When up to 20,000 guests attend the APEC 2011 Leaders’ Week in November, the local blue-ribbon committee promoting business investment here won’t be touting Hawaii’s old standbys.
Instead of focusing on tourism, agriculture and real estate, the APEC 2011 Hawaii Host Committee will be shining the spotlight on what it sees as four emerging fields of excellence in Hawaii:
• Clean energy;
• Sky, ocean and earth sciences;
• Life and health sciences; and
• The visitor segment known as MICE: meetings, incentives, conventions and exhibitions.
“We wanted to focus on the visitor industry in a different light – the business end of the spectrum, which is only 10 percent of our tourism business,” says Peter Ho, Bank of Hawaii president, CEO and chairman, who also serves as chairman of the Host Committee. “And we want to highlight some of the emerging areas, which are areas of opportunity.”
APEC is the Asia Pacific Economic Cooperation group of countries and economies arrayed around the Pacific in Asia, Oceania, and North and South America. The APEC 2011 Leaders’ Week takes place in Honolulu Nov. 7 to 13, bringing President Barack Obama and 20 other global leaders, plus their cabinet ministers and other officials, business executives and news media to the state.
The Host Committee has been trumpeting Hawaii’s “spirit of discovery and entrepreneurship,” and how the Islands are a great place to do business, launch projects, test innovations and make investments. The committee contracted with Hawaii Business to prepare a special edition of the magazine that will feature Hawaii’s areas of excellence and be distributed to all 20,000 visiting delegates, business leaders and media. It is the only locally produced publication that will be delivered to the delegates as part of their welcome packages. The Host Committee is also using video, brochures, websites and other media to get its message across.
Twenty-six projects and companies were initially pitched to foreign news media, some of them private enterprises are considered “investment ready.” More than half were under theUniversity of Hawaii’s umbrella, including scientific partnerships in astronomy at Mauna Kea and Haleakala.
“The university is actually one of the big investment opportunities in this community,” says Ho. “Here you have a research university in the middle of the Pacific, on U.S. soil, serving a population of 1.3 million. They’re getting over $400 million a year in grants. The ability is there to leverage opportunity out of that.”
Two of the featured projects were state initiatives: the electric-vehicles project of the state Energy Office and the Kaupuni net-zero-energy community in Waianae, a project of theDepartment of Hawaiian Home Lands. Medical research at The Queen’s Medical Center was also on the tip-sheet.
Last month, the committee shifted into high gear to promote a bigger batch of businesses and activities it believes APEC business people will find attractive. The committee selected 35 Hawaii businesses for the APEC 2011 Hawaii Business Innovation Showcase, then named four county winners and selected Skai Venturesas the overall state winner (see the next page for a complete list of winners). All these companies will be highlighted in a Virtual Exhibition Hall on the Internet and included on story-idea lists for foreign media.
Among the criteria for selection, according to the host committee’s website, was that a Showcase company demonstrate “unique, leading and cutting-edge innovations in product development, technology, marketing or delivery” that have growth and investment potential.
He says exhibit venues to promote Hawaii companies would be set up at the Hawai‘i Convention Center, Ala Moana Center and the Royal Hawaiian Center. APEC delegates will also be able to learn more about the companies on television in their hotel rooms.
During the run-up to APEC, Assistant U.S. Commerce Secretary Suresh Kumar stopped in Honolulu to present two Hawaii companies with Export Achievement Awards in recognition of export sales and expansion into new foreign markets.
“People who think of Hawaii think of the stereotype of sun and fun and beach, but here are two absolutely fabulous companies with newer technologies consistent with what President Obama calls ‘Our need to out-innovate the world,’ ” says Kumar, who is also director general of the U.S. and Foreign Commercial Service.
The Commerce Department honored Skai Ventures’ CBI Polymers unit for helping Hungary respond to a massive chemical spill in October 2010 and assisting Japan’s earthquake and tsunami recovery efforts. CBI’s DeconGel has been used in those countries to clean up toxic waste and radioactive contamination.
Skai Ventures founder, Dr. Hank C.K. Wuh, says CBI has proved that small companies in Hawaii can have a dramatic impact on big issues. From an unimposing office building in Moiliili, Wuh’s portfolio of companies is working on reversing corneal blindness, improving human health and cleaning up massive environmental damage that could someday threaten national and international security.
“Hawaii is a perfectly great place to do business and we are a living example of that,” Wuh says. “In the modern era, it’s not about infrastructure; it’s about intellect and knowledge. So if I can attract the greatest minds and the smartest people … and encourage them to solve difficult problems with unique solutions, and if I can convince them to do it here, that’s our advantage.”
The Commerce Department’s export program recognized Sopogy Inc. for teaming up with a Thailand company to use the company’s Hawaii-developed technology to produce solar energy in Southeast Asia.
Sopogy’s MicroCSP solar-power collection system is “just the right technology for the export market because it is microscaled, solar-tracking, heat-storing … and it is affordable,” Kumar says.
