 And, whoa, three o'clock rock here on Think Tech. Today we're with Ray Tsuchiyama, and of course we're talking about Hawaii at the statehood. And specifically, we're going to talk about the rise and fall of the Japanese in Hawaii, in Hawaiian history after statehood. It's a very interesting subject. Welcome back. Thank you very much. And I don't want to say it's a rise and fall. I think it's a rise and fall and continuance. Okay. It's a secular... Yeah. I think it's still continuing. As you know, there's going to be 1.8, 1.9 million Japanese visitors to Hawaii this year. And back in the late 90s, there was over 2 million, which was the height. So there's been a slight drop from the early 2000s. But it's still, when you talk about the arrival of Chinese tourism, it's barely 30,000 or 50,000 a year. So you're talking just a small data point. Let's talk about it from the time it first became an obvious phenomenon, which I believe would have been in the late 70s, early 80s, when the Japanese started coming in large numbers. Right? That's correct. But if you go historically, there were Japanese immigrants here in the late 60s when the Meiji era began, 1870s, 1880s, when King Kalakau actually visited the Emperor of Japan and thought about marrying off a princess and kind of binding Japan, the Japanese empire and the Hawaiian kingdom together to protect the Hawaiian kingdom from another country called the United States. So it worked. So there's been continuing immigration for the sugar plantation. My own grandparents arrived in 1907. And that's during the Meiji era. And then my father was born in the Taisho era from about 1912, 13, that continues in the early 20s. And then though, as you know, immigration stopped just before, when Pearl Harbor occurred. And then it didn't really pick up. But you're correct that the early 80s is the key time for Japanese tourism. And there's several factors to that, including the rise of Japanese economy. People became middle class. They began to earn income and money to be able to afford a trip on a plane to go overseas. That's number one. Number two, the Plaza Chorus in 83-84, readjusted the yen. And suddenly from 360 yen to a dollar, which was there since the end of World War II, it floated down to like 120 yen to a dollar. So everything became cheaper. The value of the yen was lower. 50%, 60%, 80% cheaper in Hawaii. They had more buying power. Much more buying power. The third one that people don't realize is that Japanese government had strict controls on the yen, leaving Japan, and even on passports. So people couldn't really travel outside Japan, they didn't have a passport. So all that combination of the yen, Japan is number one. You remember that book by Ezra Vogler, Harvard. And Japanese management, Nissan, Toyota, Sony, all these brands coming out that people thought would last 1,000 years would provide the impetus for Japanese tourism and investment to Hawaii. Yeah. So it probably, as in other phenomenon like this, it started as tourism. Like what they saw, it became more than tourism. I want a piece of the rock. I want to stay here, I want to invest here, I want to buy property here, I want to live here, I want to get an immigrant visa and whatnot. Right? What was the sequence there? Assume now we had this explosion in Japanese tourism, late 70s, early 80s. How did it get its legs in its feet down? You have to go a little bit back to the late 60s, early 70s. There was very early forays by Kokusai Kōgyō and Mr. Kenzi Osano. Oh sure. And remember that name. Or the Sheraton. That's right. Sheraton, Moana, Rōda Hawaiian as a big package and so forth. And so that was a very early investment without Japanese tourists ever landing in Hawaii. So he saw the future coming very clearly at that time. I'll tell you a short story. Go ahead. Okay. He was coming to buy the Sheraton and you know it's warm in Hawaii relative to Japan and he has a net shirt on. He has a t-shirt underneath and underwear and he has a net shirt on and he's carrying the money okay to buy the hotel. Huge check. It was a cashier's check or something or a bank draft okay and the check was in a place that was safe. It was between the net shirt and the and I'm serious about this. The net shirt and the underwear okay. I don't think he realized that you could actually see the check. He was a diminutive guy, happened to be very successful and this was a big deal so he wore it in a safe place and if you looked at him, if you looked at a shirt, I know people who had this experience and looked at a shirt you would see the check and it's kind of remarkable that that was the check that put Osama, what was his name? Osamo. Osamo. Osamo. Yes. You know that gave him the big start of Japanese investment in Waikiki. So that was a start before that great time and but the 80s were different that it unleashed a lot of people who made people meaning companies and entrepreneurs and people who did not come from the Hitachi's, the Fujitsu's, the Sumitobu and Mitsubishi's for the greater part of though like Mitsui real estate made a great project out of the Halikulani hotel for example and made it a global standard but there are many many others who came out of their holdings in real estate in Japan which became really rose in value at that point and they used to say if you took that area where the Imperial Palace is located in the middle of Tokyo it was equivalent at that time to the real estate value of the state of California. Okay. So the prices were really high. That's right. So you could see that the Ginza and you know areas in Shibuya, Shinjuku rocketed in value so they began to borrow based on those properties. So and the banks were flush with money. Remember exports the major we forget about this but the