I also believe it’s high time for Hawaii to get aggressive and start developing alternative ways to bring more money into the State. Opportunities abound but the right people must choose to seize the day. I have a couple ideas–two more drops in the bucket if you will–but let’s first spend a few minutes casting some stink-eye on the tourism industry in Hawaii as a whole:

1) Tourism-related jobs don’t pay well
2) Tourism is cyclical
3) Tourism is fragile: especially sensitive to economic downturns, rising fuel costs, airline bankruptcies, and terrorist attacks
4) Tourist-based global companies often don’t invest back into the local communities
5) Tourist “shows” in Waikiki and other touristy places often don’t respect local/authentic culture
6) Overall Hawaiians benefit the least from the tourist industry

The reality is that Hawaii’s economy will always have tourism dollars coming in to drive its engine. But the tourism piece of the pie is shrinking as I write this, and will continue to shrink moving into the foreseeable future. The challenge is to stop the bleeding in tourism while we work on finding new streams of revenue. The general concept is to make the overall economic pie bigger while reducing tourism as a percentage, a tall order indeed in the middle of an economic meltdown.

I’ve got just a couple ideas. The first is aimed at stopping the bleeding. The second is a proposal that offers a superior, more stable source of revenue for Hawaii than the first. But as you’ll see, it is fraught with legal and political challenges.

Stop-the-Bleeding Idea: Promote “Long-Stays” Targeting Japanese Boomers

We must think beyond tourism if we hope to wean ourselves away from it. In scaling down our addiction to tourism, step one of our de-tox program is to play off the strengths of the East Side: culture, tradition and education. The idea is to lure Japanese boomers, big fans of Hawaiian culture, for “long-stays” (2+ weeks) built around culture, education, and volunteer-ism. Get them here for an extended vacation; keep them interested and engaged until they leave.

An Idea for the Future: Turn Hawaii Into a Retirement Mecca for Japanese Boomers

Why limit ourselves to drumming up just long-stay business? I mentioned the lucrative dankai no sedai (Japanese boomer market) in my previous post–remember, the Japanese demographic made up of seven million people with over $2 trillion in savings? Well here’s a crazy idea that is not at all original: how about dangling a year-round visa in front of these Japanese retirees? With strings attached, of course.

We could take a cue from the Northern Marianna’s and lure Japanese retirees with a special “retiree” visa, with the stipulation that foreign retirees awarded the privilege of living here must spend (for example) $30,000 dollars per year, etc. Then we could further sweeten the deal for Hawaii by requiring such visa recipients to volunteer for and/or donate to community causes throughout the year. Maybe even take it a step further: promote home-stay/cultural exchange programs with Japan?

Upsides abound, but let’s consider the downsides first.

What are the “downsides” to luring Japanese retirees?

1) Foreign retirees won’t respect the a’ina and local customs: To ensure proper and respectful behavior we could require them to learn about the a’ina, local customs and practices, native gardening, provide basic English language instruction, driving lessons, emergencies contacts, etc. All these required services would create jobs.

2) Real estate prices will be artificially inflated: Avoid this by connecting foreign nationals with local licensed real estate professionals who can facilitate property purchases at current market value.

3) Japanese retirees are not eligible for year-round visas: This is true. We know many Japanese retirees who live in Hawaii 3 to 6 months of the year due to visa restrictions, but would gladly stay year-round if allowed to do so. (Think about it: our immigration laws are artificially imposing a loss of significant revenue for Hawaii.) Short of lobbying the Federal government to loosen visa restrictions for foreign nationals, perhaps offer student and “culture” visas through local schools and cultural institutions?

What are the upsides of luring Japanese retirees to Hawaii?

1) It’s a safe demographic. Can’t imagine a Japanese retiree intentionally trying to do harm to our country and way of life. Most Japanese in this demographic are highly educated and financially stable. They are good neighbors who take care of their homes, and in doing so add value to our neighborhoods.

2) It’s a cash-rich demographic. They’d be injecting lots of outside money (yen-converted-to-dollars) into our economy without taking away a single job–they’re retired, after all. Most Japanese boomers can and would choose to buy homes with cash, so no worries on the housing front due to the effects of tightened lending practices.

3) Japanese retirees would create new jobs. They need everything and every service that everyone else in Hawaii needs plus more (including language and cross-cultural services). They would shop at our supermarkets, eat at our restaurants, hire landscapers for their gardens and handymen when things broke. They would buy (or build) homes, furnish them with furniture; pursue hobbies like golf, hula, photography or just shop at the mall–all good things for the local economy.

