Have money, will migrate
Updated: 2013-03-15 07:22
By Lv Chang and Zhang Chunyan (China Daily)
More wealthy Chinese are looking for a better life in Western countries through investment immigration. Provided to China Daily
China's rich increasingly leaving the country on investment immigration programs for various reasons
At 43, Xue Jun has what many Chinese dream of - a luxury downtown apartment, a three-story villa in the suburbs and a new black Porsche Cayenne.
But Xue, owner of an auction company and a consultancy in Jilin province, wants more - a foreign passport.
Unlike earlier waves of emigrants, most of whom were laborers or miners, Xue, who has assets of at least $2 million (1.54 million euros), is not looking for economic opportunities or a free pass to travel around.
He is part of a new wave of China's wealthy elite who are looking for a better quality of life through investment immigration.
However, just a year ago, Xue was content with his life in China and had never thought of living in another country. Things changed when his 17-year-old daughter was admitted to the University of Birmingham in the United Kingdom and he went to visit.
"Things are different in the UK. There is not so much pressure, kids are not necessarily required to focus on grades, and you don't have to worry about the food you eat," says Xue, who has been talking with an immigration agency after the trip and plans to invest at least one million pounds ($1.5 million; 1.15 million euros) in a UK bank account, which will give him permanent residency after five years.
With statistics showing that more of China's rich are seeking to emigrate, the trend has increasingly came into the spotlight.
A survey by China Merchants Bank and consulting company Bain & Co in 2011 found that 60 percent of Chinese with personal assets of more than 10 million yuan ($1.6 million; 1.23 million euros) are either considering investment migration or already taking steps.
Another report, by the Center for China and Globalization and the Beijing Institute of Technology, on Chinese international migration in 2012 shows similar results. The US was the top destination, followed Canada, Australia, New Zealand and western Europe.
According to the report, about 50 percent of investment immigration projects worth $500,000 or more in the US are being pitched by agencies in China to mostly private business owners, self-employed groups and senior corporate managers aged 35 to 55.
Hundreds of consulting firms have sprung up in recent years with their websites showing photos of blue skies, lavish lifestyles and landmarks such as Big Ben, the Statue of Liberty and the Sydney Opera House.
Armand Arton, president and CEO of Arton Capital, a global financial advisory firm, says he has seen increasing numbers of Chinese taking steps to migrate to the UK, even though the country's investor program is the most expensive in Europe and requires applicants to stay there for at least six months of each year.
"China represents more than 60 percent of all applicants for investor applications," Arton says. "They are highly adaptable business people hungry for change and eager to pursue their dreams."
He says the demand for such programs is proof of a growing new order of global citizens, who can choose where to live, work and invest for future generations.
"Better education for their kids, insurance policy in case of political or financial turmoil, safer investment, access to the best medical systems around the world, ability to travel visa-free, are all true elements of what they want today," he says.
Julia Zhu, 42, an immigration consultant for a UK based-agency, who has lived in Edinburgh for eight years, says children's education is what drives most of her clients to migrate.
"People have other priorities in the UK, like they enjoy going on holidays two or three times a year," says Zhu, who goes back to China to speak with potential clients every year. "In China, parents give up holidays for children's education."
At the same time, investment immigration policies in countries have become more favorable to attract Chinese investors.
That many of the foreign programs require a substantial investment by applicants, either in real estate or businesses, is seen as a sign that the US and Europe need the injection of capital in enduring instability caused by the global economic crisis.
And to oblige, China's rich have recently been on shopping sprees in both regions, snapping up homes, considered the first step to gaining a passport.
Cyprus introduced a new immigration policy at the end of 2011, allowing a person who buys a house in Cyprus of a certain value to apply immediately for a residence permit.
The recently renewed US program, EB-5, which can grant up to 10,000 visas annually, requires $1 million in businesses that create at least 10 jobs in the US or an investment of $500,000 in a rural or high-unemployment areas.
Yvonne Liu, 22, who wants to stay in the US after her college studies, fits the profile. Her mother, Lily Zhang, a 46-year-old Chinese businesswoman, can make that happen.
Three years ago, Zhang flew to the US to look for investment opportunities. Her plan was to move some of her international trade business from Xiamen in China's southern Fujian province to southern California.
"It will create at least 700 jobs for locals," Zhang says. With California's unemployment rate above 12 percent, she found it an ideal time to invest in an American dream for her daughter.
More than a third of the $70 million investment can be raised through a quota of 50 EB-5 investor visas for other Chinese who can pay a minimum of $500,000 for permanent residence.
Last year, the investment immigration of Zhang Lan, head of a famous restaurant chain, South Beauty, created controversy in China.
Some unlucky immigration investors are finding out that there is no such thing as a free lunch. Provided to China Daily
Many accused Zhang, also a former member of the Beijing Chaoyang District Committee of the Chinese People's Political Consultative Conference, of being unpatriotic. But Zhang was quoted on the state television network as saying it had nothing to do with the patriotism. It was simply easier for the company to go public overseas if she held foreign citizenship, she claimed.
Her sentiments are common among China's wealthy elite. Many cited environmental and social concerns, such as pollution, corruption and distrust among people, as well as a rigid investment environment, for motivating this trend.
"Public opinions are always associated with confidence about China's future or the rich escaping from something illegal they have done," wrote Huang Song, secretary-general of the Finance Industry and Development Research Center of Peking University, in a recent commentary for Caixin.com, the website of one of the largest media groups in China.
"But there is another very important reason which is neglected - that is the government's restriction and barrier to overseas financing and investment.
"China's financial system essentially only supports state-owned enterprises and large firms. For private companies and small and medium-sized enterprises, it is difficult to get loans, and even more difficult to go public or issue bonds."
Another study, conducted a few years ago, revealed that 80 percent of China's wealth is held by 20 percent of the population.
"The private economy contributes more than 60 percent of China's GDP and it absorbs a majority of employees," says Wang Huiyao, director of the Center for China and Globalization. "So if private business owners emigrate with their capital, it would mean less investment in the domestic market, and fewer jobs would be created."
Investment immigration also hits less developed areas harder than big cities because economies in those areas are mainly bolstered by the private sector, he says.
The Economic Observer, a weekly Chinese newspaper, finds it ironic that after three decades of rising prosperity, those who have benefited most from the country's economic growth are leaving, taking money and skills with them.
"It is not reasonable, nor in the national interest of any country, that individuals who have benefited from the favorable overall conditions to create wealth in a country should then take the fruits of these benefits abroad rather than aiding the country in which that wealth was created," says John Ross, a senior fellow at Chongyang Institute for Financial Studies of Renmin University of China and former director of economic and business policy for the ex-mayor of London.
In an attempt to prevent a "wealth drain", he suggests following the US's example.
He says the US introduced an "exit tax" in June 2008 for American citizens with a net worth of more than $2 million.
"China is a developing country, without the same accumulated stock of wealth as the US, and therefore withdrawals of wealth are more damaging," Ross says.
CCG director Wang says the solution is to develop more sustained economic development and improve the quality of life.
"China is facing the dual challenge of modernization and globalization," Wang says. "It is impossible in a short time to eliminate the various problems and contradictions in the economic and social development.
"Besides, it is human nature to pursue a more stable and comfortable life. Only by making the country more attractive to its talent can it slow down the trend."
But Oliver Barron, head of NSBO's Beijing branch, a UK-based investment bank with offices in Beijing, says: "Gone are the days when the main focus in China is domestic wealth creation.
"Chinese investors have matured and are now more focused on wealth preservation, which is a natural step in China's evolution and one which should be embraced."
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(China Daily 03/15/2013 page10)