 Good afternoon. It's 4 p.m. on a Monday, and it's happy Halloween. To my left is Russell Liu, just back from a trip to Beijing that we will talk about later. We are here to discuss foreign investment in Hawaii. More recently, a very large investment for a mixed-use community and hospitality hotel development on the Kapolei side of Wahoo, which we will get into a lot more in depth today. So we're going to ask the first question that I'm going to kind of pose, and we're going to take an analytical look at all this, comparing and contrasting with the wave of Japanese investment in the 1980s that seemed so long ago that had a great impact on our economy, on business and society. And now we're looking at the just beginnings of another force out of East Asia, the Chinese, and they're going to also be building and selling and trying to make a profit as businesses do all over the world. The first question is, this new investor in town, in Honlulu, can you tell us who they are and where do they come from? Right, that's a great question. I'm back from Beijing and there's a lot of excitement to hear that there is a Chinese company called China Oceanwide. It's actually a subsidiary of a larger privately owned company in China and a very large company. It has actually started in 1985. The chairman is Liu Zhichun, very well connected, former party secretary, but really a businessman. He's very well sophisticated because if there's any indication how different it is in Japan, they've already set up their U.S. subsidiary in San Francisco a couple years ago. They've got projects in New York, San Francisco, Los Angeles, many places, and the big splash actually this week was they just plunked out $2.7 billion to acquire Gemworth. It's a mortgage company and insurance company, so they have just announced their big plans to invest $103.4 million in a 514-acre plot to help develop the community in Kapolei West Kapolei, or Kapolei West. Yes, so that's the big acquisition that we're talking about. In 1985, when you think about it going back in time, that's a year after the Plaza Accords, it's in the middle of Japanese investments and their business fall rates into Hawaii, but that's also when you think about it and it seems so long ago, four years before Tiananmen Square, when things suddenly came to a stop, a halt. So historically, we would see this ocean-wide company really gearing up in late 90s into the 2000s. That's right, that's right. And just to think about it, I mean, I was in China, I first went into China in the early 2000s, I was still on bicycles, still in my own jackets, and it was a different world. And just before the Olympics, I was in Beijing and they were laying out the streets, and it was incredible. But, you know, we're getting that same effect here where they're coming in and putting a lot of money. And the question that I always wonder is, how is this different from the strategy from the Japanese investors? You know, Hawaii would be lucky to be the recipient of $11 billion of foreign direct investment by the Japanese, but the question is, how different is it? I think it's critical because this kind of lays out where and how Hawaii is going to proceed in the future. Will it be hostile to this kind of investment array? What are the strategies? How is it different from the Japanese? And, you know, my initial thought is this, and I'm going to ask you that question, is that, you know, the Japanese were some investors of a vertical integration, meaning they invested all the way down the chain. So, again, the investor is different, and now China ocean-wide, not only they're investing in hotels, but they can help do a plan and develop the master community. So, is that a different strategy than the Japanese investors? I think that's a very good question, and we already have 30 years of history to look back where the Japanese came in in the 80s and today. And you're correct, in the early days, a lot of the investment were on trophy properties, the hotels, they've been here before, but a lot of new companies came in, flush with cash. So, there are companies that really made a lot of money off of the stock market and also because of the sudden enormous rise in real estate assets that they own in Japan, so they borrowed against that. So, a lot of the money went into already made properties in Waikiki, like the hi-hats and hotels in Waikiki and Omaoi and other places, and joint ventures with Chris Hemeter. Remember all the Kumagai Gumi engineering and construction company did a lot of work for Chris Hemeter's grandiose kind of mega projects. The biggest one was Waikoloa, of course, on the island of Hawaii. But including all those big investments came a, like you say, ecosystem. Of course, the jows and ANAs, which are the airlines, and also the JTBs and HIS tourism agencies, the travel agencies. So, there was an ecosystem that they developed for the Japanese tourists. So, you're correct that they came in, but they had to work very closely with hotels and with the staff to have a Japanese-speaking infrastructure in the hotels and the restaurants and so forth that kind of developed. And the duty-free, and a particular omiage or the presence that they like to bring back to Japan. Having said all that, and that was really concentrated in that Waikiki space. There were other companies, like Haseko, that did develop on other parts of the island, very close to the Kapolei, in fact, and other developments on Oahu. So, there were construction projects, but you have a very good, interesting point here, because from a Hawaii perspective, that a lot of the projects needed a market that was not exclusively Japanese when you think about it. And this project, which involves hundreds of acres, will not be sold to 100% Chinese. They have to sell to a wide range of local mainland and Chinese and Japanese or whatever international clientele. So, I think this is an integrated project that will really be challenging for any company to really develop the hotels and the marina or all kinds of other areas and the thousands of units that they could make. So, in retrospect, the Japanese companies came in and they could control the ecosystem which was Waikiki. It's harder to control a basic