While many Chinese businesspeople have adopted a foreign nationality or obtained permanent residence overseas as a means of expanding trade, most choose to stay in China for reasons related to family and work, as Yu Ran reports from Shanghai.

Although he has held a permanent resident's permit for Italy for more than a decade, Yang Changyi, 50, prefers to stay with his family and run his shoe-trading company in China, rather than emigrating.

To maintain his business, supplying footwear to Italian clients, Yang flies to Italy almost every month for meetings with buyers and potential partners as he looks to expand the market for his wares.

"Having a permanent residence permit for Italy enables me to take flights abroad any time I have to deal with an emergency. That allows my businesses in both countries to operate more efficiently," said Yang, speaking at his home in the manufacturing hub of Wenzhou in Zhejiang province.

Yang applied for permanent residence in 2002 by registering a company in Italy. His wife and daughter obtained their permits two years later. "At the beginning, I applied for the permit purely because I needed it to move my business forward quickly. It has allowed me to meet increasing overseas demand during the past decade by exploiting the advantages I've gained through networking with Chinese footwear suppliers," he said.

Having contracts with hundreds of shoe manufacturers in Wenzhou, Yang is reliant on his Chinese business partners and he is determined to keep a close eye on their activities.

Over time, Yang realized that he made a wise decision more than a decade ago, one that gives him a second option in terms of where he can base himself in the years to come, should he choose to leave.

Yang said he has noticed an increasing number of people following the same path as him; obtaining permanent residence overseas, but remaining in China for family and work. When his daughter graduated from art school in Milan last year, she decided to return to China to live in Shanghai and work as a designer.

Talking about his future plans, Yang said he is unwilling to leave China permanently because he couldn't bear the loneliness. He sees his Italian permanent residence permit primarily as a back up plan.

A sense of 'betrayal'

An increasing number of wealthy Chinese businesspeople hold permanent residence permits for Western countries or have taken foreign nationality, but continue to operate highly profitable enterprises in China.

One high-profile example is Zhang Lan, chairwoman of South Beauty Group, known for her high-end restaurant chain. Last year, the revelation that she holds a foreign passport sparked a heated debate about the emigration of rich Chinese. Many people lashed out at Zhang on Internet forums, castigating her for her unpatriotic "betrayal".

"During the past two or three years, it has become a trend among wealthy entrepreneurs to obtain permanent residence permits abroad or hold foreign citizenship, but they stay in China to run their businesses," said Sun Changgang, an immigration lawyer at W&H Law Firm in Beijing.

However, as Sun noted, more than one-third of the cases he's worked on in the past three years have been related to illegal dual citizenship. Chinese people are not allowed to hold dual nationality, although there are no restrictions on them adopting a foreign nationality. However, if they do so, they are required to renounce their Chinese nationality.

But a loophole exists. The person involved is legally obliged to inform the place where they hold hukou, the Chinese residency permit, and ask to have their Chinese nationality revoked. Unsurprisingly, many wealthy entrepreneurs simply fail to inform the relevant authorities of their change of status, thus allowing them to hold two nationalities illegally and reap the benefits.

"Stricter regulations should be issued to prevent entrepreneurs who hold foreign nationality from using their now-illegal Chinese citizenship to benefit their companies," said Sun.

He added that a permanent residence permit is the preferred option for many businesspeople, as it allows them to retain their Chinese citizenship and doesn't affect their businesses in the country.

But ownership of a foreign permanent residence permit doesn't come cheap. Song Jianning, 53, general manager of the Chinese branch of a German company in Shanghai, spends at least 520,000 yuan ($83,600) a year to maintain his family's permanent residence permits for the United States.

"To keep our permits, we have to arrange three trips and fly to the US to get an inbound stamp every year," he said.

Song and his wife started planning their permit applications in 2008 via the US EB-5 visa program, which is designed to attract foreign investors to the country.

Under the provisions of the program, foreigners will be awarded a green card if they invest $500,000 or more in a business or government project that creates 10 or more jobs within two years of the initial investment.

After spending two years studying hundreds of projects and business plans, Song eventually chose to invest in a US government project in Virginia in 2010. He obtained his green card a year later.

"My current plan is to retire to the US with my wife and children in the near future," said Song, who has bought a house in Washington, which he rents out to local people.

Many extremely wealthy Chinese have taken advantage of the EB-5 visa program. Almost 6,000 Chinese obtained the visa between October 2011 and September 2012, a tenfold rise from the same period in 2007-08, according to statistics released by the US State Department in October 2012.

"The fundamental condition for maintaining a permanent residence permit is to have as much money as possible, because the expense is much higher than we had expected," said Song, who earns about 4 million yuan a year.

Every year, he has to pay general tax of $60,000, plus $21,600 in property tax. He also has to pay an accountant $2,000 to file the taxes with the US authorities.

Backup plans

Song said worsening levels of pollution and frequent food safety scares in China have made him determined to move his family out of the country sooner or later.

A 2012 survey jointly conducted by the Hurun Report and Bank of China showed that 46 percent of wealthy Chinese, whose net worth exceeded $1.6 million, were considering leaving China.

Moreover, that survey, together with a different study by China Merchants Bank Co and Bain & Co, suggests that wealthy Chinese are the most likely to emigrate. Concerns about pollution and food safety were also cited by respondents as major contributory factors in their decisions.

More-advanced, free healthcare systems, higher food safety standards and far better air quality that leads to a lower incidence of disease overseas are the main reasons prompting China's super rich to emigrate.

"The tougher competition among university applicants under the reforming Chinese education system and the difficulties graduates experience in finding jobs have forced parents to make backup plans to allow their children to study abroad," said Xie Baisan, director of the capital and financial market research center at Shanghai Fudan University.

To give their offspring a better chance of an overseas education, the wife of 39-year-old Shanghai businessman Zhao Xijun applied for a Canadian permanent residence permit by making a business investment in 2005, a year before giving birth to the couple's first son.

Zhao's second son was born in Shanghai in 2012 and has Canadian citizenship through his mother, but the family still lives in the city.

As the only member of the family still in possession of a Chinese passport, Zhao will run his clothing business from Shanghai for the next five to 10 years.

His 5-year-old son is studying at a kindergarten in a British international school in Shanghai, at an annual cost of 80,000 yuan in tuition fees.

"My sons will stay in Shanghai until they graduate from middle school. They will be sent to senior high school in Canada when they are fluent in both Chinese and English," said Zhao.

He added that he prefers to live and work in China, but that sending his children overseas to gain a better education is more important than his personal feelings.

So, according to Zhao's plan, while the children live and study together in Canada, he and his wife will stay in Shanghai to run their business, hoping to generate higher profits.

Meanwhile, Yang Changyi has never really questioned where his loyalties lie. He and his wife remain in Wenzhou because it's their "real" home, a city full of friends and relatives. "I've been living here for the past 50 years, close to my family and friends. I don't want to move out of the area and have to make new friends and get used to life in another city or country."

Contact the writer at yuran@chinadaily.com.cn

(China Daily 03/01/2013 page5)