As Alaska diversifies its economy away from oil and gas, numerous investment opportunities are arising in tourism and in the food and beverage industries, to name just two. And China remains Alaska’s natural (and biggest) trading partner. With a middle class made up of a staggering 300 million people, China represents a vast untapped market for Alaskan businesses, while the northern U.S. state, in turn, holds great potential for investors with the acumen to get in early. Bernie Karl, CEO of Chena Hot Springs and an active promoter of China-Alaska ties, explains why now is the time to take this successful relationship to the next level
What is it about Chena Hot Springs that makes it special?
Chena Hot Springs has been in continuous business since 1905. We bought it from the government 20 years ago and it is now a 2,000-acre property that’s all about sustainability. Like we say, we sell nature and we still get to keep it. We also call it “the world’s largest oxygen bar.” We’re open 365 days a year and there’s something for everyone here, from a small child to a 90-year-old person. We have everything from dog sledding to the hot springs to aviation. We are one of the best places on the planet to see the Aurora Borealis from August to April. Nightly Aurora Viewing Tours using snow coaches whisk visitors to the top of the mountain to see the Aurora in all its splendor. Since we are 30 miles off the grid, our geothermal technology provides all of the resort’s buildings with heat and electricity year round even during the coldest temperatures. Our one-of-a-kind Aurora Ice Museum, stays frozen year round (25F degrees) by using our Chena Chiller technology and it attracts visitors from all over the world who sip appletinis at the Aurora Ice Bar and enjoy the view. The Bible says in Genesis that on the third day there was life-giving water flowing from the Earth, and they were surely talking about Chena Hot Springs. This has got to be one of the places on anyone’s bucket list.
You have a long-term relationship with China. How important is that in your line of business?
My first time in China was in 1987, under Alaska Gov. Steve Cowper. That is when we first established ties. And with regard to the Chinese people, it is my opinion that a relationship is much more important than a contract, so I’m a firm believer that relationships are paramount. And we not only cherish our relationships, we do something with them, too. In 2006, we entered into an agreement with Kaishan, the largest air compressor manufacturer in China and the second largest in the world. We have one of their screw expansion power generation devices working up here at Chena – we are talking about the first synchronous screw expander in the world, serial number 1 – making electricity for our resort as we speak. Cao Kejian, the chairman of Kaishan, is one of the most successful businessmen in China, and he is more than a business acquaintance to me – we are friends. I’ve been to his home for dinner, he’s been to mine, and he has even visited my mother in Illinois and the family farm. That says something; it says everything.
Why is the Chinese market so relevant to Alaska businesses?
The Chinese have money to invest, and their middle class is 300 million people: you’d have to be insane not to understand the value of Chinese culture, Chinese business acumen and the benefits of doing business with them. They’re the second most powerful nation in the world and soon to be the equal of America. This business should be cherished: they have lots of extra trade dollars, they are very smart business people, they are hard workers, and I can’t emphasize enough that their middle class is 300 million people. We need very little of that market to make Alaska a very successful place. Right now China is Alaska’s main trade partner, we do more business with them than with anyone else, including the United States. That should give you a clue to where we’re headed.
What sectors do you feel have particular potential?
Tourism is near and dear to my heart. My goal is to get a charter flight from China coming in once a week, 52 times a year, and I believe that we will get it done. A direct flight from China to Alaska is just a walk in the park; the Chinese have the aircraft for it. We want them to take back king crab and salmon from their trip, and we want them to be happy and to share their Alaska experience with 100 of their closest friends. But to do that, first, we need to work on securing visitor visas. Right now it takes three to six months to get a visa, but with the governor’s guidance, and with help from groups like Explore Fairbanks, a tourism marketing and management organization, we are going to make it a reality. We are a team working together and focused on getting a weekly charter coming into Alaska, and it’s 99 percent there already.
Alaska authorities and business leaders went on a trade mission to China in May. What was the outcome?
I thought it was a very well organized mission, with a cross-section of 24 people from the private sector for a total of 50 people. We covered aviation, ocean shipping, fish suppliers, beer makers, baby food makers and more. I thought the governor’s office did a tremendous job of ensuring that we met all the right people, and everything worked right on schedule. I also believe that our Chinese hosts loved our enthusiasm and what we had to offer. I myself was on a mission to get things done, and I signed three contracts with a handshake. All I need is their word that they’re going to do something. We’re talking about millions of dollars for Alaska, all tied up with a handshake. After the mission, I spent a week in Washington D.C. to work towards a travel visa for Alaska. I believe this will happen soon. Being a small state, Alaskans know their representatives so we have more influence. This is about what’s good for Alaska and good for China, so it’s a win-win situation for everyone.
What sectors would you recommend to potential Chinese investors?
We took three different oil prospects in the North Slope on the mission, representing $1 billion to $4 billion projects: We also gave them opportunities in tourism worth anywhere from $50 million to $1 billion, and unlimited opportunities in projects like a new natural gas pipeline. We need beds for 12,000 workers on the pipeline, I discussed it with the largest manufacturers and we will add 51 percent value to the prototype. We will not pay tariffs for this under a free trade zone that will be put in. They are going to finance most of the pipeline by buying gas futures, and they want to provide most of the infrastructure. You name the sector, and Alaska has an opportunity for the Chinese. I went there with projects ready to go, and they know they have a partner whom they can trust and who is going to work hard for them. There are many projects to choose from. Many Chinese investors are coming in September to Chena Hot Springs, and I am organizing meetings for them with the right people.
What would be your main message to the Chinese business community?
The main thing I want to tell the Chinese is that we are open for business and that when you care you share, and when you share you care. And we are ready to share because we do care.