Immigration Incentive Package : Canada Seeking to Attract Rich Hong Kong Chinese
Lee Ron Bick was hardly made welcome when he came to Canada from Hong Kong 78 years ago. He had to pay a $500 head tax for the privilege of doing work that white Canadians scorned, and the government refused his wife entry for 13 years in hopes that he would return to Asia.
If there was anything unusual about Lee’s situation, it was that he got into Canada at all. Asians were never really accepted in the first half of this century. From 1923 to 1947, only 24 Chinese were allowed into the country.
Lee, who came as a laborer, stayed in spite of the government. His wife eventually joined him, and Lee, now 94, became a respected and successful businessman.
Coming to Canada is different today, particularly for Chinese from Hong Kong, the British colony on the southern coast of China that is scheduled to be returned to Chinese rule in 1997.
Edward Wang is a good example. When he arrived here early this year, he was welcomed with more than just open arms. He received immediate landed immigrant status--the equivalent of a U.S. green card--a process that usually takes three years. He also received the promise of a speeded-up citizenship process and the offer of all sorts of help in settling in.
Canada’s attitude toward Asian immigrants has changed for the better as part of a general liberalizing of attitudes toward all foreigners that began in the 1960s. But the main reason for the difference between Lee’s welcome and Wang’s is money. Wang has lots of it.
With the fear and uncertainty caused by the impending takeover of the capitalist colony of Hong Kong by a Communist government in 11 years, Wang and other wealthy Hong Kong Chinese have been seeking haven for themselves, their families and their fortunes. And governments the world over have been seeking ways to draw that money their way, if not the people with it.
Money the Key
For its part, Canada has put together an immigration incentive package so liberal that it might make a college athletic recruiter envious. But just as the high school athlete has to have talent to be courted, so the potential immigrant from Hong Kong has to have money.
For those with a net worth of at least $365,000 who promise to invest at least $183,000 in Canada within a three-year period, immediate landed immigrant status is provided, with full citizenship to follow when the investments are completed.
Wang, 42, would not say how much he brought to Canada or what he put the money into, but he acknowledged, “I don’t really work--just watch after my accounts and make sure my (apartment) building does OK.” Other immigration rules for not-so-wealthy people who can provide business, cultural or other expertise also have been liberalized to attract Hong Kong residents, although they do apply to immigrants from elsewhere.
Until the new regulations were initiated, starting in 1976, a Hong Kong resident came in under a restrictive geographic quota for all of Asia and had to have close relatives in Canada and meet stringent requirements about hiring and job creation. For those without the money and skills that Canada wants, or close family ties, the door still is essentially barred.
U.S. Remains Goal
The United States, with its huge, well-off population and large investment base, remains the No. 1 goal for those leaving Hong Kong, but its immigration rules are much less liberal. Consequently, Canada now runs a comfortable second and is moving up, far ahead of Britain and Australia, the third- and fourth- most-favored destinations.
Starting in 1975, when there was only $34 million in direct investment from Hong Kong, the figures have grown in staggering amounts. According to Holger Kluge, vice president for Asia of the Canadian Imperial Bank of Commerce, a major foreign institution in the Far East, “Canada has benefited to the tune of at least $5 billion.”
Kluge breaks it down this way: at least $2 billion in U.S. dollar bank accounts in Canada, another $2 billion in real estate and the rest in various commercial enterprises.
Officials at Investment Canada, the government agency that works with foreign investments, confirm those figures and add that the total could be even higher, since immigrants are not required to notify the government of new transactions once they meet the minimum requirements.
More Money Available
Kluge, who recently moved to Toronto after six years of running the Bank of Commerce’s Hong Kong operation, says there is much, much more that he and other Canadians want to see come their way.
“There are 1,300 families (in Hong Kong) that have net values of $125 million,” he said in an interview, “and 150,000 individuals who are millionaires in U.S. terms, although not all of that is liquid.”
Another 20% of Hong Kong’s 5 million people may have sufficient assets to qualify for emigration to Canada, he said.
So far, Hong Kong money is flowing into Canada in far greater proportions than people, largely because many Hong Kong residents still see opportunities to make money by staying home for several more years. In the meantime, they are hedging their bets by sending some of their fortune overseas.
Still, they are coming over to Canada at the rate of more than 7,000 a year, a figure that promises to increase, according to Kluge, as 1997 draws nearer.
Air Travel Increases
A rising volume of air travel between Vancouver and the British Asian colony underscores that promise. For instance, Hong Kong-based Cathay Pacific Airways reports dramatic traffic growth since it began Vancouver-Hong Kong service in 1984, and Canadian Pacific Airlines, which started flying to Hong Kong three times a week from Vancouver last October, quickly added two more weekly flights to its schedule.
Toronto is so certain that it will receive large numbers of Hong Kong immigrants that it has sent recruiters to the colony to hire policemen for its own force.
While the United States has been the favored goal for Hong Kong emigres, its margin over Canada is shrinking.
According to a study conducted by Michael A. Goldberg, a business professor at the University of British Columbia, 43% of Hong Kong residents planning to invest abroad prefer the United States, against 34% that prefer Canada. But corporate investors are evenly divided at 39% each for Canada and the United States.
Moreover, Toronto is now preferred over both New York and San Francisco as places to live, with Vancouver fourth, according to Goldberg. “Canada is the favored educational location, provides a pleasant climate, has good growth potential, offers political stability and will provide for the safety of the family future,” he says.