major trade issue at that time was Japan you know dumping their cars dumping their electronics dumping their electronics remember the Walkman yeah the Walkman everywhere in the world last great electronics company was Motorola they when they sold Quasar they were still making TVs in their late 70s early 80s when they sold that that was the end of you know consumer electronics manufacturing US so everything was going down cars or cars of quality semiconductors and remember Japan is number one Japanese management was how to do really great management also of companies and that's how they became global you know Sony's and and the Nissan Toyotas and Mazushita Panasonic so you could see all kinds of things driving you know and but the people who came to Hawaii as investors came from Azabu Jidoshima remember that you know it's a company that was in real estate and also so luxury cars in Japan there was a KM coaxai motors there was a taxicab company so again these were companies that really didn't know about going abroad but they wanted to do it because they suddenly were flush with cash and Hawaii was a good place why Hawaii spoke the language why I had a lot of Japanese people already Hawaii had that pleased a lot of tourists and and they wanted a piece of the rock but what came first though Ray was it the businesses you know following tourism was it the businesses or was it you know real property residential and commercial was it all happening in the same I think it was simultaneous you had a lot of people looking at properties while they were on vacation you know in the 80s you had all kinds of entrepreneurs and ideas I remember ideas like senior citizens living out you know their time in Spain or in Hawaii for example that was it or or schools and you know private colleges coming here yeah coming building facilities and and teaching English and so forth that was another big idea of immigration laws allowed this favorite it yeah and there were a lot of still Japanese students make up a large percentage of nation's ad UH and in HPU and shaman on that continues right and the same time there was a job japan Airlines the ANA is the JTB to HIS is flourishing with a Waikiki and they began to recruit people in to sell duty-free Japanese speakers the 80s really drew and and leveraged people who spoke Japanese in the community also Japanese speaking lawyers Japanese speaking real estate attorneys restaurant tours all kinds of people were involved with these investments and there was I think simultaneous a local people were going to Japan to try to facilitate right all you know and be layering a layering of commissions and agents and brokers and whatnot to try to bring Japanese it's not like they did it all by themselves and a lot of local help that's right there was a creation of our ecosystem and there were a lot of people who spoke Japanese including my mother who worked in Waikiki in retail and and others who learn Japanese at Japanese schools and Japanese still continues as a subject language in many many DOE schools because the parents of these children who are mostly Filipino Hawaiian or Samoan and so forth who work in Waikiki tell their children if they learn Japanese they'll get ahead in Waikiki yeah yeah and still kind of living back in those days but that's still continues remember the numbers are still Japanese in Waikiki yeah so okay so what we had we they were investing in real estate right we were investing in business and golf courses right right huge huge that that the Sony open of course you know the sunny back shots of wildlife and that also exploded on the side it was a significant part of it the old man lived here that's correct he loved Hawaii and he had a couple places here the Waikiki and then he loved he loved Hawaii and so there's a symbol yes and and again for people like you say the there were many Japanese restaurants people who spoke Japanese like that see it is a place where unlike the neighbor islands I'm gonna talk specifically a Waikiki that that if you got off the plane at Honolulu Airport and then you got in the taxi or a bus provided by a tour you know tour company like a HIS or JTB and then you're deposited at your hotel but there's a leader of your tour group right there's a little flag and so forth and then all your you know checking in is as taken care of you're shown to your room and then you go out you can find Japanese ramen you can find Japanese sushi you can find people a duty-free speak Japanese island within the island you don't have to speak English I mean it's an it's a Japanese the peace of Japan friendly place the neighbor islands are much more challenging you get off the plane at Kaholui or Lihui or whatever corner you have to rent a car right I mean you have to rent a car you know to go any place you need a car you and you have to navigate your way to buy a ticket to a Luau or you know getting into a show or restaurant you have to call for reservation is much more difficult and you know what else I have to do I have to take a break okay we're talking about Hawaii after statehood the rise and fall and rise and fall and rise and fall of the Japanese in Hawaii we'll be right back hi I'm Donna Blanchard I host the show center stage on think tech Wednesdays at 2 p.m. and this is Crystal right I'm Crystal and I host clock talk on Tuesday mornings I like watching Donna's show I like watching your show I like watching your show because you talk about you're not afraid to really dive into issues that are important and and sometimes they're a little shocking and you always bring us information that is sometimes the underbelly that we need to know and it's important well said well I like yours because you can find any topic in any type of character but you will