Canadian Catalyst : Commerce: An influx of Asians bringing $1 billion a year in capital has invigorated Vancouver’s economy.
In a city rich with inspirational views of water, wood and mountain, sundown at English Bay Beach is an especially soothing scene. The bay is as still as glass on a recent summer evening, and a half-dozen freighters at anchor outside Lion’s Gate reflect the last rays of the sun.
The mix of people scattered along the beach watching this tableau perhaps symbolizes Vancouver’s past and future. Interwoven in the soft cacophony of children’s squeals and the voices of folk singers are lilting strains of Cantonese.
Welcome to the Hong Kong of the Northwest, where English isn’t necessarily spoken at English Bay, where Canadians of British ancestry are watching their timber-rich province of British Columbia flower with ethnic diversity.
Vancouver has been much scrutinized as a city fraught with tension since the advent in the early 1980s of entrepreneurial immigrants from East Asia, particularly from Hong Kong, where the specter of reversion to mainland Chinese sovereignty in 1997 has spurred an exodus.
But the word today is that the influx of capital from Asia--estimated at more than $1 billion a year--has stimulated local economic growth and created a significant number of jobs. Asian money is credited with buffering the Vancouver area--so far--from the recession that is hobbling much of the rest of Canada and North America.
Consequently, the grumpy Caucasian backlash against real and imagined millionaire Chinese immigrants, who purportedly build “monster homes” and drive up real estate prices, has given way to a popular tolerance, even admiration, civic boosters say.
“This is now an Asian city,” said Graeme McDonald, president of the Asia Pacific Foundation of Canada, a government-supported nonprofit agency based here. “I’m constantly astonished that you can go several minutes downtown without seeing a non-Asian face. People around here are proud of that.”
Recent changes in the city’s demographic makeup are difficult to quantify because the 1991 census hasn’t been tabulated along ethnic lines. But city officials estimate that 25% of Vancouver’s population of 472,000 are natives of Asia or Canadians of Asian descent. Nearly two-thirds of these are Chinese, with large communities of Asian Indians and Pakistanis, and smaller numbers of Filipinos, Japanese and Koreans.
Many of the city’s elementary schools are reporting that more than half their pupils speak English as a second language, apparently referring to euphemistically labeled “visible minorities” as opposed to polyglot European stock.
Yet discomfort over the city’s changing character has eased as the economy prospers and some of the negative myths about Asians are gradually debunked.
A recent study of the causes behind spiraling real estate values, for example, showed that the price push comes primarily from people pouring into British Columbia from the rest of Canada, migrants who outnumber immigrants crossing the Pacific by a wide margin.
And Ottawa’s controversial “business-immigrant” program--in which citizenship is essentially for sale for the right price--has proven to be a boon for Vancouver. Canada’s only Pacific port has received far more Asian immigration and investment in proportion to its population than Toronto and Montreal.
“Most people think all they do is come in here, buy real estate and crowd the schools,” said Roslyn Kunin, an economist in Vancouver for the federal agency Employment and Immigration Canada.
“They don’t realize these are the people who are helping us diversify our resource-dominated economy,” she said. “Who would have thought we’d see garment workshops in Vancouver, or a small factory making plastic gizmos?”
Kunin’s agency reckons that the 20,000 business immigrants who came to Canada between 1986 and 1990 generated 10% of the nation’s investment growth, created 80,000 jobs accounting for 16% of net employment growth, and spawned 3% of the net growth in Gross National Product. (GNP is the total value of all goods and services produced.)
Investment has been essential for British Columbia, where the forestry, pulp and paper industry--the traditional mainstay of the economy--is in a slump, going nearly half a billion dollars in the red last year.
In fact, Vancouver was experiencing growth in employment while the rest of Canada was losing jobs to the recession until May of this year, when Kunin believes the flow of Asian investment started to slow. Unemployment in Vancouver was 9% in July, relatively low compared to the 11.6% national average.
“A lot of people don’t understand the benefits of the connections Hong Kong people bring,” said Stanley Kwok, a prominent Vancouver architect who immigrated 25 years ago. “Many keep their business going back there and look for synergies in trade with Hong Kong and China.”
By far the most conspicuous example of Asian investment in the city is that of Hong Kong tycoon Li Ka Shing, who didn’t immigrate himself but sent one of his sons, and visited long enough in 1988 to snatch up 204 acres of prime real estate from the provincial government, the site of Expo ’86. Li’s winning bid was $145 million in Canadian currency (about $126 million at current exchange rates), a scandalously low price in the eyes of some critics.
Li struck a deal to redevelop the site along the north shore of False Creek into an integrated residential-commercial complex with parks and schools, a project with an initial value of about $2.2 billion. Supposedly the largest urban redevelopment project in Canada, it will generate 28,000 “person years” of work and have a $6.5-billion economic spinoff, said architect Kwok, who is senior vice president of Li’s Concord Pacific Development.
