U.S. immigration-eyed investment risky

BEIJING, Dec. 5 (Xinhua) -- As more Chinese new rich bet their future on emigrating to the United States, experts warn outbound investors of the pros and cons before deciding where to put their money.

U.S. official figures lately revealed to Xinhua indicates a growing number of Chinese were trying their luck at attaining U.S. permanent residency through investing a minimum of 500,000 U.S. dollars in starting or taking over businesses in the United States.

Xiao Lian, a researcher with the Chinese Academy of Social Sciences (CASS) Institute of American Studies, said in an interview with Xinhua, "Some Chinese might calculate better property protection, living environment and education for kids through immigration to the U.S."

In fiscal year 2011 ending Sept. 30, the U.S. Citizenship and Immigration Services (USCIS) received 2,969 immigration petitions from Chinese entrepreneurs eyeing residency through the Immigrant Investor Program, known in short as "EB-5," USCIS officer Bill Wright responded to a Xinhua email inquiry.

The 2011 figure is double of that in 2010, and a ten-fold increase from 2007, the USCIS data showed. The USCIS approved, also in fiscal year 2011, 934 petitions from Chinese entrepreneurs, a six-fold increase from 2007.

With an investment of 500,000 or more U.S. dollars, successful EB-5 visa applicants, passing strict background checks for verifying wealth sources, may first gain conditional Green Cards, then see the conditions removed in two years before they choose to become U.S. citizens in five years. Spouses and children, accompanying Green Card holders, are authorized to work or attend schools in the U.S.

Quite a few Chinese, particularly wealthy people, are able to meet the 500,000 dollars minimum investment criterion and likely get the status of permanent residents and even U.S. citizens, said Xiao, who nevertheless warns there are looming risks of this approach.

The USCIS requires that all EB-5 visa holders should invest in commercial enterprises, and create or keep at least 10 full-time jobs for qualified U.S. workers within two years since their admission to the United States as Conditional Permanent Residents.

The comparatively higher costs of American labor force -- one major reason why American businessmen have transferred manufacturing bases overseas, to such as China and Vietnam -- likely drive up operating costs and impose a considerable financial burden on foreign investors, Xiao said.

Possible labor disputes would also pose great challenges to Chinese investors, whose English non-proficiency and unfamiliarity with U.S. laws would substantially limit their capability for reaching fair settlements.

In addition, a loss-making enterprise is like a huge hole that investors can never fill with money, and once it fails to survive for two years, investors' EB-5 visas will be canceled, leaving all previous efforts in vain, Xiao said.

Li Yongpeng, a senior immigration consultant in northern Shanxi Province which is abundant with super riches for coal mining, said, "The biggest risk is to pick a troubled business and fail to turn it around."

Enterprises qualifying the minimum investment would be designated by the USCIS to locations featuring high unemployment rates and sluggish economy, and to a rough range from real estate to hotel operation, auto parts businesses to clean energy projects, Li said.

"If investors pick a low-risk enterprise," the consultant, however, said, "the EB-5 employment creation requirement is not much of a challenge."

Li advised potential investors to turn to sectors that are supported by governments and locations where any state government has high credibility.

"There are enterprises that promise stable and long-term economic returns," he said.

A number of EB-5 visa applicants are often unaware of potential losses. Such an ignorance partly results from the fact that many depend on intermediary agencies to handle their immigration cases.

Some consulting agencies have taken advantage of investors' lack of knowledge regarding the EB-5 program and deliberately understated the risks of certain investment projects, Charles Qi, chairman of the Beijing Entry & Exit Service Association, said.

"Potential investors need a complete picture of what they are getting in to," Qi said.

Li Guoxue, a researcher with the CASS Institute of World Economics and Politics, said, U.S. immigration of rich Chinese people might weaken the Chinese economy and hurt the domestic job market.

Such capital, if invested domestically, especially in enterprises in dire need of investment, would create more jobs and earn investors fat returns as well, Li said. Enditem

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