find that source which brought them to the product of that creative process and I bet that's like the most important thing is the process so I think yeah I do I think it's all about the process and I think we'll find world peace when we know each other's stories so thank you very much for bringing that to us join us on think tech take Hawaii anytime okay we came back a race to Chiama and me we're talking about Hawaii at the statehood the rise and fall and rise and fall and rise and fall the Japanese in Hawaii in recent years that's so interesting I know this this is what we're talking we're dwelling in the 80s here the 80s are what 30 years or 35 years ago it's not that long and yet people don't know people now don't know what happened then so they you know they had a profound effect on tourism the industry of tourism as we now know it but I think they drove it really it was no other group not even the Canadians that you know that were that numerous and influential they changed the way things worked in Waikiki no I think if you talk about Japan Japanese society one of the keys to how they do business or product development and invasion is to quality control and so a lot of tourists would you know pick up faults or flaws or this could be done better throughout the hotel industry so I think a lot of Japanese innovations came in terms of raising standards for service customer service in Waikiki and that meant hiring Japanese nationals to staff some of them but again there were some who went to Japan and learned the language and came back you know I remember talking to Dr. Kelly Richard Kelly we argue he used to go and you know pass out brochures on our rigor and he was a great market here for Hawaii in Japan a lot so there was I think a awakening within the industry to really market more in Japan and remember before the Japanese came it was a it was a mostly West Coast Maryland California yeah and it was a lower lower level you know per room pricing world infrastructure hotels in Waikiki when the Japanese started to come there was a rise in in hotel you know pricing luxury more luxury hotels the Trump towers and you know the rich towers would come in as condos the Hilton's and so forth sure and same retail you know the Palm Court kind of stores you know the Fifth Avenue stores came out here correct in order to satisfy that same need for excellence for expensive for show off kind trophy trophy type of goods and so that was a major change within Waikiki retail because you can make so much more money per square foot if you sold one you know a Louis Vuitton bag then you know 15 hamburgers in an hour so that that transformed the Waikiki retail world very much and and also I just wanted to point out that in in Alamoana there is a little bus terminal and it's a it's a interesting development that you see many buses layer layer only only you know that you can only board if you have a JTB card or you know some card Japanese card now they're this is a Japanese private kind of alternative mass transit system that they developed right here to solve one intractable problem which is how to get Japanese easily from Waikiki to Alamoana even today in the mass transit world the bus is most heavily you know passenger route is Waikiki Alamoana now and then of course there's there's a game to go to Alamoana Alamoana is the most important that's right part of their trip and also the other route is the airport now it's interesting to point out that is several what ifs what ifs in the history of Japanese investments in Hawaii and what if in the in the 80s and there was many people who came out to discuss with the city administration to build a mass transit line for free in order to get the you know development rights on the station yeah so that that would have if that has started earlier I think that and they would have started out between the first leg Waikiki Alamoana yeah they would invest at that time that never developed unfortunately the other thing that should have developed by now through many many turns and in this is the mid Pacific Japan US R&D Center why hasn't that developed I don't there were many many attempts at this setting up medical facilities that again Japanese could come and get medical care they wanted here that that we're going to be the you know the special medical center of the Pacific that's called medical terrorism again Bangkok Singapore others are really in the forefront of that category but you're right that's another area that if you were back in the 80s you could have seen the colleges but there is polka international college in in in ever that's adjacent to west off and they're doing quite well there and they're a kind of like a symbiotic the only one of those Japanese colleges but you know what what strikes me is that just a footnote or all of this is that we were faced with the state was faced with this enormous rush of people and spending and demands for service and goods and and for you know investment they wanted to invest big time and we I don't think we saw the need the importance of trying to manage this I think it washed over us and then a wash back again but I liked it before we go too much further I want to talk about real estate okay because somewhere in here they started buying real estate right and first it was you know it was random condos and then it was you know large buildings and commercial and office and then they were starting to develop right develop their own condos which they could market in turn to Japanese investors so they just happened at an alarming rate there was so much going on the late 80s and by the early 90s all of this had pumped up real estate values in Hawaii because they were willing to pay trophy properties for everything there was a story