 Son, he's okay. Here we go. We're back. We are back. Are you surprised? We're back. Of course. We're back. We live here I'm Jay Fidel. This is think tech here. It is the one o'clock block Here on think tech on a Thursday afternoon, and we have a very very very very very special guest here. Dr. Turnboy He is a professor and has been a professor for some time the Mattson professor at the Schuyler College of Business Let me tell you his basic roles in life He is the Mattson navigation endowed chair professor of global business And he's the chair of the Department of Information and Technology Management He's director of Pacific Research Institute for Information Systems Management and the director of the Apex Studies Center We've been talking about that. He's the director and CEO of the UH Vietnam Executive MBA programs in Hanoi and Ho Chi Minh City He's the chair of the Hawaii International Conference on System Science HCSS.org And he's at it's all at the Schuyler College of Business University of Hawaii at Manoa and I am so happy to have him here. Welcome to the show yet again wonderful to have you here, Turnboy. Thank you, Jay. Thank you for having me back. So we're going to talk today about, you know, the things that fall within your ambit What's going on in business in Asia Pacific? What's going on with Trump and how Trump affects business through his Diplomatic machinations and his business maneuvers where he steps on things And so I want to get a handle on the real effect of this and I know you can help me You've thought about this and I'd like to propose some propositions to you and see what you have to say about them These are very interesting and you gave me these propositions. I'm interested These are observations, okay First Let's see First Asian countries and for that matter most of the trade partners of the US around the world are concerned about the Isolation isolationism of the US administration Why they're concerned and how deep a problem is US isolationism? Okay, I think a major problem from the perspective of Asian countries is the fact that most Asian economies They rely their growth on a export driven economy If you look at the past Japan China South Korea And other countries they rely so much on exporting their production to Major economies and particularly the United States in order to grow the economy and For the last decades or so we have a number of the Tigers country like Vietnam the Philippines and Indonesia and those countries actually are also trying to duplicate as the same model and now With a Trump's policy trying to reduce the trade deficit Therefore, it's a major concern and quite a few businesses in Asia are getting very anxious about Looking at the US as a limitation to export their products. Yeah, so can you throw in the? Dicotomy between sales of goods and sales of services. Do we have an advantage in services or an advantage of goods or both? And how does isolationism affect our ability to sell services and goods? Yes, and actually this is a great question that we need to think more deeply but the economy of today is not a economy of a producer and The buyer or a seller or a buyer But basically we are living in an economy where integration is so important And then you are my buyer, but I am also your buyer as well Let me give you an example iPhone for example is my technology from Samsung to produce its iPhone and Samsung is buying technologies from Apple in order to build its Samsung Galaxy, so you cannot say that the South Korea has a trade Excellent visa with the US, but it just is the accounting doesn't work anymore So this is something that using the concept of trade deficit to engage in a trade war No, no doesn't seem to work anymore. Yeah trade wars are Old yeah, they're they're gone and forgotten but let's take the Asia Pacific region at least and Talk about how it has been how it has been under Obama how it has been in terms of developing robust Relationships under the existing arrangements including the TPP which didn't didn't actually survive for us anyway How has it been are we are we being successful these days? Are we doing the things we you know could have should have done before Trump? Let me talk about two things the reality of the economy and the politics of it The reality of the economy is that the world is not living in the context of his sub of the international supply chain network So we buy a lot of we Americans we buy a lot of stuff from Asia in order to produce our stuff For example, China has been known to be the factory of American companies for Walmart and Apple and so on and Vietnam is now catching up as well most of Interestingly enough if when people think about Vietnam they think about exporting rice or fish or all these things but in fact the major work of export from Vietnam actually are High-tech products made for by American companies. Yeah, how about Chinese companies Chinese companies are outsourcing to Vietnam, too Little bit but not as much because they are still competitors between them as a producers of Basic parts, but then so if you look at Vietnam, which is currently in the blacklist of the Trump administration as one of those 20 Countries that cause trade deficit to the US But in fact these countries are supporting the production of American products So the supply chain context is much more complicated than just looking as you mentioned a little bit earlier The relationship between the borders of two economies. There is not such a thing anymore in this context Now, let me talk a little bit about the TPP by Restoring from TPP. I think we are basically denying our opportunity to me. I think it is an opportunity loss Just last month in Hanoi, there was a TPP meeting of 11 countries without the US Not there at all not at all and they were discussing about what to do without the US and now Japan has decided to take the lead to replace the United States and there is another thing that is going on right now the regional comprehensive