In July, Sopogy president and CEO Darren T. Kimura signed a memorandum of understanding with a Thai energy company to build a solar plant in northeastern Thailand and distribute Sopogy products in Thailand, Laos, Cambodia and Vietnam. Kimura says he is in talks with other potential partners in Japan, Australia and the Pacific Islands.
Kimura says that having the APEC summit in Honolulu gives companies like his a chance to get on the radar of the dignitaries, CEOs and business people who attend. “We want to bring our products to their attention because our technologies are very appropriate for Asia-Pacific markets. In fact, we design them for those markets.”
With a nod to APEC, Kumar says: “Just looking at these two companies as examples, you can see that Hawaii is more than travel and tourism. Asia-Pacific delegates will be well served to look beyond the tourism at the newer technology and products that Hawaii companies have.”
Hoku Corp. is another Island-based solar-energy company that has been successful in selling to Asia and, ultimately, attracting a big investor from China.
“If you can do big solar deals from here, do projects here and show a track record, you can expand from Hawaii and succeed as a global company,” says Jerrod Schreck, president of a Hoku division, Hoku Solar Inc.
The original Hawaii company, Hoku Scientific, evolved from a solar-cells company into two separate operating companies: Hoku Materials, a Pocatello, Idaho-based polysilicon manufacturing company; and Honolulu-based Hoku Solar, which provides turnkey photovoltaic systems for commercial, institutional and government clients, and assists real estate developers with solar projects.
At the end of last year, Hoku’s star moved under a bigger corporate sky when Tianwei New Energy Holdings Co. Ltd. became 60-percent majority shareholder. A manufacturer of electrical transformer and grid components, Tianwei is itself part of a conglomerate called China South Industries Group.
“From early on, our company culture was to take a laptop, get on a plane and do some deals in Asia. We’ve benefitted from that over time because we’ve maintained strong links to Asia,” Schreck says.
The APEC Hawaii Host Committee is also promoting the Hawaii Convention Center as a place to hold conventions and meetings with aloha.
While convention centers around the nation vie for the same business by promising to boost attendance, Honolulu has a track record for helping scientific, technological and life sciences groups attract more attendees from the APEC region.
Randall Tanaka, assistant general manager of the Hawaii Convention Center, says major international conventions of scientific and medical organizations like the IEEE, International Society for Magnetic Resonance in Medicine and the International Chemical Congress of Pacific Basin Societies (Pacifichem), see attendance from Asia soar whenever they meet in Hawaii.
“Naturally, it’s easier and more convenient for them to come here as opposed to Boston,” but there’s more to it than that, Tanaka says.
Convention Center and Hawaii Visitors and Convention Bureau experts assist U.S. associations by translating sales pitches into Asian languages, and actually escort them to Asia to meet the leadership of the organizations they’re trying to lure here.
“We’re reaching out to them and we’re helping them pull from Asia,” Tanaka says.
In addition, the Convention Center says it has worked with U.S. embassies to smooth the way for delegates through the visa process. Nonstop flights from Japan, Korea and, now, China also help draw Asian convention delegates here.
Hosting APEC on behalf of President Barack Obama is “a defining moment for Hawaii,” according to Hawaii Lieutenant Governor Brian Schatz. It not only gives Hawaii a unique opportunity to reinforce its position as a world-class destination and showcase its economic potential, it showcases Hawaii as an international-business meeting place, he says.
“It’s a game-changer,” agrees Tanaka.
Thirty-five local businesses were named winners of the APEC 2011 Hawaii Business Innovation Showcase, a program sponsored by the APEC Hawaii Host Committee, theChamber of Commerce of Hawaii and the four county governments.
The overall winner was Skai Ventures, the umbrella organization for the many innovative companies run by Hank Wuh. The county winners were:
Big Island Carbon
The host committee says the winners will be able to showcase their innovation in products and services directly to visitors during the APEC Leaders’ Week in November.
The other winners were:
Avatar Reality Inc.
Cardax Pharmaceuticals Inc.
Clear Fuels Technology
Hawaiian Electric Co.
Hoana Medical Inc.
Honolulu Seawater Air Conditioning
Makai Ocean Engineering Inc.
Onipaa Kakou LLC
Outrigger Hotels Hawaii
Referentia Systems Inc.
The Queen’s Medical Center
Bigger Market, Bigger Payoff
To make money, a biomedical research company has to move its products and processes from lab to market. The bigger the market, the more profit there is to be made.
Former IBM executive turned bioengineering entrepreneur Anton Krucky says overseas corporations reap advantages when investing in American biotech companies due to U.S. intellectual-property protections and the rigorous approval process administered by the U.S. Food and Drug Administration. FDA certification is the “gold standard,” says Krucky, founder, president and CEO of Tissue Genesis Inc.