about a golf course I forget the name but it was a world-famous golf course in California Pebble Beach Pebble Beach where the place was worth say 50 million dollars but the law American lawyers representing the Japanese investors said you know you want to be sure to get it you know offer 80 million dollars and they did and they got it for 80 million dollars next thing you know they had to sell it because it was worth less than 50 million dollars but it was always seeking this kind of a trophy property at a trophy price this had in my view a traumatic effect on Hawaii's real estate market and its you know economy and the benefit of the social the social structure of the state because you were infusing all this money and ultimately investors want to return if they don't get a return it collapses well you know we and before the show we were talking about other foreign entities that come in to like Miami from South America Brazil a very similar stories that are happening Vancouver and the Chinese now and of course New York City has had waves of people coming from Europe or Asia and so forth and but I have to say a fundamental issue here as a state or a city how does one in a democratic society and economy are free wielding a capitalist economy manage investment for example if from tomorrow we say Californians who come in here have to build affordable housing to do that something says or Colorado has some constitution yeah you can't say it is I think you can do something when you're talking about investment offshore me out of the country well Vancouver has done something very dramatic they've instituted a foreigners tax on real state to control or manage this this boom that they happen in Vancouver and so I think we have to be very careful of saying and that's and back in the early 90s I think the mayor at that time Mayor Fosse actually said we have to put a stop on that and something there was a kind of a slowing in the mid 90s they wanted to buy a golf course he wanted a hundred million dollar entitlement fee well that was really too high but it showed you where his head was that it was into managing what they did and and so they can people can always take their money and go other places so that's the that's the point of what I'm saying that they saw Hawaii as a very like you say an inviting place a place a comfortable place and a place that they could do business and and that it was a really nice place to be because they were surrounded by people who they they believed the Japanese believe that they were doing a good thing for the economy and they still believe that and they came with that you're talking about their management style which was already tested world-class you know with the consensus I remember on Bishop Street here they would walk around in their suits in groups of five or ten of them and they would everything was consensus nobody ever actually agreed without talking to the group and having multiple meetings and conversations and asking you the same questions over and over and over again so everybody in the consensus group was satisfied it was we hadn't seen that before that was not American style it was their style it was very effective I think because it you know everybody tested both internally and externally on what was really going on and they learn how to deal with it problem is that they were willing to pay too much and you know that led ultimately to sort of inflation of real estate values which we the local people had to catch up with right because of all of a sudden it cost you know twice as much to buy a residence then you had to pay the twice as much because everybody was relying on comparables of properties that they purchased this had a big effect on things and when we come back which I hope will be soon Ray I'd like to talk to you about how it got to be a bubble and how the Japanese decided they got to leave town the investors anyway and and how that will work out because that was that was a hard time this was roughly in 1993 and I want to examine with you how it led up to that what happened and how how how the waves receded in the early 90s what do you think well that's fine and of course 91 began a rock war which would be the beginning of a 10-year recession yeah and then by 2002 things began to get better for Hawaii and that would you know there was a 10-year period that's right and and the Japanese figured in that period but but what would come in the late 90s early 2000 will be waves of American tourists because an internet bubble happening California and that would save Hawaii as the Japanese left there will be another bubble coming and coming in early 2000 waves from all sides and that that again changed the economy and and we're we're at this point where we're still waiting for the next wave but that sustained us for as we closed I just want to tell you one short story and that is about a particular client of mine who had been part of one of those consensus group management groups and bought a lot of property here and they came a time when they were folding up their last property selling it off and leaving town I say leaving you're only we we have worked with you for years now you bought a lot of property done a lot of things here but will you do you see a time when you will come back and he said to me I'll never ever forget this he said no I'm not coming back my generation has failed to make the return that was expected of us by our principles in Japan I will not be coming back the next generation will come back such as it is oh and I thought it's very wise statement thank you rates are jammer wonderful to have you Hawaii after state heard wow there's so much here and there's more to come more come but it's very complex it's not simple okay all right okay