‘It’s a sales job’

By WILLIAM H. STEWART
Economist

First of two parts

There is an old adage that states, “If you want to make money you have to spend money.” This is certainly true if one hopes to expose the CNMI to potential investors. It’s the difference between having a passive program that requires little “creative thinking” or dedicated action; a program that requires little motivation and a lot of wishful thinking; one that waits for investors to come knocking on the door.

The Commonwealth doesn’t need this type of lackluster effort. Rather it needs an aggressive, dynamic, well thought-out and adequately financed, consistent “plan of action” in place and functioning over the long haul.

The persons involved in carrying out such a program must be highly motivated and believe totally in what they are doing. They must be informed on all aspects of the islands’ geography, laws, political affiliation with the United States and many other factors and be adept at public speaking and be ready to answer a myriad of questions from investors and their technical staff. Knowledge of the area’s fascinating history won’t hurt—a person with the drive, knowledge and motivation such as David M. Sablan. If anyone knows how to do it, he does—make no mistake about that.

The tools needed for an aggressive investment promotion are basic and standard and, regrettably, unavoidably expensive. Ideally, in a perfect world where there’s lots of money a program might involve the following (but in the CNMI’s case, with its limited resources, perhaps only a few of the suggestions listed below can be implemented. Others might have to wait.):

* Promotional video presentation (about 20 minutes);

* 35 mm promotional slide presentation;

* Internet investment promotion web page;

* Factual descriptive color brochure (as handout to leave after meeting with potential investors;

* Budget for promotional advertising in “selected” periodicals (Asian Wall Street Journal, Far East Review and other business periodicals and perhaps several “selected” U.S. regional newspapers). Select the “rifle” approach in developing the advertising strategy and direct the message to a “targeted” audience as opposed to the “shotgun,” hit-or-miss scattered message. Think of it as being more effective than the high cost of such alternative Rose Bowl Parade advertising where the possibility exists for achieving more positive results for the money;

* Sufficient funds to host luncheons, receptions, etc., for potential investors;

* Travel budget for personal promotional sales calls and follow-ups on investment missions;

* Functioning Free Trade Zone;

* Specific “suggested” investment opportunities documented with estimated pro-forma investment projects for private implementation including “business specific” marketing analyses (discussed in part 2);

* A single one-stop office headed by a sort of “investment promotion czar,” a “development ambassador,” who answers only to the governor. A person with authority to “trump” any department head that fails to cooperate with the overall development program;

* If it hasn’t already been done, consider the five-year-old suggestion to post the following large sign in the airport baggage claim area: “For information on investing in the islands, contact: “XXX” – (or whoever). This is bound to be of interest to one in, say, X number of arrivals. What’s to lose?;

* Governor to possess emergency economic authority to waive certain non-federal regulations (particularly as related to anti-business environmental impact stumbling blocks where reasonable mitigation offers have been rejected by the bureaucracy without suitable justification or consideration of desirable “trade-off” benefits to the economy);

* Create a volunteer group representing the private sector to serve as advisers in suggesting needed legislation or modifications in existing regulations and to counsel visiting investors. Consider their advice during the planning phase of promotional activities.

I have witnessed trade and investment missions where many of the participants (not all) didn’t have the slightest idea of the type of business they wanted to encourage—no clue. They didn’t have a pre-investment feasibility study to present to a potential investor for examination and didn’t even have a map or aerial photograph of the property they hoped to lease. After the wining and dining social sessions and their return to the island, I expect many soon thereafter wondered why their effort wasn’t successful. The reason it wasn’t successful for some is because they were unprepared to “sell” their idea or concept. They hadn’t even given their project a “paper personality” to leave behind for further study. They never realized that the entire effort is a sales job. First, selling the idea of a geographic location from which to conduct a business (example—proximity to Asia). A sales effort as to the reasons for investing in the islands (incentives) and an illustration of the profit potential (example—financial and marking information).

Don’t expect the commercial attaché in the American embassies in the countries visited by investment missions to provide much follow-up assistance. They might assist with initial introductions and attend the receptions but that’s about it and they certainly won’t make any follow-up contacts after the investment team departs. Believe me, they have other “fish to fry.”

I’m reminded of an analogy about the farmer trying to get a stubborn mule to respond to his command to move off the road. He picked up a large board and hit the mule over the head. A bystander witnessed the blow and asked, “Why did you hit the animal?” The man replied, “ I don’t want to hurt him—I just want to get his attention.” One will certainly not be addressing mules—but will be addressing the need to get attention and, in the field of investment promotion, there are accepted ways of accomplishing this goal and some of the more essential tools needed are described in part 2.

In the initial phase of project review, investors need facts and they expect the people in charge to provide them, to know what they are talking about. BS won’t cut it. Nor will trite commonplace terms such as “pleasant climate,” “adequate water,” (as often cited in the case of Rota). These should be avoided as they don’t convey a single fact, such as: Is the water hard or soft, the rate of sustained flow, required treatment (if necessary), etc. Facts, facts and more facts—that’s what it’s all about.

Another thing to keep in mind is that investors are impatient. They want answers and they want them quick—that’s where the phrase “time is money” takes on real meaning. A “mañana attitude” won’t “cut the mustard” as “they” say. It will, however, often send the investor elsewhere the next day. (More to follow—the next day.)