“If you look at it, it’s a good deal for Vancouver,” Kwok said.
Not necessarily so, says Paul George, a former biology teacher who founded the Western Canada Wilderness Society. His group is concerned about the negative effects of urban growth and development on this city’s relatively pristine natural environment.
Li Ka Shing’s megaproject spells disaster, George contends, because the provincial government virtually abdicated its regulatory control in selling the land in one huge parcel.
“It was the stupidest real estate deal ever done in the history of North America, except maybe selling Manhattan for a few beads,” George said. “They sold it off at less than fire-sale prices to raise some quick cash, and the city will suffer in the long run.”
Although it’s too early to measure accurately, many observers believe that the influx of money from Hong Kong seems to be drying up as more immigrants, Canadian passports in hand, return to the British enclave. With the political situation relatively stable in China, Hong Kong still offers plenty of opportunities to make money.
The Vancouver lifestyle is great, but Canada, with its high taxes and onerous regulatory environment, can’t compare as a place to do business.
“Everyone from Hong Kong who comes here has to make an economic sacrifice, maybe a 25% to 50% cut in their take-home pay,” said Danny Gaw, who assembled a group of Hong Kong investors that bought a bakery and a doughnut chain for about $8.5 million.
Gaw’s plans to diversify into the textile business were delayed by red tape over earthquake codes for an old building he bought, and later abandoned when recession crimped his potential market south of the border.
“From the investor point of view, the margin of profit is not nearly as good as you can get in Asia,” Gaw said in the Spartan office above his doughnut factory. “Unless there’s a catastrophe in Asia, I don’t think there will be much further investment from Hong Kong.”
Much as elsewhere in North America, Japanese investment in British Columbia’s resort industry has been dampened by the collapse of the speculative bubble in Tokyo’s financial markets.
But there are signs that the Taiwanese are picking up where their Asian neighbors have left off. Just recently, a group of more than 60 investors from Taiwan visited the city’s Economic Development Office, sniffing out opportunities.
Already, many Taiwanese investor-immigrants have emulated the pattern of the earlier arrivals from Hong Kong, even buying the million-dollar homes that speculative builders throw up in anticipation of easy money, said Sandra Wilking, a former member of the city council.
“The neighbors got very upset about these monster homes because developers stripped away trees to make more room for the house,” Wilking said. “I think greed walked through the door, and a lot of the Chinese buyers were victims, terribly naive. But word eventually got out in Hong Kong that these things were terrible quality and in very poor taste.”
Wilking, an ethnic Chinese whose father Anglicized his name, said anti-Chinese sentiment among Vancouverites peaked in 1989 and the fuss has lately died down. The appointment of David Lam, a prominent community leader, in the ceremonial role of lieutenant governor of British Columbia, has helped bridge the gap, Wilking said.
“But we have a long way to go,” she said. “Your don’t see Asian Canadians on the boards of any of the big banks, for instance. We still don’t have an equal seat at the club.”
The first Asians in Vancouver came as railroad laborers in the late 19th century. Now, the capital-rich Chinese pose an ironic reversal of the traditional rags to riches immigrant tale.
“This is a new twist on immigration--newcomers are a lot more threatening when they have a lot of money,” said Maurice Copithorne, a former diplomat who served as Canada’s high commissioner (equivalent to a consul general) to Hong Kong and now practices law in his hometown of Vancouver.
The awkward adjustment may not be completely behind Vancouver yet. Latent antipathy could rise to the surface should the recession catch up and test the city’s tolerance, notes William Saywell, president of Simon Fraser University.
“As long as the economy remains relatively buoyant, these kinds of tensions don’t rise to the surface,” Saywell said. “As soon as you get a severe economic downturn, it comes out dramatically.”
Vancouver is Canada’s third-largest city, after Toronto and Montreal. The Pacific port is distinguished by its ethnic Asian communities, which officials estimate to make up one-quarter of the cities population.
Greater Vancouver Area’s Asian Community based on 1986 census
Japanese: 12,000 (7%)
Chinese: 100,000 (58%)
Fillipino: 14,000 (8%)
East Indian/Pakistani 46,000 (27%)
Source: Vancouver Economic Development Office; Statistics Canada
The most conspicuous example of Asian investment in Vancouver was the purchase of the waterfront site of Expo ‘86, 204 acres of prime real estate, by a Hong Kong investor. Critics say the price the provincial government got for the land was scandalously low.
‘If you look at it, it’s a good deal for Vancouver. ‘
Senior vice president of Concord Pacific Development, which is developing a $2.2-billion residential-commercial complex on the Expo ’86 site.
‘It was the stupidest real estate deal ever done in the history of North America, except maybe selling Manhattan. ‘
Founder of the Western Canada Wilderness Society, which is concerned about the negative effects of urban growth on this city’s relatively pristine environment
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