Safe Haven for Capital : Hong Kong Buys Into Vancouver
Electrified, the wealthy Chinese immigrant from Hong Kong began spluttering.
David Lam--himself from Hong Kong and now British Columbia’s lieutenant governor--had been advising the mogul that a newcomer to Vancouver must “participate” like a concerned Canadian citizen to win acceptance.
In your case, Lam says he told the Chinese tycoon, you must give generously. The newcomer nodded. Canada was now his home; he planned to do lots of business. In the way of contributing, he asked Lam for guidance.
Lam was ready. “You should give $10 million to the University of British Columbia,” Lam told him.
That is when the spluttering began.
“But I’ve never seen the University of British Columbia!” the newcomer exploded. “I don’t even have children who will be going to college. How about a token? How about $1 million?”
“No token,” Lam replied firmly. “Not even $9 million. Give $10 million. You want to make an impression.”
For good or ill, Hong Kong is indeed making an impression on Vancouver these days.
In one of history’s toniest diasporas, millionaires and multimillionaires from the British crown colony are arriving here at an accelerating clip. And while not all of the immigrants are rich, newcomers are swelling the topmost tiers of Vancouver’s demographic pyramid.
With them comes a flood of capital, and the combination has turned real estate markets topsy-turvy, triggered a construction boomlet and launched Vancouver into light manufacturing of the type that made Hong Kong famous--and rich.
By extending their economic grip, Hong Kong’s investors and entrepreneurs are expanding not only the overseas Chinese network but also Vancouver’s role in the Pacific Rim.
But this economic influx is not without problems. As much of Vancouver’s best property falls into foreign hands, resentment grows. “We are rapidly becoming an Asian city,” a Vancouverite who works for the British Columbia government says. T-shirts advertise “Hong Couver” and “Van Kong.”
So David Lam, 65, who arrived from Hong Kong 23 years ago and has risen to be Queen Elizabeth II’s chief representative in British Columbia, exhorts wealthy Chinese newcomers to do things right for the sake of all Vancouver Chinese.
To Lam, the newcomers from Hong Kong too often are abrasive. Brimming with self-confidence from success in Asia and indifferent to Canadian tastes and ways, some immigrants give the whole Chinese community a black eye, he believes.
“I try to show them,” the lieutenant governor says. “I tell them . . . that it’s not dog-eat-dog over here with everyone fending for himself. . . . I tell them to volunteer, to cross the ethnic line and get to know and help others. To people who have money, I say ‘Give.’ ”
Lam’s prestige spans the Pacific Ocean and circles the Pacific Rim; his own fortune from North American real estate development is estimated at more than $80 million, and he never donates less than $1 million a year to universities, colleges and worthy works; once, he subsidized the Vancouver Symphony Orchestra’s tour of Japan.
A new immigrant does not deny Lam lightly, and so the tycoon gave in, and the university found itself $10-million richer. But when he made his pledge, he did it in a way that flabbergasted Lam--he insisted that the gift be anonymous.
Lots of Surprises
The fact is that the lieutenant governor and other Vancouverites are getting lots of surprises from Hong Kong these days.
The story of Hong Kong’s growing presence in Canada begins with the 1984 British agreement to turn over Hong Kong to the Beijing government in 1997 without enforceable safeguards for the colony’s 5.7 million Chinese, including the 3.25 million natives entitled to hold British passports.
Whether born under the Union Jack or not, Hong Kong’s residents have been left by their colonial masters to find their own “insurance"--safe domiciles for family and fortune after 1997 if Beijing reneges on its promise to let capitalism operate for 50 years.
In 1986, 19,000 Hong Kong residents emigrated; in 1987, 30,000; last year, 45,000. Half of them have come to Canada. This year--a week before the Tian An Men Square massacre on June 4--so many Hong Kong residents had applied for visas that the Canadian consulate was out of forms.