partnership between China and other Asian countries and now China is Going to take the lead on that issue and now they are also developing the silk world to do business Europe, so certainly in the international business if you try to disappear Then it doesn't work. So my understanding from the Trump administration is that they would like to get rid of collective bargaining But I get you into a bilateral Negotiation so instead of going through TPP instead of going through WTO What they would like to do is they like to go one by one But one by one favors the larger partner and if you want to try to dominate You can dominate better in a one in a one-on-one you know lateral agreement No, so I guess this is a point the point is not because of the fact that the US is still the number one economy in the world And by getting into a bilateral negotiation Like sample US Vietnam US South Korea US Japan and so on The law the jungle is not the stronger would prevail But the problem is this is a fully globally integrated world You cannot just engage into a bilateral negotiation Because what happens if I negotiate with Japan and Japan negotiate with China and China negotiate with Vietnam Vietnam Was the Philippines and so on you you end up to have a big mess and this is what WTO and TPP accept there for that matter Yeah, that's so interesting. So We're in the past. I think this kind of arrangement was Largely unilateral or bilateral I should say You try that today and you run into trouble and it sounds like that's this administration's strategy to go from multilateral to Bilateral and then have separate agreements on the thought that they'll that the administration will be more powerful with anybody On a one-to-one basis and on a one-to-many basis, but the problem and I'd like to identify the problem So let's assume we try to do that. Let's assume we try to have a multi I mean bilateral agreements with all the countries in the world a couple of hundred countries What happens you said it unravels, but how does it unravel? How does it how does it come back to bite us? So, you know about it a negotiation would might work if you weren't in business So assuming you produce Let's say computers and then you are trying to negotiate between different suppliers like memory chips For example, then you can play that game a little bit So you negotiate with one guy and you try to counteroffer with another guy. It might work as a business But this is a government and government do not have full control on International businesses. You are talking about more than nationals. You are talking about global firm You're talking about individual businesses around the country around the world They are so creative. This is the essence of entrepreneurship. They don't care And they will find a way to circumvent the situation and therefore I don't think the concept is going to work my my view of the government especially the leadership of the u.s. is to set a Fundamentals of the global business standards human rights labor law Fair trade so that we can have a fair playground for businesses to run to do international competition and competitiveness And this is not the matter of saying that you have a trick deficit against me Then I'm going to kill you and it's not going to work But this is this is a second observation that I would have to share with you written bit Asia is trying to figure out how to counteract with the new administration Washington DC So the easiest policy is to do wait and see and I think this is actually a fairly fair strategy because Honestly, we still do not know yet. What Washington DC is thinking nowadays Second so you have got to figure out if they have a consistent policy to do anything about global trade but One thing that is so stunning to me is the outcome of the negotiation between President Trump and China Before presidency came to Washington DC he really Treaden China quite a bit about the trade deficit about currency depreciation and so on But then after a few days of meeting Basically, he forgot about all of these things and he even gave quite a bit of trade concessions For the sake of security against North Korea, right? So what is the point? So certainly what what it means is that? starting from a very simplistic view of business looking at reducing trade Deficits and getting more jobs to the US now we are putting a lot of factors that were not considered at the very beginning Yeah, so basically my strategy that I would think Asian countries would be doing is that they would create all kind of Possibly artificial arguments in order to counter the benefit of trade deficits against the USA This is it sounds fairly tumultuous And it must be a real train on the people the rank and file in the State Department the State Department officials And as far as the as you said as the multinational corporations are concerned Okay, do whatever you want. We're gonna handle it on a business basis by ourselves So this is precisely the point that I'm thinking Because that the new administration in in Washington is relatively new It's really like more than four months. So people are still trying to figure out what is happening there But at the end of the day, I would argue That the impact from the Trump policy would be much smaller than we expect That could be a lot of noise That would obviously cause a lot of concern and anxiety it has been But at the end of the day the force of integration globalization the impact by those multinational those global companies The flow of money the flow of ideas the flow of people to support the sustainable economy is going to prevail so We might be we might have a lot of things to talk about what is happening in the Trump administration But I think at the end of the day life would go on Wouldn't take a short break to avoid We're gonna Kind of integrate what you're saying. It's really wonderful and then we'll be right back Aloha, my name is Steven Philip Katz. I'm a licensed marriage and family