Linda He is the woman at the helm of Wailian Overseas Consulting Group, one of the most well known migration agencies in China. She spoke with us from China about what a migration agency does, how to market an EB-5 project in China, and the agency’s due diligence process.
EB5 Investors Magazine: What is your professional background and how did you get involved in EB-5?
Linda He: I was helping my family and friends’ children pursue educational opportunities studying abroad and soon realized that there was a large demand to help Chinese citizens pursue immigration opportunities worldwide. Soon after, I started looking at different immigration programs from countries around the world. I studied the Australian program, the New Zealand program, and then the U.S. program. I quickly discovered the U.S. EB-5 program and became very interested in learning all of its requirements. At that time, almost no professional in China was specializing in U.S. EB-5 work and the program was mostly unknown to the general Chinese population.
I believed that the EB-5 program offered great promise, so we started doing advertising in local Chinese newspapers. Wailian was the first company to do big sections of advertising in the newspaper. At the time people were doing very little clips in newspapers, maybe 1/16th of a page, but we started with big advertisements, and the response from the public was overwhelming.
EB5 Investors: For people who are not familiar with migration agents, what does a migration agency do and why is it important to EB-5?
He: The goal of a migration agency is to find and match investors to the EB-5 projects. The general step-by-step process is to first find or be approached by a project, conduct initial review of whether the project is a fit for the company (meaning a safe project in the definition of the migration agency), if yes, then the agency conducts its due diligence, and finally markets to the general public and finds EB-5 investors.
In China, in order to promote EB-5, the entity or company must be licensed by the Chinese government and because of that, all of the agents must be licensed. Accordingly, the government has strict requirements for the immigration program, such as the number of employees, their training (employees must have knowledge in areas such as finance, law and different aspects to be an expert on the investment project), and the structure of the company. It is very important for an agent to be licensed in order to promote EB-5 opportunities in China.
EB5 Investors: You mentioned taking out advertisements to gain entry into the market, but what sort of work went into becoming a leader in the industry?
He: At Wailian, we focus on four key points: the first is the professionalism of our employees. We stress the importance of being familiar with the immigration laws and the importance of staying up-to-date regarding any proposed changes. Ever since its founding, Wailian has been committed to acting in a strictly professional and ethical manner. Second, we have assembled a team of leading professionals from around the globe: attorneys, accountants, financial analysts, etc. to assist us in providing service to our clients. We are very proud of the team we have assembled and believe that they are some of the leading experts in the EB-5 industry. Third is our track record. We have been doing this work for a very long time and have experience with immigration programs from around the world, including Canada, Singapore and other countries.
Because we started our business just as the need for immigration services started to develop in China, we have been fortunate to assist our clients in a wide range of immigration services on a global basis. Lastly, it is the trust that we have gained from our clients. Our track record is our best source for new business. One example of that is how we process our documents. We have an in-house document processing team—so that we can always process client documents quickly and efficiently. That makes our clients very happy with the services they receive from us, and as a result they keep referring new clients to our company.
EB5 Investors: Describe your staff. How many employees do you have and what is their professional background?
He: Currently our company has over 300 employees globally and it is still growing. The employees all have very different professional backgrounds, including law, business management, finance, you name it. Also, many of our employees have a background of having either studied, or worked in a foreign country.
Our company also does something very different from most companies in the industry, we not only train our sales consultants, or something we call immigration consultants, who directly deal with the clients, but we also provide training and support to all our staff on current business models on the projects that we sell. So we are constantly providing training and support. So many of our employees have full confidence in the company. As a result, we have a very large percentage of employees who have been with the company since its start.
EB5 Investors: Moving on to the project side, how do projects contact you or how do you find or choose your projects?
He: We have assisted numerous regional centers from their inception of doing business in China to their current success. As a result, our industry contacts provide us with information about upcoming projects.
We also receive referrals from different regional centers or developers that we work with or through their attorneys. Interestingly we also receive a number of referrals directly from our investors.
We always have our door open to any new developers and regional centers, the market is constantly changing, so are the projects, so we need to stay up to date. Projects are welcomed to contact our company and we will conduct our initial review of the project and follow up thereafter.
EB5 Investors: It certainly seems that a lot of your business is based on referrals both from the investor side and the developer side.
He: Yes, like I said, we started out early, at a time when there were almost no EB-5 projects being offered in China. So, we helped bring in several regional centers and some of those regional centers are now very powerful names in the industry. As a result, people know the name Wailian, and know what we have achieved, so they trust us and come to us.
EB5 Investors: Why is it so difficult for regional centers to reach investors directly in China? Why is it common to go through a migration agency?
He: This involves some legal complexities. Like I said earlier, the brokers in China must be licensed in order to offer EB-5 services, otherwise it will violate Chinese law. Another factor is the trust issue; when doing business with Chinese investors, there can be huge cultural differences. Also sometimes regional centers are not even aware of their licensing requirements in China, depending on what kind of office they have there.
For example, at the EB-5 summit that we hosted this past March, I learned about a certain case where a project worked directly with investors and clients based on a referral directly from their attorney. Because there are some very long I-526 processing times, a couple of investors from the project got very, very worried and concerned. They had no one to speak with because there was no representative from the project or the developer in China. The developer was unable to be reached and many of the investors did not speak English, so it was very difficult for them to gather any information. This ended up causing a panic with the overall investor group. I spoke with two of those investors who came to the conference because they knew that would be the only chance for them to meet somebody from the project side. Had the project retained a migration agency from the very beginning, the investors would know who to contact to answer any questions regarding their investment, without causing panic.
