones in a seamless global network

Today, customers worldwide demand more involvement and more customization from companies they buy from, something Hawaii Businesses know something about. No single firm is big enough in scope and size to satisfy the experiences of one consumer at a time. The larger the companies the more focus is on access to resources and large markets.

To successfully compete in the 21st-century business, we must reinvent the processes and culture in order to sustain competitive, innovative solutions.
Many companies in various industries will succeed because they are able to change, or fail because they can’t keep up with changes.

There are changes in customer demands today, in the pace of business, in the use of technology, new economic powers, new affluent consumers and new consumer needs. The window of opportunity is no longer what it was and the shelf life of a success story is much shorter. These new customer demands and trends are going to be with us for a long, long time. What is your company prepared to do about it?

There are over 2 billion new consumers developing in India and China right now, staggering numbers? Can your company afford to take its time, when competitors are going after these new markets and consumers, accelerating customer engagement, product development, and cementing relationships?

There are many solutions and services Hawaii based Companies are able to offer through quality service, innovation, knowledge of hospitality, CRM and client services. This is how we built our “Tourism Niche’” with the “Aloha Spirit”.

ING Direct, a new service being located in Waikiki at the old Local Motion location, ING DIRECT will open an Internet cafe on the ground floor of the building at 1958 Kalakaua Ave., where customers will be able to purchase coffee access the Internet and learn about the online bank’s investment tools, services, and deposit and loan products. Educational investment programs to assist people in their investment needs. Maybe this will fail; maybe it will be a huge success. Credit must be given to ING for creativity, trying and innovation.

On line learning centers world wide are offering great, quality educational services and products tailored to meet the demands of students needs and desires on demand. Many of these centers are managed by world class universities, MIT, Harvard, and Stanford as well as thousands of business and language schools. Instructors in China teaching Mandarin and Chinese Cooking, instructors in India teaching media and video courses, instructors in Japan teaching Japanese, Ikebana and making sushi. Technology helps make this possible, on demand for a fee, MIT offering classes on line free of charge.

Amazon Web Services and Facebook are teaming up to help developers build instantly scalable applications for Facebook users. Build your Facebook app on AWS to ensure reliability, flexibility, and cost-effectiveness as your application grows in popularity. You Tube video allows you to make audio/visual presentations from your web site on your products and services foe a minimal investment of time and money.

With 55 million active members worldwide, as of November 2007, Facebook’s social / business networking site allows you to create and share your applications with a massive and growing community of users. Amazon Web Services enables you to quickly implement your ideas for Facebook applications by providing an inexpensive, scalable computing platform. Using these infrastructure web services, your Facebook application is able to reach “web-scale” by scaling up and down seamlessly as demand dictates — with pay-as-you-go pricing and no upfront costs. This allows companies and individuals to market and promote their products and services worldwide in any language.

Many International firms do not like to hire large numbers of people and let them go after six months when the project is done. It costs them money as well as the security issues that allow their competitors to have insight into their business. Many would rather outsource to vendors, as they work for a large number of firms, these vendors can afford to focus a large number of talented people for short periods of time. These outsourcing companies can allocate staff from 10 to 300 or more from one location to another or one project to another in a week, a month for whatever period of time needed. Like “Temp Help Services” they offer varied skill levels and industry qualifications. They recruit internationally as well as from the US and fill positions worldwide where needed.

Staggering numbers, aren’t they? But the key point being this is happening in a short period of time, like now. Can your company afford to take its time, when competitors might be leveraging some of these vast sets of global resources to accelerate customer engagement, product development, and all-around decision making?

Many of these examples are outside the box and will seem strange however they are an example of opportunity. Opportunities within our ability that will allow us not to get locked into a set of processes and models that are not stimulating new business, not increasing profits create a depressing, unexciting, and uninspiring future for our Hawaii businesses.

DJ Halcro
www.hawaiipacificexportcouncil.org
www.hawaiiscore.org

District Export Councils: Your partners in exporting
Hawaii District Export Council is an organization of community leaders whose knowledge of international business provides a source of professional advice to firms seeking to expand their international sales. We are closely affiliated with the U.S. Department of Commerce, provide specialized expertise to the Department and its clients as well as provide support to the FCS Officer in Honolulu.

We respond to your export needs by working with the U.S. and Foreign Commercial Service (US&FCS) domestic offices and promoting greater international trade activity at the local level. We Counsel exporters, sponsor trade events, and help build local export assistance partnerships with other organizations.

There are a number of Councils nationwide with over 1,700 volunteers representing business, universities, and government. Members, appointed by the Secretary of Commerce, are recognized for their extensive knowledge of international business and access to specialized trade resources. Members provide an important source of professional advice that complements the assistance provided by US&FCS international trade specialists.

Each DEC has a membership mix which includes exporters (manufacturing and service industry), export service providers, tourism specialists and public sector trade promotion organizations. This group represents the users and providers of local export assistance services that can identify opportunities / gaps in community export programs. We also help develop local networks to provide a broad range of international trade services to the exporter. We provide assistance and infrastructure that matches available resources with business needs.

Each DEC establishes committees to address the priority objectives of their community and the Department. Committee members address issues such as trade finance, international competitiveness, and National Export Strategy initiatives. We also provide workshops and mentoring for companies that are interested in developing an export plan for their business.