Edward Hou, a Toronto real estate broker who came from Hong Kong 20 years ago, stressed the cleanliness and safety of Canadian cities as prime reasons for picking Canada.
“Hong Kong people are conservative and cautious,” he said, “and they like it here because it is safe and there are few hassles.”
He and others also talked favorably about Canada’s multicultural immigration policy, which emphasizes the ethnic individuality of newcomers as opposed to the assimilationist, “melting-pot” approach of the United States and the more restrictive, if not anti-Asian, character of Britain and Australia’s tight regulations on foreign ownership.
Figures Called Misleading
Not everyone is as satisfied or as optimistic about the Hong Kong-Canada link. David Nesbitt, manager of the Hong Kong office for Wood Gundy, one of Canada’s major investment firms, says that the bulk figures for Hong Kong money in Canada are misleading.
For instance, he said in an interview while on home leave in Toronto, fears were aroused in 1982 when a visit to Peking by British Prime Minister Margaret Thatcher first raised the issue of negotiating terms for turning Hong Kong over to China, thus causing huge amounts of currency to be traded.
“It was really manipulation of the currency,” he said, “really trading to avoid the fall of the Hong Kong dollar. Huge amounts of money showed up in Canadian banks (because of the relative strength of Canadian currency), but we didn’t see much in the way of new sales in stocks and bonds. . . . It had nothing to do with Canada as the best place to invest. They were looking at currency first.”
Furthermore, Nesbitt said, a large percentage of the investments in Canada and the United States reflects sophisticated business practices by wealthy, international business people who would have sought opportunities in North America for its financial benefits regardless of the political situation at home.
Hard to Convert Assets
Nesbitt also played down the ability of Hong Kong’s rich to convert assets at home into money for investment in Canada.
“Only about 50,000 have significant assets that can be turned into cash,” he said. “The rest are either too poor, or their wealth is in real estate that is hard to sell, or their wealth is in a business whose worth is dependent on his individual expertise. That doesn’t convert into cash.”
Besides, he added, “I’m optimistic” that the agreement between Britain and China will work. The arrangement, reached in October, 1984, essentially promises that Hong Kong will continue its capitalist approach to doing business for 50 years.
Other problems have surfaced. There are anecdotal and largely unsubstantiated fears that the new immigrants have driven up prices by overpaying for property and have forced long-term tenants out of commercial projects by upgrading the property and then raising rents.
Known as Tough Bargainers
However, Kluge, the banker, and other experts say that the Hong Kong business person is a tough bargainer and seeks out the best deal possible. In fact, because many Hong Kong buyers seldom use mortgages and opt instead to pay cash, the price is often lower than it would be if the purchase was made with borrowed funds.
Despite such reservations, the signs are strong that heavy movement of capital to Canada from Hong Kong continues, and most analysts are convinced that the situation is of major economic importance to Canada.
Kluge said, for example, that his bank has little difficulty selling special investment funds, which limits participation to 20 Hong Kong investors who have to put up a minimum of $250,000 each. He said that participants in the four existing funds invested an average of $1 million. Nearly 250 people are on a waiting list to join the next fund, Kluge said.
Investment in Vancouver
A check with real estate brokers indicates that there is still significant Hong Kong investment in the major commercial areas of Canadian cities, particularly Toronto and Vancouver.
Boswell Malcolm, the Vancouver general sales manager for Royal LePage, one of Canada’s largest real estate brokers, estimated that 12% of the commercial property in downtown Vancouver, a city of 1 million people, is owned directly by Hong Kong interests.
Vancouver city officials, who asked not to be named, said the figure is far higher but difficult to pin down since it is hard to link some corporate names to Hong Kong investors. Whatever the true figure, the presence of Hong Kong money is plentiful. One broker, who asked for anonymity, said that he was working with four Hong Kong residents who are prepared to put $1 billion into Vancouver as a prelude to moving here.
Also, a 1984 survey by the Canadian newsmagazine Macleans showed that more than half of the apartment blocks in Vancouver’s upscale West End residential area are owned by Hong Kong Chinese.
In Toronto, Hong Kong money goes more into investment opportunities and smaller commercial properties, particularly mini-malls--small shopping centers in residential areas, known here as strip plazas.
Still, several major downtown hotels, including the luxurious Harbour Front Hilton, and high-rise office buildings are controlled by Hong Kong interests.
Other signs of the serious intentions of Hong Kong Chinese to continue their personal and financial movement to Canada can be seen in intangibles.
According to University of British Columbia professor Goldberg, Kluge and other experts, wealthy Hong Kong residents like to create a favorable transition situation by sending children to a country that interests them. If so, the fact that there are an estimated 19,000 Hong Kong Chinese students attending Canadian colleges bodes well for Canada.
As for Nesbitt’s optimism about Hong Kong’s 1997 transfer of control to China, Goldberg’s survey shows that there is considerable uncertainty among Hong Kong residents. About 55% of those who have already invested overseas did so because of fears about the future. More telling is his finding that 75% of those who intend to invest abroad will do so because of the uncertainties.
Robert Lee, a major Vancouver realtor who is the son of Lee Ron Bick, said that until 1982, only about half of those in Hong Kong with foreign investments emigrated with their money. “Now the figure is closer to 80%,” he said.