residential community based area like in West Oahu. Let me pose another question. I think Haseko is a Japanese developer, very successful, and they've done an excellent job of planning a master community, building homes, and they're in the business of hotel resort development also. So, we're seeing the flip side. It's like what Haseko has been doing, building a master plan community, and now probably China Oceanwide learning the lessons, maybe looking at Haseko saying, well, we can make a master plan community which would be good for the community. Do you see that some resemblance to that? Oh, yeah. And in fact, if you go more back in time, I work for a company called Oceanic Properties, part of Castle and Cook. And back in the 70s and into the 80s, a master plan community that really is a model is Mililani Town. And that included the golf course, malls and all kinds of amenities and CCNRs so that the look and feel of homes were of a pattern so that you don't get crazy architectural designs that result in lowering of values for homes in the neighborhood. So, I think if you go back in time, there's models of a Castle and Cook that did very well. But in any kind of master plan community, and I think you're going to agree with me, is that you have to work very well with the homeowners, with the community itself and their desire for a certain amount of the amenities and what they were promised, what the community looks like, and that the value they paid for their home is continuing, that they would have a home in a neighborhood that retains its value over time. And that's where I get to what I think, as I see, very different than the investment in the 80s by the Japanese. They invested in an area that was really non-residential, except for small areas in the Waikika areas, very different, not at least whole land. This is an opportunity where there is no more room for further hotel development. And this whole area, the 514 acres, has been part of the zone for residential for building homes. And in essence, they're helping build a community. And it's going to give a different kind of brand of tourism with the Atlantis that's going to come up. We're probably going to see high wealth Chinese who have traveled around the world. And that will bring travel not only from China, but I see other places from Europe, high wealth that really want this kind of luxury. So it's a very interesting strategy. And the question that I always have is, in my mind, living and working in China, well, people will say many Chinese are short-term investors, but I really think this is a long-term strategy. This is a strategy to evolve, to become more American. And people will ask me, being in China, why is this so? And I see the economy is changing in China. You know, the renminbi has gotten weakened, and it's a great opportunity for a Chinese company fleshed with cash to go out to diversify its assets. And what other batteries in the U.S. economy where the dollar has become stronger? So I think we're the beneficiaries of a good investment coming in. And I think the fact that this investor is also invested in a company called Jamworth and the life insurance mortgage area, it seems that it's going to be a long-term commitment, not a short-term. So I'm getting out of the U.S. that in order to do this project right on the island of Oahu, in the state of Hawaii, it has to be a quality project. I think so. They have to have very high standards. They have to work with the best of the best of global architects, designers, and construction firms. And of course, since they're on the first list of getting out of the block, that they will be under much greater scrutiny from the media, from residents, and so forth. So they can't do something that will result in a bad reputation. It has to be a very good reputation, ultimately, to sell the homes, and it has to be really great. So if you were looking at it from a global perspective, traveling all over the world and looking at quality developments in residential or resort and so forth, if you were going to advise Chairman Liu, if he was here right now, what would you tell him? And you're from Hawaii, you know the intrinsic challenges of real estate development here in Hawaii. It is not a simple task from a lot of mainland people coming here thinking they're going to get a permanent 60 days or construction very cheaply and so forth. But you go back to China. Remember, they can do anything they want in many cases, and their construction is so fast and they can get things, and they're really great projects on mainland China. But you're dealing with communities, with people, with all kinds of hearings and so forth, permitting, what would you tell them? Well, I think I'll tell them two things. The first is the Chinese culture. And if you look around the world, wherever you travel, whether it's in Italy, in London, in Africa, you're going to find a Chinese restaurant. Chinese restaurants have been involved. The cuisine is no longer Chinese to some extent. And they localize. The Chinese localize. In fact, the history of Hawaii, I'm a fourth generation Chinese, a lot of them have been married. And so you evolve, your culture evolves. And so I think I'll tell them that first lesson. And I think you would understand that because Chinese food around the world has been localized. The second thing is, let's look at the examples of the local area. I think Koseko is a good example of a very good corporate citizen who has developed some beautiful land out in Elva Beach responsibly. And they've got a great planned community. And I think all of these things are because they are trying to be a good corporate citizen. And I think that's what I would tell them, to be a good corporate citizen. And I think the end of the day, your investment will be much greater because that's part of it, you become part of the community and they'll give back to you. Well, we'll go back to this notion of corporate citizenship in Hawaii in just a moment. Take it a break. Join us at Think Tech of Hawaii. Our show is Asia in reveal. Our next program is on November 17. This is Johnson Choi, your host. Thank you for watching Think Tech. I'm Grace Chang, the new host for Global Connections. You