How China's wealthy transfer their assets abroad
Staff Reporter 2012-09-25 15:40
Visitors to a immigration and real estate exhibition in Beijing. (Photo/Xinhua)
Growing numbers of Chinese entrepreneurs have sent their families abroad, both to provide their children with an expensive education and to safeguard the value of their assets, while they themselves remain in China to run their business.
Their critics accuse them of using their enterprises as collateral to obtain loans for immigration through investment means or to transfer their assets abroad before announcing bankruptcy and fleeing the country. The Economist reported recently that over 16% of China's wealthy have emigrated abroad and 44% are in the process of doing so.
Many immigration brokers report that most of the emigrating Chinese businesspeople are ages 35-45, possess assets between 10-40 million yuan (US$1.6 million-$6.3 million), and emigrate mainly for family considerations.
Researchers believe that the emergence of the trend has not only damaged the country's economy but also lends greater weight to claims of social problems and financial disorder in China.
Concerns for the security of their fortune and for themselves personally are direct causes of the trend. An immigration broker points out that some who emigrate via investment in foreign countries have made their fortunes through complicated means, which may include grey-area income via non-business activities or inherited assets in which civil disputes are involved. The legal transfer of these controversial assets via emigration can help solve their problem.
Other major reasons include the education of their children, a desire to protect the security of their assets and making preparations for retirement. A survey shows that these three reasons are cited in the cases of 58%, 43%, and 32%, respectively, of wealthy individuals who move abroad.
Tian Yinghua, an emigration lawyer in Shanghai, says the United States is the first choice for Chinese nationals seeking to move abroad, due to its looser qualification procedures for immigration. In 2010, the US issued 70,000 green cards to Chinese nationals, including many Chinese businesspeople who still have business interests back home to attend to.
An insider notes that entrepreneurs who stay in China to take care of their business by themselves plan to leave and join their families overseas if the country's economy tumbles. In that case, how to transfer their assets abroad becomes a major problem. Many veteran immigration consultants note the primary method is the transfer of assets via offshore financial centers, such as the Cayman Islands.
A would-be emigrant can set up a domestic company and spend several thousand yuan to establish an offshore account in the Cayman Islands. The account holder can then remit US$500,000 from their domestic company to the offshore company before transferring it to the US.