therapist And I'm the host of shrink wrap Hawaii where I talk to other shrinks. Did you ever want to get your head shrunk? Well, this is the best place to come to pick one. I've been doing this We must have 60 shows with a whole bunch of shrinks that you can look at I'm here on Tuesdays at three o'clock every other Tuesday. I hope you are too Okay, we're back. We're here with tongue boy a professor of match and professor of global business and many other things at the Schradler College of Business We have the honor of having him in the studio today to talk about Asia pacific and business and all the things the trump administration is doing and how that affects it and how it affects us I guess ultimately, but you know, I wanted to Explore with you the you know the the kind of policies that the trump administration putting out the kind of isolationist policies trade war type of policies Bilateral instead of multilateral approaches things This is costing us in some way It may not have as profound an effect on trade and business as we think perhaps because Trade and business is conducted by business partners who may not care what the governments do at any given moment in time I'm telling you that was a harbour professor of business out here a couple years ago And she pointed out that You you measure influence by the amount of money that passes hands and the amount of money that passes hands between Multinational corporations is far greater than between governments and therefore if you measure it that way These businesses have greater influence than the governments do But I'm wondering about the geopolitical aspect and how that affects business, you know So you can say well, it doesn't affect business that much But we we have to agree that when everyone in the world is ticked off at the us for things that he's done And the isolationist positions that he's taken That affects our image our reputation our influence nationally and geopolitically, but doesn't it ultimately also affect business Well It certainly has an impact. I don't think we could deny it We we have already seen a slight decrease in People tourists visit in the USA We have seen quite a few contracts being delayed because people like to see what is the impact on trade policies On tax on import tax and so on So no denial There is an impact but again as I mentioned in a global economy with a global supply chain network People are so creative And then there are certain states in the u.s. Who finds way to who are finding ways to circumvent the policy in Washington DC At the end of the day as I mentioned earlier We don't know yet the impact but I hope and I suspect That the impact is not going to be that big at the end of the day As far as the geopolitical situation Obviously, you might have heard the tension between Mr. Trump and the leaders in the world including The prime minister of england and then the newly elected French president But and then is there anybody who's not being disregarded the story about the chancellor of Germany So so so the story goes on and goes and goes on But I think people are smart and in the world of diplomacy at the end of the day people reason and the language of The reason is going to prevail I think And the hope that we all have about our president is that He is finally a businessman at heart And business people successful business people tend to be very pragmatic And if a pragmatic person tend to come down to reason I think the real situation that we are having right now is that the view from the American administration is so simplistic And the word is by far much more complicated than that simplistic view of the world But then I think The work the work goes on And one message that I would like to share to the administration is that If you go back to the wisdom by Aristotle Aristotle, you know, I want you to know on think tech we we spare No, no possibility. We talked about Aristotle. Have you talked about Aristotle lately? Never mind But but this is actually coming wisdom nowadays The whole is actually much greater than the sum of its parts So what it means is that we live in a global economy Then we have many individual nations that are working together So we can come up with a global concept of working together to co-create value to all the citizens of the world It is much better than isolating ourselves in our own Corner of the world and try to do the best we can So I don't think the model would work anymore and this wisdom actually is more Greater than today than ever. Yeah, yeah Well, I mean what's interesting is that some of these leaders are much more akamai than the the trump administration is akamai about these things And they're sophisticated. They understand and I wonder When you say that in inheriting that is that well, he may want to do a trade war But people I mean leaders in other countries. I'm not going to respond in kind They're going to be more akamai than that because if they responded in kind, we'd have this As you said trade wars are over. That's that's that's done and gone So how will they respond even if he becomes more isolationist and more, you know Multilateral even unilateral and engaged in trade war but In the short term, I expect nothing is going to happen everything in the global world Especially from in terms of international negotiation is moving extremely slow. So maybe when Maybe if trump stays for the second term these things might happen But I don't think his ideas is going to be carried over immediately And then in the second observation, which is actually a bit more scary to me Is that that's by the fact that the us is still the number one economy in the world? We are no longer The most important factor The word actually technically Could go by without us They need us we are a very important country for special for Asia Yeah, but then without us they can still survive So basically the message is that should we be Part of it or we are of it. Yeah, but I think the word will move on