By Winnie Ng
While fancy brochures and videos are important, seasoned agents are looking for much more than these. Even projects that show a high chance of success, with sufficient job count and collateral, are not guarantees that they will gain traction in the China market. The secret sauce to success in the Chinese market includes a few important but less obvious elements.
COMMITMENT TO EB-5
EB-5 is a long-term investment project for all parties: regional centers, projects, agents and investors. Rumors of an increasing visa backlog has caused fear and insecurity among agents and investors. Agents and investors want to know that the regional center and developer principals are committed to helping them obtain their permanent green cards no matter how long the process takes.
Just as investors are prepared to commit their hard-earned money for an indefinite period of time, project principals need to fully dedicate themselves to do whatever it takes to help investors throughout their EB-5 process until they achieve their end goal.
Recently, there has been an increasing number of reported cases where project principals engaged in activities that are harmful to investors’ EB-5 process. Some project principals have defrauded investors’ money, others decide not to use investors’ money anymore, and still others decide not to change their business plans. As such, some regional centers decide to stop sponsoring these projects, forcing investors to withdraw their I-526 petitions and refile with another project. In fraud cases, some investors would pursue legal action.
These cases may cause agents and investors to question: Do the project principals know the consequences of their actions?
Each I-526 petition does not just represent a sum of money – it represents an individual and his or her family’s dream to immigrate to the United States. It is their future. When an investor decides to invest in an EB-5 project, they are entrusting their future in that project’s hands. Project principals must take this responsibility seriously. Every decision they make must take the investors’ best interests into consideration.
Under the existing EB-5 law, when investors withdraw and refile their I-526 petitions, they lose their priority dates and have to start at the end of the increasingly long visa line again. They will have to wait much longer before they can immigrate to the United States. Children may face age out issues. Many investors in these situations decide not to refile their petitions and give up their dreams to immigrate to the United States.
Thus, no matter what happens during the investors’ EB-5 process, be it more attractive financing or difficulties in construction, project principals must do their best to follow through with the plans submitted to USCIS. Or else, they are ruining the futures and dreams of innocent investors.
For regional centers that do not own or control the projects they sponsor, they cannot prevent project owners from engaging in behaviors that put investors’ green cards in jeopardy. In these cases, seasoned agents would not only look at the regional center principals to ensure that they are experienced and committed to investors’ success, but they would also evaluate the project principals to ensure that they also have a good understanding of EB-5 and are committed to helping investors achieve their green cards. If agents cannot feel this type of dedication and commitment from the project principals, then these projects will have a hard time gaining traction in the Chinese market.
UNDERSTANDING THE CHINESE CULTURE
There is a big difference between the American and Chinese culture. Most Americans tend to trust a person until they find out that this person cannot be trusted. The Chinese culture is the opposite. Most Chinese do not trust a person until this person have proven over time that he or she can be trusted. Thus, project developers need to understand that it takes time to earn agents’ trust.
Project principals cannot expect one single trip to China will yield hundreds of investors. Some agents have told me that they take months to get to know the project representatives before they decide to market their project. Thus, project principals need to prepare adequate time and resources to build relationships with agents.
Respect is another key element in the Chinese culture. While project representatives may be proud of their wonderful project, they need to be careful not to come off as arrogant and disrespectful. Even if you have a wonderful project, if you are arrogant and disrespectful, agents will not want to help you market your project.
HONESTY AND INTEGRITY
There is a saying in the Chinese culture, “paper cannot cover fire.” The truth will come out sooner or later. Like fire, news spread very quickly, especially with WeChat. Project principals need to know that lying to cover the truth will damage their reputation and lose any credibility that they may have earned in the industry.
Agents understand that there is no perfect project. Every project has strengths and weaknesses. Many weaknesses are acceptable to agents. However, if developers are not truthful and agents find out later by another source, agents will not trust you or want to work with you again in the future.
While there are many earnest project principals with great projects, the few bad apples in the industry have made agents and investors apprehensive about EB-5. Many agents are afraid to market EB-5 projects and are recommending investors to immigrate to other countries. Investors themselves are looking at other alternatives.
EB-5 investments are a long-term commitment. Investors are entrusting their money in a stranger’s hands. If they feel that this industry is full of fraudulent projects, the current demand will die. There will be no more market for EB-5.
We need to work together as an industry to build a reputation of honesty and integrity. If we want to thrive in the Chinese market as a whole, we cannot tolerate any degree of fraud.
EB-5 is a wonderful vehicle for investors to come to the United States and for the United States to grow and develop economically. With the right level of commitment, understanding of the Chinese culture, and integrity, project developers can thrive in the Chinese market while helping investors and the U.S. economy.