“In some ways, if your model is to be in Hawaii but do business outside of Hawaii, that’s very good,” he told University of Hawaii Cancer Center researchers. It’s typical for promising technology and biotechnology companies in Hawaii to get early funding from the U.S. Department of Defense, which is searching for innovative ways to care for its personnel and facilities in Hawaii and around the globe.
In his talk to cancer researchers, Krucky shared a business-growth chart for bioengineers.
A company’s value is measured by what someone will pay for its stock, so it’s important to move up “the valuation chain,” Krucky says, from proofs of concept and novel research to an application fitted to the new technology. “You need to get that technology out of the lab, test it in the field with preclinical trials and pretests on animals,” he said.
At that stage, a new piece of biomedical technology might be worth $50 million, he said. “If you want to go higher than that, you’ve got to place your products in the market, get the technology approvals and certifications and do clinical trials overseas or with the FDA.”
That makes a big difference, Krucky said.
Technology that might have been worth $50 million during pretrials, may be worth $300 million or $400 million in clinical trials after certification, he said.
Krucky is looking for large companies in countries such as Japan and South Korea, where TGI has partners doing testing and commercial application of its Hawaii-based technology.
Help for New Exporters
Investors from Asia are looking at high-technology companies and technological processes, but they are also interested in fresh food and food processing, as well as cosmetics, health-maintenance products and tourism opportunities, according to U.S. export trade advisors.
It’s no coincidence that experts from the U.S. Department of Commerce’s Commercial Service stepped up activity in Hawaii in advance of the APEC summit in Honolulu.
According to U.S. commercial attaches whose job is helping American businesses generate sales abroad, investors in APEC member economies are looking for high-quality, new products and services that have potential for worldwide sales. Some of those investors will be in Hawaii attending the APEC summit.
“An innovative product for a global market: That’s a compelling argument for any investor,” says Suresh Kumar, assistant U.S. secretary of commerce for trade promotion.
Kumar offers this advice to Hawaii-based companies that want to reach out to the world markets:
“First and foremost, showcase your products and show what you can do. Show the various applications and commercial potential for your product. If you can show there’s a global market, you become more attractive for direct investment.”
At one government seminar in July, U.S. Commercial Service officers offered tips on how to do business with customers in Japan and Korea.
Yuri Arthur, a Japan specialist at the U.S. Embassy in Tokyo, said Japan is hungry for a variety of U.S. imports, including fresh and processed foods, and food-processing equipment. Attitudes and policies about agricultural and other imports are changing in light of nuclear contamination concerns, she said.
Since the Fukushima disaster, there has been a lot of Japanese interest in environmental and alternate-energy technology, especially solar, and in “green-data” information-storage technology. Following the disaster, there was a 15 percent dip in cosmetics sales, but business is rebounding and imported cosmetics are again in demand, Arthur said.
Mark O’Grady of the Seoul Embassy said Korea was ranked as Hawaii’s 10th largest export market in 2010. When doing business with Koreans, don’t rush into a deal, he counseled. “Build a relationship gradually.”
“Koreans,” he added, “consider business understandings open to discussion as circumstances change, so be prepared for further dialogue after the signatures.”
Based in Honolulu, John Holman’s job is to work with trade-promotion colleagues at U.S. diplomatic posts around the world to help Hawaii companies enter new international markets.
He directs the Commerce Department’s Hawaii Export Assistance Center, which is a good first stop for local companies looking to go global.
First-timers who visit the Export Assistance Center at the Hawaii Foreign-Trade Zone can discuss their business objectives and come away with contacts that can help them identify, screen and meet prospective partners, agents, distributors and customers in target countries.
Commercial Service experts say one way to get a new product into overseas markets is to participate in trade shows here and abroad so that potential buyers can see your product.
In Hawaii, the U.S. Commercial Service has given only two Presidential E Awards, the highest honor presented to U.S. firms for export success. With exports leading the way, business is growing at both winners:Cyanotech, which grows algae, and Noni Biotech International, a processer of locally grown noni fruit.
In a sunny, 90-acre facility in Kona, the privately held Cyanotech cultivates microalgae and converts it into nutrients for a world market.
A Nevada-registered stock corporation, Cyanotech describes itself as the world’s leader in microalgae technology and a high-volume producer of high-value natural products from microalgae. The products include a nutrient-rich dietary supplement for humans, a natural nutritional supplement for aquaculture and animal feed industries, and commercial phycobiliproteins, which are fluorescent pigments used in the immunological diagnostics market.
Noni Biotech International produces juice, powder, puree, concentrate and capsules from the noni fruit, while its subsidiary, Pacific Biotech LLC, conducts research on noni extracts and other plants endemic to Hawaii. The company has its headquarters and research labs on Maui and a factory in Hilo, where it buys fruit daily from more than 80 farmers on the Big Island.
Upon receiving the Presidential E Award in May 2011, David Backstrom, Noni Biotech’s president and CEO, said export sales had doubled year over year, amounting to nearly 60 percent of the company’s total sales. The company is doing business with 10 APEC economies and in talks with potential partners in five others.