To some extent, the investors and entrepreneurs who created Hong Kong’s economic miracle are practicing family division. They are installing relatives abroad to obtain citizenship and a family beachhead.
In another practice, the head of household emigrates with wife and children, then commutes to Hong Kong. “Because they spend so much time in the air (over the Pacific), they are called ‘space men,’ ” said Sarah Monks of the Hong Kong Trade Development Council’s North American office.
“The thinking is,” she said, “that Hong Kong yields too many profits to abandon now and, besides, who knows what will happen in 1997? In the meantime, a foreign passport provides insurance--a way out--and the opportunity to start up a Canadian branch.”
There are good reasons that Canada tops the destination list. Easing immigration rules in 1986, Ottawa offered entry to investors with a net worth of $500,000 and a plan approved by a province to put as little as $150,000 into a new business. In Hong Kong, whose annual per capita income of $9,600 ranks second in Asia only to Japan, many residents are able to meet the requirements.
Australia Is 2nd Choice
With similar enticements, Australia is the second favorite choice.
Even so, either Britain or the United States probably would rank first, Monks said, but London bans landed immigrants from Hong Kong and the United States has imposed strict quotas.
Last year, 4,877 immigrants entered Vancouver directly from the British colony, while an unknown number of earlier transplants relocated here from Montreal, Toronto and elsewhere in Canada. Altogether, about 20,000 recent immigrants from Hong Kong are said to live in Vancouver.
Toronto--Canada’s largest metropolis, its financial capital and a cosmopolitan city of many large ethnic communities, including 225,000 Chinese Canadians--also attracts Hong Kong immigrants. “Toronto gets the yuppies,” says Michael A. Goldberg, a University of British Columbia professor, “and Vancouver draws the yacht people.”
Though a staid city by Asian standards, Vancouver offers mild weather, direct 13-hour flights to Hong Kong (11 hours back), mountain and sea views and Canada’s largest concentration of Chinese restaurants and import stores. In greater Vancouver, which has a population of 1.4 million, Chinese constitute the largest minority, with about 200,000 members, many of them fourth- or fifth-generation Canadians.
“For those who already have made a fortune, Vancouver is a wonderful place from which to carry on,” Goldberg said. “The young professionals see more opportunity in Toronto.”
But Asianization pangs are gripping Vancouver.
In the city’s public schools, half of the children speak English as a second language--the largest number of these listing Chinese as their first; in some schools, Chinese speakers represent 80% to 90% of the student body. Many students also come from Japan, South Korea and Iran.
In Kerrisdale and Shaughnessy, Vancouver’s equivalents of Beverly Hills and San Marino, scores of large houses erected by Hong Kong newcomers dwarf and crowd adjacent homes, their scale outraging neighbors. In many cases, Chinese owners of these “monster houses"--a nickname used even in City Hall and by Lt. Gov. Lam--have torn down more modest homes to make way for the new ones.
Commonly, the new structure extends almost to the property lines, obliterating lawn and trees cherished by the neighborhood, and rises a story higher than its neighbors. In the past year, the median sales price of homes in these upscale communities has risen 50% to about $300,000, boosting the property taxes of nearby homes by about the same percentage.
While a Hong Kong immigrant can buy a large house for the price he obtained from selling a small Hong Kong apartment, most immigrants buy into less luxurious neighborhoods.
Much Like Los Angeles
“Vancouver is like Los Angeles,” Goldberg, who has visited Southern California, said. “It is experiencing the Monterey Park and San Marino syndromes, with Chinese of middle class entering middle-class communities, Chinese of wealth going into the wealthy ones.”
Although immigrants from other lands and Canadians from other provinces contribute to the heating up of the real estate market, the Chinese--with publicity over “monster houses,” land purchases and other deals--are most visible; they therefore get the most blame.
