A recent article in the Wall Street Journal/China (
www.wsj.com
) dated November 14, 2012 headlines, ”Why Rich Chinese Are Investing Overseas (It’s Not What You Think)”. So what do I think? What do you think? The seemingly obvious answers might be, the rich Chinese want to make a profit just like other investors world-wide. Or perhaps they invest with an eye towards obtaining an EB5 visa. Or, and I have heard this from Chinese investors in the past, they have “very much money and they don’t know what best to do with it.” So what does the Wall Street Journal think? Here are some thoughts on the subject as stated in their article:
“According to a joint report by consulting firm McKinsey & Company and Minsheng Banking Corp. on China’s private banking sector, the number of wealthy Chinese is rising quickly and they’re looking to shift more of their investments overseas.
Reuters Vancouver has long been a popular destination for rich Chinese looking to emigrate, but the current round of overseas investors from the world’s second-largest economy may have other goals in mind. The number of China’s high net worth individuals – defined as someone with more than $1 million to invest – increased 15% annually from 2010 to 2012, according to the report’s estimate. It forecasts their numbers to rise 19% annually between now and 2015, to 1.9 million people from 875,000 in 2010.
According to the report, which was based on interviews with 700 high net-worth individuals in 29 Chinese cities, roughly 60% of China’s wealthy have assets overseas. This group keeps only about 10% of their investment funds offshore, the survey found, but more than half said they hoped to increase that percentage over the next five years.
Most surprising, though, were the reasons China’s wealthy choose to invest overseas, which were not unlike their counterparts in the rest of the world. While governments around the globe are raffling off residency perks to attract Chinese money, immigration was cited as a reason for investing overseas by only 23% of respondents. And children’s education was a reason for only 16%..
Now that China’s economy is slowing – and the yuan is in a funk – it makes more sense for China’s rich to hedge their bets by keeping more funds overseas. Moreover, China’s elite are nervous about what the leadership handover will mean for their political fortunes, and by extension their wealth.”
If your company, your city, your state decides to target investors in China
they are out there.
A well informed, targeted plan to find them has a reasonable expectation of success. The trick is to present your project in the best possible light to a Chinese investor or investors that you have on your short list of most desirable prospects. To create a short list that is most likely to produce results for you,
put in the time to do your homework.
There are many many sources online you can use to identify likely candidates to submit your project to. Once you have done your homework, then go the extra kilometer and consult with someone who has “been there and done that” already. Those folks are out there if you take the time to research them. And finally,
get good legal counsel before you enter into any kind of agreement!
It might cost you a few dollars, euros, yen, pounds, whatever, but
it will be worth it
in the end!
Hawkeye in China
– LEX Smith