Selecting the Best Geographic & Demographic Area to Introduce an EB-5 Project

Selecting the Best Geographic & Demographic Area to Introduce an EB-5 Project

“One of the most fascinating contradictions of China's rapid growth under
the auspices of the Communist Party has been the rapid emergence of private
“China’s overall individual investable assets totaled RMB 62 trillion [$10.212
trillion] in 2010, a 19 percent increase from 2009.
 By the end of 2010, there were 500,000 Chinese high net-worth
individuals, with at least RMB 10 million [$1.647 million] in investible
assets. Average investible assets per capita were approximately RMB
30 million. Aggregate investible assets for all high net-worth individuals
equaled RMB 15 trillion [$2.470 trillion].
 In 2010, 15 provinces/municipalities had more than 10,000 high net
worth individuals, increasing by four since 2008: Tianjin, Hunan, Hubei
and Anhui.
More than 50 percent of China’s HNWI remain clustered in five provinces:
Guangdong, Shanghai, Beijing, Zhejiang and Jiangsu.”xx
“About half of the Chinese who are wealthy today were not four years ago,
and more than half of those who will be wealthy in five to six years are not
Go Where the Money Is
EB-5 promoters in China can obtain fairly current reports of population and
wealth distribution demographics from the National Bureau of Statistics of
China. However, before looking any further, suffice it to say that as of August
2013, there are over a million people living in mainland China who are legitimate millionaires. Beijing is home to 184,000; there are 172,000 in
Guangdong; and there are 147,000 in Shanghai.xxii
Let’s face it. You are not going to build a chain of EB-5 investment stores all
across the country. There are really two very simplistic approaches to
determining which geographic and demographic locations will be most
suitable for you: Go for either the 50% that is in these three cities, or go for
the other 50% that is not. I believe that either strategy is legitimate.
Competition for clients in any city in China increases proportionally with the
size and the number of EB-5 Agencies available in that city. Cities like Beijing,
Guangdong and Shanghai are likely to have many established EB-5 Agencies
and offices. Therefore, you need to have a well-developed strategic plan that
gives more weight to the competitive nature of those cities when
introducing an EB-5 project there.
On the other hand, the obvious marketing opportunities there are virtually
unlimited. Neither you nor your competition is going to suck several hundred
thousand Chinese investors into your EB-5 vacuum machine manufacturing
company. There is plenty for everyone.
When there are more fish in the sea than all the nets of all the fishermen can
haul in, the decision on where you seek potential investors becomes
significantly less important. Just because a high net worth individual lives in
a big city does not mean that he or she is interested in investing in America,
let alone living in America. It may be that more of the younger, newly
affluent Chinese will have a greater desire to do so. More of these people
live in Tier 2 or Tier 3 cities. Statistics are beginning to indicate that these
people are also much easier to deal with.
It would be a costly mistake to assume that all high net-worth individuals
think the same. It’s as absurd to think that as it ever was to think that all
Chinese people look the same, as many Americans did in the last century.
Monitored trends indicate that widespread Chinese investment attitudes
have migrated away from high versus low-risk investments toward
investments with controllable risks with moderate returns.xxiii This should be
a boon to EB-5 project promoters.

An Unadvertised Opportunity in Tier 2 & 3 Cities
If you are introducing an EB-5 project in Mainland China for the first time, it’s a
good idea to create balance between potential customer resources and the level
of competition, so that you can penetrate the market and survive. The EB-5
business organizer from the U.S. can consult with government departments and
private business people to obtain reliable information before selecting the best
geographic and demographic area for project presentation.
Tier 2 & Tier 3 cities may provide you the best opportunity to establish your
own EB-5 Agency and presence without having to spend extra time worrying
about “retribution” from established Chinese Agencies. It may also be the
best opportunity to establish your own presence, and to establish
cooperation with Chinese Agencies. In smaller cities you will likely feel less
pressure to allow the Chinese Agency to handle everything, which tends to
leave you in the dark as to who is and is not exposed to your EB-5 project. It
is much more likely that you will be able to work in harmony with Agencies
in these less popular and relatively untapped resource cities. 

This is an extract from the book How to Find Chinese Investors, Agents & Clients for Your EB-5 Projects & Services: A Practical Guide for Regional Centers, Attorneys, Developers and Businessmen”

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