How to Assure an Agency that You Are Worthy of Their Consideration
The EB-5 business in Mainland China has become highly competitive,
particularly in the last decade because of the growing number of U.S. Regional
Centers and immigration lawyers attempting to gain a piece of the pie.
Therefore, it’s important to understand the obstacles you may encounter in
attempting to gain the cooperation of a Chinese EB-5 Agency. There are
essentially four things that you must understand and deal with in order to gain
the relationship you desire.
Hong Kong-based immigration attorney Steven Blayney has described China
as “a culture that emphasizes individual cleverness and responsibility to
immediate family and friends rather than to society, and an inherent weak
regulatory framework for administering EB-5 . . .”v In this chapter, we will
discuss the most important implications of that. Blayney also points out that,
despite our American perspective on the Chinese government - and on our
own, for that matter - the Chinese tend to trust their government in general.
Therefore, individual investors and Agencies alike may feel a greater degree
of comfort if your EB-5 project has some level of government support,
investment, or interest.
Because the Chinese like to deal with notable - what they call “famous” -
companies, if you are a new entrant into the market and you are relatively
unknown, plan to have a more difficult time attracting the attention of large
EB-5 Agencies initially. Don’t give up. Keep on keeping on.
As we have mentioned, older EB-5 Agencies, which are usually in the major
metropolitan areas, tend to be the largest. Aside from any facts relevant to
your particular EB-5 projects, there are many new entrants into the EB-5
Agency arena. More Agencies mean more competition. The more
competition, the more difficult it is for established Agencies to maintain their
market share. This is particularly annoying to them when they have a sense
of “we were here first” entitlement. Think about how IBM felt about Apple
when the latter was a startup, and you will get the idea.
New Agencies have a huge battle on their hands as established Agencies
work to keep them from prospering and growing. By now Americans ought
to realize that bigger is not necessarily better and older is not necessarily
wiser. The big tiger will fight to have a lengthy reign, but there comes a day
when its strength has gone. It will fight to the death to keep its “leadership”
position. A large, established EB-5 Agency will do the same. Don’t forget that
you are also competing for a limited amount of business. If you can’t be “famous,”
at least be credible. If you lack experience, offer them expertise.
Cunning is something you always want, but you never want the other guy to
have. The black mark on the EB-5 program is the chicanery that has transpired
on both sides of the Pacific. In all fairness, we must admit that some of your
compatriots in EB-5 projects in the U.S. have set less than stellar examples by
defrauding Chinese investors. In March 2013, the Chinese Ministry of Foreign
Affairs warned Chinese investors of EB-5 Fraud.vi Chinese Central Television has
portrayed EB-5 investment projects as high-risk, so it’s not as though investors
and Agencies are entirely in the dark, thinking that your project is their big break.
You may have the utmost integrity, but those who have gone before you have
not always blazed a trail that has a welcome mat at the end of it.
Chinese EB-5 Agencies work with EB-5 Regional Centers, like head-hunter
Agencies, work for employers. They deliver the goods; the company pays the
Agency a fee or commissions. Business experience teaches us that a
salesman, given two products of equal value but with different commission
rates, will sell the one that pays him the greatest commission.
CAUTION: The lack of uniform commission and fee structures may be the
single biggest problem with the EB-5 system. Some Chinese Agencies will
come right out and tell you that their business relationship depends upon
who pays them the highest commission. Even if they don’t say so, it may still
be the most important item on their agenda. Commissions tend to spiral
upward as Agencies’ appetites grow and as resource centers become more
competitive, creating a situation where integrity is likely to spiral downward.
Know Before You Go
By now you have probably figured out that if your company is small and your
project is small, the larger Agencies are not as likely to be interested in you. At the
end of the day, their underlying objective is to extract as much money as they can
from both you and the investor. Face it - there are bigger fish for them to fry.
An Investor’s Objective Is Different than an Agency’s
Clients want to invest in a project that will secure their I-526 quickly, meet
the established two-year criteria successfully, and generate a reasonable
short-term return on their investment. By the same token, large EB-5
Agencies want to land the biggest fish. The bigger projects require a larger
total investment. Larger investments require more investors. Gathering
more investors may take more time.
If you have a big project that is going to require many investors, it is probably
best to work with a large EB-5 Agency. Conversely, if your project is small by
comparison, you may find it much more time efficient and cost-effective to work
with a smaller Agency. You may also receive a whole lot more cooperation.
Work with an Agency that fits the size of your project. When you are offering
a comfortable fit, you should have no problem assuring the right Agency that
you have the right project.
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