Migration program: Is it trick or treat?
Updated: 2013-03-21 16:30
By Lv Chang (China Daily)
Wealthy Chinese are the targets of this US real-estate company at a housing fair held last September in Beijing. [Photo / China Daily]
There may be more to some investment programs for migrants than meets the eye
The wealthy in China are increasingly turning to immigration through seemingly cost-effective investment. But not all immigrant projects are what they seem to be, and some may even be scams set up by domestic immigration agencies and foreign investment organizations, experts warn.
Qi Lixin, chairman of the Beijing Entry & Exit Service Association, says the number of Chinese immigrant investors has doubled during past years, and investors need to be cautious when they are choosing immigration programs.
"There is a hidden problem in immigration programs," he says. "Though many immigration agents vaunt their successes and claim that through them the risks of failure are minimal, if they do fail, how can Chinese applicants be sure they will get their money back?"
Last month the US Securities and Exchange Commission alleged in a complaint filed in a district court in Chicago that Anshoo Sethi, 29, fraudulently sold more than $145 million in securities and collected $11 million in administrative fees from more than 250 investors, primarily from China. The investors believed "their investments were simultaneously enhancing their prospects for US citizenship", the commission said in a news release.
Qi says that in most contracts signed by investors and immigration agencies there is no specific provision to prevent investors from being exposed to heavy losses.
"In a case like this one, we do not know who will take the responsibility for the contracts. Apart from that, there is no federal law in the US to protect Chinese immigration investors."
Though risks exist, the US EB-5 Immigrant Investor Pilot Program, which provides a method of obtaining a green card for foreign nationals who invest at least $500,000 in projects creating or preserving jobs for Americans, is still highly popular among Chinese.
Of the 7,641 EB-5 visas issued in the year to last September, 80 percent were granted in China, the US Citizenship and Immigration Services says.
"The US investment immigration is a program specially designed for China's richest," Xiao Lian, a researcher with the US Economy Research Center, part of the Chinese Academy of Social Sciences, was quoted as saying in an interview with China Youth Daily.
"It seems very alluring, but that free lunch is more likely a trap if Chinese investors don't choose wisely."
Investors from China may find themselves and their money locked into investment projects and face economic, social, legal and security risks, he says.
"The immigrant investor program requires the applicants to invest in the US and hire local residents at the same time, but even Americans themselves prefer to invest in China and Vietnam. It is not easy for Chinese to make a fortune through such investments."
Xiao says high labor costs make running a business in the US onerous, a pressure that migrants who turn their hand to running a business will feel. In particular, the strong power of organizations such as unions poses big challenges to immigrant operations, he says. In addition, migrants whose English skills are limited and who are unfamiliar with the complex web of local, state and federal laws will leave themselves open to legal action.
The US investment immigration policy stipulates that the business set up must "create or preserve 10 full-time jobs for qualifying US workers within two years", or under certain circumstances within "a reasonable time" after the two years, of the investor's admission to the US as a conditional permanent resident.
However, whether it be in the US or elsewhere, the challenges that Chinese investors face do not vanish once a visa is granted.
Yang Xin, 35, who immigrated with her 7-year-old daughter to Britain in 2011, says she is sometimes overcome by loneliness without her husband, who spends most of his time in Beijing managing a trade company.
"If it was not for my child's future education I would not be living here," says Yang, who has become a housewife after quitting her job as a public relations manager.
"I keep myself busy taking care of our child and taking English classes. If it weren't for that I would go crazy without any friends or relatives here."