EB5 Investors: I know a lot of developers do attend these conferences because they are looking to find investors. How does that process work at a conference?
He: The purpose of the conference is to provide a platform for the developers, projects, regional centers, agents and potential investors to learn about one another. The main purpose for the developers/projects/regional centers is not for them to be able to sell to the investor directly—they still need to work with immigration agents in China—but it is a very good opportunity to showcase the project to the market, to see if Chinese investors like the type of project they are offering and the structure of the project. It’s a very good opportunity for developers to see how the market reacts to the project, or test whether the project documents and marketing materials are strong enough to stand on their own, or if anything is confusing to the investors. Many of these developers and projects are new to the Chinese market and it can be quite difficult for them to understand the process of doing business in China. They may get a referral from their attorney or from a friend to meet one or two immigration brokers in China. But through this conference, they have an opportunity to meet with tens or hundreds of immigration brokers, so they have more choices. That is the point of the conference—to increase the probability of finding a suitable partner in China. At the conference, we not only provide an opportunity for developers to showcase their projects, but we also invite industry professionals, including top name immigration lawyers, securities lawyers and economists who talk about current trends and what people should know about the EB-5 program. So it’s also an educational and informational event for projects and for immigration brokers to meet industry professionals that they otherwise may never meet.
The plan for our next conference in 2015 is to enhance the experience by inviting even more professional companies to join together and to provide an even bigger platform for everyone involved. For the past few years we have been holding the event in Shanghai, so our plan for 2015 is to present conferences in the northern and southern parts of China as well. China is very big, and each city or province is culturally different, and the foundation of the immigration process can be very different. So if it was interesting and worthwhile to come to China for one event, now they can attend three events and meet even more people.
What regions do you work in outside of Shanghai?
We have sales offices in most of the tier 1 and 2 cities in China, these cover northern and southern China.
How many projects do you take on at a time?
We like to keep around three to four, giving the investors some choices yet still meeting the goals of the projects.
How many investors have you placed with projects?
Our company has placed over 1,000 investors overall.
EB5 Investors: How do you choose what projects to represent, and what is your due diligence process before you decide to sell a project to investors?
He: As you already know, there are hundreds of projects out there and many in very different industries, industries like hospitals, utility companies, manufacturing, real estate, all kinds of projects. What we look at is, first of all, the developer’s background, and the feasibility of the project—will the project be able to survive the potential risks. So we look at the project as a whole and not just one single variable. Another factor that we examine is the immigration law—does the project qualify under the immigration law? Are all the elements of the project legal under the immigration laws? We don’t want to do anything that is illegal or that may jeopardize the green card status of the investors.
In terms of how we conduct our due diligence process, we actually have our own lawyers and independent third-party entities that assist us. We can’t be experts in all the different areas, so we hire professionals in specific areas to assist us with the due diligence process.
EB5 Investors: How do you match investors with the projects; how do you help investors choose which project will be best for them?
He: It really depends on the clients, because each client may have their own preference because of their different business background or experience that they have. For example, people who are in the manufacturing sector may be more interested in a manufacturing EB-5 project, because they will be more knowledgeable about that project. Because we have maintained a very successful track record and people trust us, we always share our thoughts on why we have selected a certain project, why we like the project and decided to promote it, and what we think are the benefits or advantages of the project. We always share our thoughts with the client and the client can analyze our input and make their own decision according to all of the information.
EB5 Investors: What qualities make a project more marketable to the investors? Some people may choose a project based on their background, but what are some general qualities—position in the capital stack, location, industry?
He: All of those points you mentioned are important, but none are singularly important. For instance, the location of the project is important but not a critical factor. To date, we have done projects in very well known cities in the United States, but we’ve also done projects that are situated in very rural areas of the United States, including small cities that even some Americans haven’t heard of. Same with the size of the project—it matters, but again it’s not a critical factor because we have sold very large-scale projects and some very, very small-scale projects. As to the capital stack that you mentioned earlier, that is also very important, as it may be a direct factor to the success of the project, for instance if a certain source of the funding is already in place or if it still uncertain. The feasibility of the business model is very important in determining whether the project will succeed, as opposed to doing something that you know the market will not react well to. So, you really have to look at the picture as a whole—but for each project we typically focus on one highlight point to make it happen.
EB5 Investors: Describe your underwriting process, what work do you do with investors to make sure that they are eligible for the program before you sell them a project?
He: The U.S immigration law for EB-5 has made it very clear that an investor only needs to have a clean source of funds of at least half a million dollars, so that is the most important factor of the eligibility requirement. So when we do underwrite the investor, we first determine that they have the funds available and that it is a clean source of funds that can be documented simply and easily understood.
What is more difficult for the clients is for them to learn about U.S. immigration law to understand what is legal and doable and also for them to understand the project and see if it will be a good match for them. But the underwriting process for the investor is not that difficult, because the EB-5 program doesn’t make it difficult for the investors.
EB5 Investors: What sets Wailian apart from other agencies and what are your long-term goals as an agency?
He: What makes us different is our experience, our dedication to being constantly up-to-date regarding immigration law, the network of esteemed professionals that we have assembled and, most importantly, our dedication to our clients. We rarely look at what other agents are doing, and instead focus on how we can continually improve our service to our clients. We want to spend more time focusing on how to improve as a company and how we can find better projects for our investors.