can find me here live every Thursday at 1 p.m. where we'll be talking to people around the islands or visiting the islands who are connected in various aspects of global affairs. So please tune in and aloha and thanks for watching. Hey everybody, my name is David Chang and I'm the new host of the new show, The Art of Thinking Smart. I'm really excited to be able to share with you secrets on giving yourself a smart edge in life. We're going to have awesome guests and great mentors of mine from the political, military, business, nonprofit. You name it. So it's something for everybody. And so we're back talking about corporate citizenship in Hawaii for foreign investors, particularly a new one that came to Oahu and saw an opportunity in Kapola West. And we've been talking to Russ Liu who's been kind of analyzing this while he's been in Beijing and in Hawaii. And we're talking about Chinese cuisine, about also supporting the community in many, many ways. And this is where I think the program is going to shift and focus on with these new companies. This is not going to be the one and only Chinese company coming or foreign company coming to Hawaii. There's going to be a lot more coming into the future. Some of them are not knowledgeable about the past, what has happened in the past. And for them to come in and to not listen to the community or promote themselves in a way that would make them good citizens may not be a road to success in the Hawaii economy and society. So we're back at this point talking about this company that really wants to do good. They really wants to develop something, a quality project, an integrated one, a mixed use one that is very big, very big here. And so we're going to go into some areas where if they were going to come in, what would make them really stand out? And to the community says, wow, they're great people and we're proud to have them invest and be part of our society. What would one of them be? Well, there's a Chinese word we call Heidze. Heidze means children. And the culture in China really does a lot. They do a lot for the children. And I really think being a corporate citizen, the whole concept is alien to many Chinese because you know, you had governmental companies and a given example when Warren Buffet and Bill Gates went to China to talk about philanthropy, all these multibillionaires showed up just to see them. But they didn't get any... That's a new point. It's brand new. It's brand new. The whole idea of philanthropy, things like that. But when you talk to them in a business term, it's very different because you're in the scrutiny by the media wherever you go in the West. Everything is transparent. Corporate governance. And there's a part of it that's very different because you're in the spotlight and it's going to be, are you a good corporate citizen? And again, I think we need to show them that we welcome them first of all. And I think we understand the similar concept that we have children. Kapolei is an area where young families are growing up and the whole area, the schools, the university, all of this is dynamic. And this is your investment in the future. And you're having employees living in that area that's going to work for you. All of this means a lot and that's the community. Well, out in Kapolei in West Oahu, UH West Oahu campus is the fastest growing among the 10 campuses in the U.S. system. And ocean-wide, this may be a good entree, like we were talking before, that they do have an investment in a legend computer, a Lenovo. Now, if they could somehow link with West Oahu to have research in personal computing or mobile or software or software engineering and linking it with Fudan University perhaps, the great university that the chairman attended, that's what you say is for the children a jobs kind of creating kind of project. Ray, I'm going to write that down Lenovo. We're going to write to the governor. We're going to tell him we've got to figure a way, maybe we could have a Lenovo Research Center. I mean, things like this are dynamic. And, you know, there's a Chris Lee who has been tied into the university film media school. That's a big thing in China now. And again, at West Oahu, I've actually visited facilities. I'm extremely impressed. The infrastructure is new, but we need to get content. We need to get good content. And going back to somebody like this is, this is something that's not going to only benefit our community, but the Chinese kids, you know, bring them to summer school out here. You know, bring them to do the educational component. And I think the governor is on the right track, actually, promoting education. I mean, that's one of the things that I have never heard of. And, you know, I did meet with these people, and I'm impressed that education is a high priority. And I think education and tourism would be compatible to this being a good corporate citizen. It's not only going to be just our kids, but global citizenship. And I think the whole idea of global citizenship is important because it brings a lot to the community. It brings a lot to Kapolei. And, you know, let's introduce them to football, June Jones, you know, the Kapolei High School team. All of these things, American culture, a lot of Chinese kids or kids from Asia coming here to see what American life is all about. It's a benefit that goes two ways. So I think it's more than just the community. And when China Oceanwide puts a lot of money to this community, we were saying it's Woldeja. It's our home. And this is what we need to focus on, the theme should be in this community, locals alike, investors. This is our home. So I'm getting a really interesting thing because you don't see the West Kapolei project in isolation, but rather a bridge back to China. Yes. Or in Oasia, you know? Because you have Tokai University out there. Right. And that's really growing also. But you have a very good point that, you know, Lenovo or Legend is not a small company. They bought IBM business some years ago. And they're into mobile phones. They're into many, many areas. They're not a tiny start-up anymore. They're quite a player in the global, you know, high-tech field. Yes, yes. And you know, that's an interesting point because, you