Downtown, the commercial property market crackles. To date, Hong Kong owners have invested more than $2 billion in office towers, hotels, malls and about 80% of the prime Robson Street shopping block. Andrea Eng, a broker who sold more than one-third of the $420 million worth of commercial property bought by Hong Kong investors last year, says no end is in sight.
“Every single night I am on the phone to Hong Kong with prospective buyers, and now I am getting inquiries from Los Angeles and San Francisco,” said Eng, a fourth-generation Canadian who specializes in sales to Chinese speakers.
Looming over the whole scene is the financial figure of Li Ka-shing.
A Hong Kong billionaire whose companies represent about 20% of the capitalization on the Hong Kong Stock Exchange, Li paid $260 million a year ago for the right to develop the 204-acre waterfront site of Vancouver’s 1986 world’s fair--Expo ’86.
For this prime property, Li outbid Canadian developers on the advice of his son, Victor Li, 26, who moved to Vancouver several years ago after graduating from Stanford. The younger Li obtained Canadian citizenship and oversees his father’s budding Canadian interests.
The Li family’s privately held Concord Pacific Development Co. will convert the world’s fair site into a $1.6-billion global financial center with a 400-room hotel, man-made islands with 10,000 housing units and a 630-berth marina.
The Li family also controls 52% of Husky Oil Ltd., Canada’s 12th-largest oil company. In addition, Li is deputy chairman of the powerful Hong Kong & Shanghai Banking Corp., which has bought the Bank of British Columbia.
Others Follow His Lead
But Li Ka-shing’s impact extends much further than his holdings. Others follow in his steps.
“When he decided on the Expo site, it was a profound commitment to Vancouver, and others (in Hong Kong) decided to follow the man they regard as a sage,” Mayor Gordon Campbell says. “Like the ‘boys on the bus,’ everybody came along.”
The rush alarmed many Vancouver residents. First, they learned that their city’s real estate was being offered for sale in Hong Kong newspapers--and bought sight unseen. Then, rumors circulated that Hong Kong speculators were grabbing up residential properties by the dozen for resale on the Hong Kong market.
A substantiated shock followed: When a new Vancouver condominium was offered for sale in Hong Kong last December, all 216 units were snapped up within three hours. The partners, who included Victor Li, did not offer the units for sale in Vancouver.
Vancouver now attracts 60% of Hong Kong’s real estate investment in Canada. Two years ago, Toronto had the edge, and many Vancouverites wish it still did.
Foreign Money Pours In
Almost daily the mayor hears from citizens concerned over foreign investment. “They fear they are losing control of their economic destiny,” Campbell said.
A Dartmouth graduate, third-generation Vancouverite and former real estate developer who personally as well as officially welcomes the inflow of people and capital as an economic boon to the city, Campbell says the resentment arises not from racial bigotry but from distrust of any stranger with power derived from foreign wealth.
“For a poor immigrant who takes a job, works his way up, accumulates money and invests it, there is understanding,” Campbell said. “But for the rich immigrant who comes in with wealth from elsewhere, buys into life at the top and exerts power from a capital base accumulated elsewhere, there is resentment.”
However, in the opinion of British Columbia University’s Goldberg, racial feelings may also play a role. “I suspect that newcomers with the same amount of wealth from the English aristocracy would be far more welcome,” he says.
For Canada and Vancouver, which pride themselves on racial tolerance, it is a close question. Ever since Chinese laborers came to work on the trans-Canadian railroad more than a century ago, China has been in Vancouver’s bloodstream. For a spell, Sun Yat-sen dwelt here, raising money for his 1911 revolution--a sojourn commemorated by the Dr. Sun Yat-sen Classical Chinese Garden, a $1-million gift to the city from David Lam.
From the original Chinatown, now a commercial core in central Vancouver, families have dispersed throughout the city, many clustering, some assimilating, and have watched their sons and daughters enter all professions and the wider reaches of Canadian society.
