China tech officials see Hawaii as U.S. gateway

[urbanguy]

China tech officials see Hawaii as U.S. gateway

A group of influential Beijing officials who recently visited Hawaii say they see the state as the best point of entry for Chinese life-science companies wanting to break into the U.S. market.

Officials from China's capital city toured the new University of Hawaii medical school complex last week, met with venture capitalists and saw first-hand some of the research being done by Hawaii Biotech and Tissue Genesis, two of Hawaii's most ambitious life-science companies.

The visit opened the door to Chinese high-tech companies setting up Hawaii subsidiaries in state-run incubators and forming local partnerships before entering the U.S. market. Hawaii entrepreneurs wanting to break into China's markets also could open subsidiaries in that country's largest high-tech park in Beijing, which three of the Chinese officials represented.

The four-day visit was arranged by the state High Technology Develop-ment Corp. as a reciprocal visit to HTDC's visit to Zhongguancun Tech Park in Beijing last September. Zhongguancun is China's largest tech park, occupying about 186 square miles and home to some 6,000 high-tech firms, including multinational giants such as Microsoft, IBM, Oracle and Motorola.

Officials from the Beijing Municipal Government's Bio Engineering and Pharmacy Industrial Department and Zhongguancun Life Science Park and incubator were in Hawaii at their own expense to see what Hawaii could offer. They said they were surprised by what they found.

"Many Chinese pharmaceutical companies want to come into the U.S., but cultural difficulties prevent it," said Zhang Jie, the Chinese delegation's senior ranking official, through an interpreter.

Zhang and the other Chinese officials also said they were won over by the aloha spirit.

"After this trip, I'm convinced Hawaii is the ideal point of entry into the U.S. for Chinese companies because it has a very accepting atmosphere for different cultures," Zhang said.

Understanding herbal medicines

Zhang said she was surprised by Gov. Linda Lingle's understanding of traditional Chinese herbal medicine. In a meeting with the group, Lingle asked about efforts to market Chinese medicine to Western consumers, indicating to the Chinese that she understood the potential of the business.

That stood in contrast to meetings with officials in other U.S. cities, where it was clear that no one had even heard of Chinese herbal medicine.

With the world market for holistic and traditional Chinese herbal medicines reaping billions of dollars each year, Zhang's department believes the time is right to partner with U.S. firms to modernize and introduce traditional Chinese medicines to Americans on a mass scale, just as Western medicine has been introduced to China.

The idea is to use the latest high-tech production techniques available in the United States. Zhang foresees working with the University of Hawaii to research modernizing many traditional Chinese herbal cures with the goal of receiving U.S. Food and Drug Administration approval. The results could be spun out and commercialized through partnerships with Hawaii companies.

Zhang's bureau is the first municipal Chinese government agency to actively promote the high-tech industry.

"They service and support the high-tech industry as opposed to regulating and controlling it," said Philip Bossert, director of the High Technology Development Corp. "This visit has made it highly likely that the Zhongguancun International Incubator will enter into a cooperative agreement with HTDC, including the provision of office space for them here in one of our incubators and office space for us in one of their facilities in Beijing."

During their brief visit, the delegates also met representatives from the University of Hawaii, Hawaii Community Development Authority, state Department of Business, Economic Development and Tourism, Allegis Capital and PacifiCap Group.

VC sees potential

Barry Weinman, managing director of Silicon Valley-based venture capital fund Allegis Capital, walked the Chinese officials through the steps needed to take a company public. Allegis currently has $600 million under management from some of the world's largest corporate investors.

Weinman, who personally has been involved in 73 initial public offerings, believes Hawaii's fledgling tech industry could get a boost from Chinese tech companies.

"I talked to the lead guy [from the life science park] and he told me they'd been looking for a new office for years and that wherever they went, they weren't treated that well," Weinman said.

In Hawaii, however, they were welcomed.