know, bringing the global component, you know, China Oceanwide's partners, the stakes are just there. And I really think that it can be a catalyst to making our home, our community, where the kids learn to be more global, clean investment, really good things, interaction with other global kids so that you learn how to do the business, learn the culture. And I think this is all part of it that we shouldn't be afraid of. And I think this is how we will rise as a community, you know, through education. And again, I can see that this is a theme that they're making investment and what can we give back and what can we both share is really an education in our children. And that's our children to hear locally and children around the world. So Kapli can be a real global magnet. You know, think of Singapore being a global magnet. You know, you dream a little bit, but that's important because you've seen the models created in Asia, Ray. I know you've seen that. And I think that the whole concept is aligned with some of the cultural and philosophical upbringings here. Well, and going back to talking to Chairman Liu if you was here, what does he represent or what does his staff, I mean his staff at the top must be very much knowledgeable about the West and banking, investment and real estate development over the years. But how did they develop all this? Did they go training in the Fudan University or did they go to the West and come back? What is the profile of some of his core lieutenants who are going to execute this project? I don't know his core lieutenants, but I can tell you, living, working in China for 13 years, still I spent time between places. And a lot of these successful men and women have actually gone overseas. Whether it's one year, two years, three years, they've all acquired the cultural understanding, the philosophic understanding and the education. And this whole thing gives them a different dimension when they go back in the world. They understand what is out there. They understand the rule of law. They understand we have to do things differently. And so I think it's a little bit different going back to an earlier part of the show. The Japanese investments where I think they didn't have the benefit of the internet. They didn't have a benefit of a lot of the way the Chinese system, you know, English is a required language. So that's why many Chinese go outside and actually live in the West. So I think coming back to this whole thing of a corporate citizen, I think they can understand that better. And I think we just need to aggressively, not aggressively, but to kind of work with them. Their success is our success. This is our home. These are Asian values. And, you know, our home will keep it clean early. And, you know, this will make your investment better. But at the same time, you know, we want you to be a good corporate citizen. The reason why I say this is that even though they may have studied abroad and so forth and did work, working on a real estate project in San Francisco or Los Angeles or New York or Houston is different than in Hawaii. This is a small place. We're in Ireland. We've had many issues where we still are struggling with at a society with Waikiki as an engine of growth and then that's tourism. We still are trying to find other ways of diversifying our economy. And it's been decades still searching. We are looking for affordable housing, for answers to homelessness. Of course, we can't just ask investors to solve our problems for us. That's our problems as a society. And I think these are opportunities to kind of let, again, going back that this is not a place where you can get things done in a time span that is comparable to a Houston or New York. And that the community, you really have to work with the community or there'll be a lot of issues and so forth. So going back to the foreign investor, I think Japanese tourism is still big, still about 1.6 or 1.8 million a year. And that continues. So that ecosystem has succeeded in a way. Now we don't see large projects like this anymore by Japanese investors. But still that investment, that sustaining Japanese ecosystem in Waikiki and other parts of the tourism hospitality world has continued with Japanese speakers and people from Japan have been living here for 20 years, been part of the community. So I think that's an area where companies like Osiewad would, I hope, invest in that they would have people coming over here that would be part of the community. I think you said an important point, Ray, and that's to be part of the community. We need to make sure that we welcome them. We need to make sure that we get them on the East West Board Center, where they're actually a part of the community. Back to the Asian concept of relationship. I really think that what sets the pace and apart from other cities, we have to have a relationship. Everything starts with a relationship. And everything in a relationship is long-term. Relationships mean we trust you and we're here like your friend and we're going to be a long-term. I think that's very important. It's an Asian concept, not only Chinese, Japanese, but it's very important. That's why the Japanese have been here a long time because there's been a relationship. I think that's really important that that relationship is not only the business community, but the government. And we really need to work together with the governor, the political people here, the business community leaders and to develop that relationship. I think you're quite right. We have to welcome these people because they're putting a lot of money into this. They're taking a lot of risk, but at the same time, they're creating a lot of new jobs for local people, for young people. But there's an opportunity, like you say, to create synergies for high-tech or global or for young people to really get involved with new types of industries in Hawaii. Well, let me give you an example. Just following the Lenovo connection, I would go back. And this is the end. We're going to come to the end. We can talk about the next session. I have a plan for that. Yes. So thank you very much and we're coming to the end of Global Connectors all about investment in Hawaii. Thank you again.