Yeah, like in tpp other people will take our role. We will no longer be a leader in that We will no longer be a trade leader going back to the tpp. I think this is truly a opportunity loss To me the economy of the 21st century is moving and it has already moved in The service economy And this is where the usa has lots of competitive advantage. You're talking about Software technology. You're talking about tourism. You're talking about education. You're talking about healthcare So we are leading the world in those areas And then the whole world is looking up to us in order to do the leadership in international trade by withdrawing from those Partnerships because of the fact that we are losing In certain economic sectors like like the production And these technologies and then then we are Trying to protect something that we are losing anyway And we are foregoing opportunities on something that is much bigger Which is a service industry. Yeah, it's the wrong way to go So what is the right way to go? I mean, for example, you know, if you had tpp tpp is what a dozen or so nations 12 um and um, you know a peck, which is 11 A peck is like 21 nations and so forth and Although a peck is not so much a trade agreement as a sort of border economic kind of agreement But I'm I'm just wondering what is the optimal solution because you can have 12 Why not have 200? Why not have the model of tpp and a peck prevail for world relations World trade for everyone to be involved on an equal basis is is that does it reach a tipping point where it's no longer productive? Do you have to stay relatively small or can you go global? Actually, the best of all words would be to keep working on the word trade organization Which is a large body That embraces The most of the nations on earth The problem is not like a big family If you have a big family then you expect to have more internal fight Yes So have a smaller group of people then it tend to be a little bit easier to manage So actually the concept of tpp is so wonderful because you are dealing with 12 countries Yet they occupy 40 of the trade of the of the GDP of the world and one third of global trade And then the beauty about the tpp is that you are dealing with a strong economy which is d us And the fact about other countries that are supporting american economies in the context of supply chain economy South korea, vietnam, the philippines, indonesia all these countries actually are our Suppliers and therefore it is nice to work within that smaller set of family It's a practical thing Exactly as opposed to a WTO that is way too big. Yeah, so it's a matter of practical considerations for easy management If you have a 200 member organization, it's very hard to manage it and and people will be unruly and sometimes difficult So it's better to have it small and let them ask to come in and then maybe we take them in Shrinking this down to hawaii, okay It strikes me that there was a time maybe there still is a time when hawaii can be A trade leader a place for mediation a place A sort of market center if you will and right now we have signs of that at the convention center With all these scientific conferences that are happening Right now there's one going on this week 8 000 people coming and talk about microwave technology There was one not too long ago. There'll be a lot more in the future involving hundreds of thousands of people to come in Then millions and millions even billions of dollars come in by way of tourism Now that in itself is not a big deal except that It seems to me that hawaii has a prospect as a state of the union to be a trade center Do you agree and do you think that the trump administration is undermining that possibility? To my personal knowledge, I haven't seen anything happening yet again, I think Hawaii is a bit too small of the radar of what the trump administration is thinking right now As I mentioned earlier, the world Goes on so Tourism in hawaii is still good and healthy Because of the fact that we are still one of the best destinations in the world And given a more insecure world nowadays, hawaii has Been recognized as a safer place to travel and visit And then thanks to the university of hawaii, we do have we do attract quite a bit of scientific Conferences in the country in the state. So I think we are at least for now Still doing okay And again, I don't think that what is happening in russian to deceive but impact us too too much On a bright on a bright spot Uh The trump administration is increased is increasing significantly The military budget By a huge Percentage 54 billion or something. I know so I think if he can if he can obviously and if he can Then I expect that it would benefit hawaii a little bit as well. Yeah And one more thought before we close is that um, I understand in november of this year They'll have the apex meeting in um in vietnam And trump has said is and this is seems counter to some of the other things he's done Trump has said he's going to attend You have any thoughts about why he's going to attend? What kind of a presence he's going to create there and what kind of benefit if at all We will have the united states will have from that The benefit by effect versus the major meetings like that are called in paris or the uto meeting Is that a pick is basically a non-binding meeting? so We Participating countries don't have to sign anything And therefore it is just a it's a hobby a hobby A photo op To light up and then take pictures and smile so I think No interpreted me. I don't think he but this that's opportunity. It's perfect. That is perfect opportunity for a photo op The better meetings are the ones where you actually get down to business Make deals write it up, but you have all the necessary authorities back home actually approve it It's nothing to happen. There's no no Thank you, tongue boy. It's been great to talk to you. I know we have miles to go And maybe we can do this again soon. Thank you for having me and thank you again