Weinman told Chinese officials that if they were serious about bringing life-science companies to Hawaii, the local business community would in effect create an investment banking group -- or hui -- to advise them on everything from health care to wealth management.

"If you are a young Chinese company trying to get into the U.S. market with a P.O. box and attorney, those are basically transactions, whereas in Hawaii it would be a relationship," Weinman said. "Delaware and the Cayman Islands won't do that. Culturally, they are much more comfortable here. If they went to San Diego, where there are 400 life-science companies, with the idea of bringing 10 biotech companies, who cares? I'm sure Gov. Arnold Schwarzenegger isn't going to pick up the phone and call them. In Hawaii, the governor would be out there helping them. She met with them for 45 minutes on their visit here."

Weinman, who lives in Hawaii and commutes to Palo Alto, Calif., three days a month, said all of Allegis Capital's portfolio companies are either setting up joint ventures with Chinese companies or setting up operations in China.

He plans to follow up with the Chinese officials in Beijing in a month or two to see how serious they are about their Hawaii plans.

[urban addict 20324]

This is probably the first step in Chinese tech. companies moving to the US. I guessing, eventually, these companies would invade Silicon Valley and that may be a boost to the sagging economy there.

[PghUSA]

ugh the distractions . . . c'mon guys I'm trying to learn chinese . . .

[urban addict 20324]

...

[urbanguy]

^You may be right about them eventually moving to places like Silicon Valley however it would probably be a while from the looks of things. BTW id rather see them eventually branch out to the northwest like Portland or Seattle then Silicon Valley to spread the wealth more! I really hope that this comes into fruitation cause man that would really give a much needed boost to a wonderful city like Honolulu! *Fingers crossed*

[urban addict 20324]

I hope it gets to Silicon Valley....

[urbanguy]

It probably will but they already have so much wealth its better to share but keep it on the westside of course!

[urban addict 20324]

Well, Silicon Valley has lost 230,000 jobs since the dot-com bust, so they need some companies to fill up the vacant offices around San Jose.

[urbanguy]

Yeah but the valley still has so many spread the love for goodness sakes!

[urban addict 20324]

..... some go to Silicon Valley, some elsewhere ......

[PghUSA]

Knowing everything I do about how the Chinese operate (their companies are basically government departments that make a profit) I don't really trust a "private Chinese company" (no such thing) with interests in tech in Hawaii or the like. I'd rather be less rich then have them import their slave labor business model over here. Just my two cents, I am sure that within the matrix of the Chinese economy there are good people just looking to bring the best product to market and make a buck, but the system they have to operate under needs to be stopped. Ok I'm off my soap box, interested in hearing your thoughts on this.

[urban addict 20324]

Well, I'm supportive of those Chinese tech companies that don't have slave labor in coming over to the US and rail against those that have. (I think tech companies have better wages than dirty, manufacturing ones in China; but they may still treat workers like slaves.) I believe this slave labor system is a cruel way for businesses to make big money, since it seems like China doesn't have a mininum wage. Over here, there is so it should be better for the workers (there's a mininum wage here) if the employer doesn't treat them like slaves or it's back to the "I am a MAN" strikes.

[PghUSA]

^^just to clairfy I am sure they won't be running the same labor practices in Hawaii, my larger point is just that although those "companies" might have the best intentions companies in China are controlled by the govt. it would be similar if Prez Bush bought a 50% stake in GE, AT&T and Microsoft and then started giving orders . . . it is just another tentacle of the same beast. Maybe someone can find out how much influence the Chinese govt. has over these companies, if they are truly a legitimate company here to do business or part of some grander Chinese emperialistic scheme. I am afraid the latter is all too true in the long run. I want to keep an open mind though so if anyone has info to the contrary let us know

[urban addict 20324]

Slave labor=low wages=low prices=competitive with US products=big profits for employers. China needs business and labor reform like the US in the Progressive Era for the benefit of all!!!

[urbanguy]

If they were to offer low wages i dont see them lasting very long in Hawaii i'd imagine high turn over rates!