4) Many Japanese retirees are looking for a meaningful way to fill the void in their lives that was created when they said goodbye to their “lifetime” jobs. This presents a wonderful opportunity for Hawaii. On a personal note, many retired Japanese friends here in Pahoa have expressed to us their desire to contribute to the local community. To create opportunities for them to volunteer, we bring many of them to our local charter school where they interact with the kids in Japanese language class. They seem to enjoy the kids and many are repeat volunteers. (The kids enjoy it, too.)

5) Foreigners pay property taxes at much higher rates than Hawaii residents, more outside revenue for the state.

6) Japanese buy quality: Japanese retirees wouldn’t spend the day-to-day amount of money a Japanese tourist typically spends. But it would be a year-round steady stream of outside money injected into the local economy, a source of revenue less vulnerable to the drastic fluctuations of a fragile tourist-based economy.

7) Children and grandchildren of retirees come to visit. This is when retirees make an exception and spend like tourists (often spending a couple days in Kona or visiting other islands).

Think of the possibilities. If done properly, an influx of Japanese retirees could have a huge impact on local communities that could really use the help right now. It could be a win-win for everyone.

The cynical side of me says that it makes way too much sense for our government to consider this. Indeed roadblocks abound. Federal visa restrictions and “national security” issues present the biggest challenges. The question is does anyone in power care enough to find creative ways around these issues?

With money scarce, our leaders on the East Side of Hawaii might want to consider this: if just five thousand Japanese couples retired in Puna, and each couple spent $30,000/year, that would be $150 million dollars injected into the community. If each couple paid property taxes on an average of $1,500 per home, that’s $7.5 million more toward paying for badly needed public services. What if we could double or triple these numbers? What if…

There are no magic bullets to pull Hawaii out of its current slump, nor assure it a prosperous future. So many more measures are needed to help our communities get healthy and prosperous. The ideas presented above are, as I mentioned, just a couple drops in the bucket. But right now Hawaii could use every drop it can get. This potentially lucrative window of opportunity won’t be open forever. Now would be a great time for Hawaii to seize and embrace the retiring Japanese-boomer demographic.

First is the dankai no sedai, “cluster generation,” Japan’s post-World War II baby boomers who began turning 60 this year – as well as retiring in large numbers.  Born from 1947 to 1949, this demographic bulge represents 6.9 million consumers.  It has been estimated that the generation holds financial assets of 130 trillion yen, or 10% of Japan’s total individual financial assets.

Then there are the dankai jrs., “baby boomer juniors,” a second demographic bulge that by one definition represents some 18 million consumers born from 1971 to 1980.  This group came of age during the depressed 1990s and early 2000s, and are now enjoying their lives with somewhat of a vengeance.  In general, their trust in social and business traditions has been seriously undermined by having seen their parents struggle during the poor economic times.

You have no doubt heard of the young working women of Japan who were almost single-handedly responsible for shoring up the economy during hard times.  These are the so-called “parasite singles.”  Although they work full-time, they continue to live at home with their parents – rent-free and with many of their meals provided – leaving most of their salaries free for expensive luxury-brand handbags, restaurant visits with other singles and overseas travel.  They represent 9-11 million consumers (including some males) – about 60% of single men and 80% of single women between the ages of 20 and 34.

The term fuyu-so refers to wealthy families with money and education.  In the past, some 90% of the Japanese population defined itself as middle class, but that figure has declined with increased segmentation.  Fuyu-so households encompass those that have 10 million yen to 10 billion yen (or more) in savings.  It has been estimated that this could represent from 1-3 million households at the high end – but could be as high as 10-11 million households – with the remaining 37-38 million households falling into the “mass retail” market by definition.

There are other segments as well, including six-pocket angels (kids with parents and both sets of grandparents), DINKS/NOKS (double income no kids/no kids), freeters (part-time job-hoppers) and make-inu (“loser dogs,” single career women over 30), as well as Japan’s burgeoning “silvers” (elderly) market, all of which will be addressed in the coming months.

So what does greater segmentation mean for companies wishing to improve their success rates with Japanese consumers?

Clearly, the opportunities for marketing products and services in Japan are better than ever, but these new differences must be taken into account when developing effective marketing strategies.  For most products and services, a one-size-fits-all approach is no longer viable.  Companies need to view these distinct groups in terms of customer expectations as well as communication and messaging.

Debbie Howard is president of Japan Market Resource Network and the chair of theAmerican Chamber of Commerce in Japan.

(This article first appeared in the June 4, 2007 issue of The Nikkei Weekly)