Last year’s royal appointment of Lam to the lieutenant governorship was popular across racial lines and--in the words of property broker Eng, a former Miss Canada before she started selling real estate as an associate vice president of the old-guard, establishment firm of Colliers Macaulay Nicolls Inc.--"it created euphoria in the Chinese community.”
Greater Pacific Rim Role
The influx from Hong Kong is upgrading Vancouver’s Pacific Rim role in a number of ways.
Though Vancouver will continue to be a port city, the workaholics from Hong Kong are unlikely to be content with watching timber and other natural resources flow unprocessed into the export stream.
Hong Kong is one of Asia’s “Little Dragons.” The term, an honorific in Asia, was bestowed upon Hong Kong, South Korea, Taiwan and Singapore for their astounding economic rises from broken and impotent economies after World War II into major exporters of manufactured goods.
“It will make a difference,” Campbell said. “We used to say: Cut the tree and sell. Now we have the Chinese contribution: Cut the tree, make something out of it and then sell.
“This can change our economic destiny.”
Like everyone else on the West Coast, Vancouverites had talked Pacific Rim for decades. But little happened. Now, the mayor proclaims, “Vancouver is a Pacific Rim strategic city.”
Already, Cathay Pacific, the privately owned airline based in Hong Kong, has established its North American headquarters here; so has Hong Kong’s Sing Tao publishing group, rapidly expanding throughout Asia and the Pacific.
And with capital imported from Hong Kong--now running at about $500 million a year--investors have not only bought real estate but have opened the first garment factories in Vancouver’s history. They also plan consumer electronics and toy production, specialties that helped to propel Hong Kong into “Little Dragons” ranks.
“They are replicating Hong Kong in Vancouver,” said a British Columbia civil servant who requested anonymity. “As they wind down operations in Hong Kong, they are winding them up here. It’s a mass transplantation.”
In the process, Vancouver’s unemployment has fallen over the past two years by one-third and, at least in the opinion of the mayor, it has become a more vibrant and exciting place.
City ‘More Lively’
“By bringing in new people, new cultures, new ideas . . . the city becomes more lively and active,” Campbell says. “By embracing that diversity and saying it’s an asset, we will be a more humane and interesting city.”
To keep the capital flow pointed at Canada, Campbell and others in the city leadership emphasize to prospective Hong Kong manufacturers the advantages of the U.S.-Canada trade agreement, which opens the U.S. market to goods made--or finished--in Canada.
“Add value here, your product becomes ‘Canadian’ and it goes into the U.S. duty-free,” says J. Kelly Edmison, president of Vancouver’s Hong Kong Canada Business Assn. “That appeals to a lot of the smaller fish. It’s not Li alone making us a strategic city. In addition to Li it’s a whole bunch of Wongs, Ho’s and Chins who are not famous, not billionaires, not major multimillionaires, who are making the Pacific Rim work.
“You see it any time boarding a flight from here to Hong Kong. About 400 people out of 428 on that plane will be Chinese. Maybe all of them are on business. That’s the Pacific Rim.”
Paul Tsang is a Hong Kong immigrant who wants to Canadianize. Three and a half years ago, he arrived in Vancouver with his wife, son (now 9) and daughter (now 4); he is editor-in-chief of Sing Tao Newspapers (Canada) Ltd. “We want our roots to be here,” Tsang said.
But some of Hong Kong’s “space men"--the commuters to Hong Kong--can’t make the break. They cling to old ways, even on weekends in Vancouver betting the horses at Hong Kong’s Happy Valley race track, playing mah-jongg and eating at dim sum restaurants.
Tsang urges his children to speak Chinese at home, but they often speak English anyway, he says, especially after watching TV. They are learning French in school, and he’s afraid they will lose some of their Chinese. “In fact, I accept that as a fact,” Tsang says. “But we are very satisfied with the new environment.
“Those who have come here for a passport,” he says, “may have stronger feelings for Hong Kong than I have. I am not looking back.”