How to ‘unsucceed’ in a business/industry on Saipan—Part I

Everybody wants to succeed in business. But for some strange reason, most of the businesses that the government is involved in seem to ‘unsucceed’ (this is my coined word). For many years I have studied how businesses succeed. I have read many books on management and marketing on how to succeed in business. I have spent countless hours discussing business with many winners. I even have taken several courses in business entrepreneurship. But until I came to Saipan, I never understood how to unsucceed in business. Let’s run through several examples.

[B]Industry No. 1[/B]: Tourism. We started to build a tourism industry over 25 years ago. I recall back in 1984 when I first arrived, about 150,000 tourists were visiting our islands. Most of them were Japanese. Gradually the Japanese market grew until it reached over 700,000. At the end of 2008, the number of tourists was less than 400,000. However many of the Japanese did not stop traveling. They simply bypassed Saipan and flocked to other destinations. Why is that?

The only reason we still managed to get about 400,000 tourists this past year is that we were visited by Chinese, Koreans and Russians. I wonder why the Japanese tourists are not coming here anymore. They certainly have not reduced their traveling. In fact more of them are traveling outside of Japan than before.

Has anyone studied why we lost this market? What did we do to make them not want come here? Were we unfriendly? Were we appreciative of their business? Where did we do wrong? Have we tried in a serious manner to set up a dialogue with the travel agents? Are we still trying to market in the same manner as we did 25 years ago? Will we do the same to the Chinese, Koreans and the Russians? The questions remain unanswered.

[B]Industry No. 2:[/B] Garment: We have heard all the horror stories about slave labor of the workers. We are glad the garment industry is gone. They did so much to destroy the clean image of Saipan. Aren’t you glad they left? Now we can sit and enjoy the hindsight of our stupidity.

Now that their tax benefits and other contributions to our government and to the island are gone, we have begun to feel the pain. When the containers came in full, they returned full also. Now that the containers that bring food and other commodities return empty, we feel the added cost of shipping. Never mind, we have gotten rid of the nasty bad slave shop garment industry. But….

A funny thing which few of us somehow failed to notice is that when a garment was made in Saipan and sold in America, we received some of the benefits of that sale. We received taxes and other benefits. But now we have none. Instead take a look at what has happened.

Take for example a brand name T-shirt that was made in Saipan. The garment maker here sold the T-shirt for about $2.75 to his buyers. When it was sold to the retail customer in the stores in the United States, the price was anywhere from $75 to $125. Who made the profit? It certainly wasn’t the garment maker here.

Now that all the garment makers have gone to foreign countries, let’s look at the same T-shirt now made in Vietnam or China instead of previously Saipan. It is made for under $2.75 but is still sold in the stores in the States for $75 to $125. But this time we receive no tax money or any other benefits. So who is benefiting? It seems we shot ourselves in the foot.

When the workers lived and worked here, they spent some of their salaries here. The garment makers paid taxes and bought goods for their workers and their factories. Where are all the benefits now? Does the American buyer benefit? Today where are the 1400 local workers employed in the industry that were fired because of no jobs? Again let’s bask in hindsight and smile at how stupid we were in chasing away the golden geese.

[B]Industry No. 3:[/B] For an island that aspires to increase its tourist industry and entice investors to come here, we have one of the saddest state of an airline system. The only way one can travel to Guam is on Cape Air or Freedom Air. Both are small local airlines that carry only a few passengers. The only way one can travel to Japan is via Northwest. We are still fortunate to have Asiana Airlines fly us to Korea, if that where we wish to go. But for how long?

What is the real story why Japan Airlines stopped flying here after so many years? Isn’t there a connection between the drop in Japanese tourist and the sellout of all Japanese owned hotels as well as the Laolao Golf Resort on Saipan?

Why has Continental Airlines deserted us? Weren’t it one of our best friends? Wasn’t it the one that actually opened up the routes to Saipan? Why do no other airlines want to fly to Saipan? Where does the real truth lie in this problem?

I find it hard to believe that all routes to and out of Saipan are money losers. Does this mean that other destinations are money makers and we are not? Is there anything we can do to solve that problem? What will happen should Asiana Airlines decide to fly away? According to newspaper reports it too is losing money. What are we doing to make sure they don’t desert us also after a few months?

[B]Industry No. 4:[/B] Why have all the previously owned Japanese hotels been sold out? They haven’t sold their hotels in other tourist places such as Guam or Hawaii. But I guess if we don’t have the Japanese tourist and don’t have the airlines to bring them in, then the Japanese investors don’t need the empty hotels. So on and on goes the story. This is another classic lesson on how to unsucceed in business.

[B]Industry No. 5:[/B] The lone casino on Tinian has been limping along for 10 years. I am surprised they haven’t thrown in the towel and left. We promised them an improved airport 10 years ago with fueling facilities. What happened that they haven’t been constructed?

I never hear of the government working out problems with them that occur. Instead we charge their customers a fee to go to Tinian to play at the casino. Have we forgotten that the Tinian Dynasty has had to buy its own means of transportation such as planes and ferry boats to shuttle their customers back and forth at its own expense. We should have done that with them. Is any one in the government sincerely sitting down with them and work as a partner. Aren’t we scared that if they leave, look at all the money we will lose?

[B]Industry No. 6[/B]: I will not delve about the CUC fiasco. It has been battered around enough. We daily feel its failure and unfortunately will continue to feel it for a whole longer. But we will discuss this at a later time.

[B]Industry No. 7:[/B] The labor situation is another classic one. For over 25 years we seem to never have grasped how to handle this slippery one. We have changed the regulations so often it makes one’s head spin. We have vacillated from position to position over the years, that we don’t know which end is the head and which is the tail. I have given up on this matter and float with whatever the powers that be dictate.

No, I am not writing all this just to poke fun or ridicule anybody. It is a serious matter. We have had many great opportunities to improve our economy and our lives, but for some strange reason we mess them all up. True, some outside forces always affect us but if we work hard and are sincere we can overcome or adjust to them. Next week let’s look at what we could have done to soften the blows. [B][I](To be continued)[/I][/B]

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[I]Pellegrino is a longtime businessman in the CNMI and is the former president of the Saipan Chamber of Commerce.[/I]