Yuan for Dollars, Dollars for Yuan: Investment Between the USA and China

Domestically, Nanjing is the proud home to a dozen Top 500 Chinese Private Companies, including Suning Holdings Group, which ranked No. 3 in 2015. Most of these local giants have made or are planning outbound investment in foreign countries. For example, Fullshare Group launched an investment portfolio of real estate, hotels and resorts, theatres, and eco-farms in Australia in 2008. A more recent showcase would be Sanpower Group’s acquisition of British retailer House of Fraser in 2014. These companies’ large cash reserves, along with the willingness to invest, have contributed to the city’s strong economic performance that is outpacing that of the national average. Last year, the local GDP of Nanjing amounted to over RMB 1 trillion, up by 9.2% over 2o14, and compared to the national GDP growth of 6.9%. Furthermore, the city’s general public budget revenue totaled RMB 100 billion with a year-on-year increase of 12.9%.
While large domestic companies are taking strides forward in outbound investment, China’s SMEs may also have interest but are unfamiliar with the channels and resources. And though the local government of Nanjing would love to help, support is limited beyond the border. In China, foreign investors are usually supported by a designated team from local industrial parks or development zones who help guide investors through site selection, business registration, and prepare for daily operations. Similar support services for Chinese investors in western countries would go a long way in attracting Chinese investment. Yet a major shortfall is general awareness, as noted by one Chinese investor who said, “Unfortunately, many Chinese are clear about the immigration process, but are not familiar with the [investment process].” Clearly, there is great need for more information about available investment channels and vehicles.
One such tool that is increasingly positioned for attracting Chinese investment to the US is known as EB-5. According to a NY Times article, EB-5 works “Through a federal visa program where a foreigner who invests $500,000 — and in some instances, $1 million — in a project that will create at least 10 jobs can apply for a green card. It generally takes from 22 to 26 months to obtain legal residency through the program, as opposed to several years for other visa programs.”
Notwithstanding the attractiveness of a green card, there are other aspects of the program to consider. Importantly, potential investors should understand the degree to which the US government will scrutinize their verification of funds, says Otis Moore, Principal of Westside Investment Partners. When meeting with potential investors, Moore is quick to point out that, “The USCIS typically looks to the past seven years to verify that appropriate taxes have been paid, that salaries are able to support the level of investment, and prior real estate and other transactions can be documented properly.” That’s why Westside Investment Partners prepares expert counsel with qualified immigration attorneys as part of the process, helping ensure their approval rate percentage is in the high-90s.
Most EB-5 investment into the US takes place in the real estate market, so it is fitting that Colorado is becoming a more significant player in this regard, driven by foreign investment into the development of a number of world-class assets in the Denver area. This has helped to “put Denver on the map” internationally, and applies healthy competitive pressure to traditional EB-5 destinations like New York and San Francisco. Recognizing this, Moore points to one local opportunity saying that, “In the Colorado market, nearly all of the resort areas qualify as rural census tracts, which would allow Colorado to spur new development through EB-5 investment in these areas with a rural designation while still satisfying the original intent of the program.”
Combined with the expert guidance of local companies like Westside Investment Partners, along with the support from local government organizations, opportunities like these could lead Colorado to become a top destination for Chinese investment.