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The elephant in the EB-5 room has always been the inordinate length of time it has been taking for the USCIS to process I-924 applications. In many, if not most, cases the processing time has been well in excess of 12 months. This is the result of underestimating the demand, especially from China, and being understaffed and underequipped as a result.
Three things have happened recently that have reduced processing time to 4.4 months, according to the National Law Review.
I-924 processing has been moved to the Immigrant Investor Program Office.Regional Centers are proliferating throughout the US, not only promoting more projects, but also providing more assistance for investors.The USCIS is now approving I-924s on the basis of “hypothetical projects.”
To learn more, contact us online at American Corporate Services or call us at 415-682-2550.
EB-5 Direct Investment or Indirect Regional Center Investment - Which Is Better?
EB-5 Direct Investment is like a tree that gets lost in the forest of foreign investment options. This could be due to several factors, not the least of which is the increasing number of EB-5 related businesses seeking multiple investors to fund large projects that require raising large amounts of capital far in excess of the individual minimum $500,000.
A direct investment requires creation of at least ten new W-2 jobs within the company in which the immigrant investor contributes equity. The direct approach is often more appealing to those who desire to earn a higher return on investment. Structurally speaking, the potential for a greater ROI is higher, but as in any risk versus reward equation, not only does the greater risk increase the potential for reward, but the potential for greater reward also increases the risks.
Efficiency and versatility are often cited as advantages of direct investing. There is no regional restriction on the development of an investment project, so projects can be developed anywhere in the US. The USCIS approval process takes less time with a direct investment, which works to the benefit of both the project and the immigrant investors.
Which is better – direct or indirect investment? The question itself seems to beg that the answer is one or the other, black or white. In reality, the answer is that the better investment is the one that is most suited for the individual applicant.
Why Use a Regional Center?
The point of a Regional Center is to be chartered by the USCIS to pool capital for job-creating investment projects and to facilitate both the investment and the immigration processes. While the process is slower, it is arguably more secure and has several immediately distinct advantages, not the least of which is that an RC can obtain pre-approval of proposed projects. While this adds time on the project side, once the project is approved, the investor side of the project should be shortened considerably.
In terms of job creation, Regional Centers projects have a versatility of their own, as jobs created need not be direct or even indirect, as even induced job creation through the downstream impact may be taken into account. The provision allows for much broader prospects for fulfilling the EB-5 job creation requirements.
From a financial perspective, participation through Regional Centers can be structured in a manner where the individual investments can be pooled into a limited partnership that then loans funds to the project. This creative route has a built-in exit strategy, otherwise known as the term of the loan.
At first glance, EB-5 appears to be a one-size-fits-all, but that is simply not true. No one expects immigrant investors to come to the US in a straightjacket. A vital part of the EB-5 visa program is that it can be tailored to fit individual investors so that they arrive in style.
Canadian Investment Visa Program Cancelled
Where Will the Chinese Investors Go?
Canada’s decision to cancel its Investment Visa Program could be a mixed blessing for the U.S. EB-5 program, at least in the short term. The rather obvious positive side is that the Chinese investors who were already in the middle of the Canadian process might generally be inclined to continue their quest to relocate somewhere. One of their most likely choices is the United States. Their original choice of Canada might be an indication of their desire to immigrate to the Western Hemisphere. Their original capital will become unencumbered, so they will have cash readily available that had been heretofore “invested” in the Canadian program.
On the other hand, there are other considerations. One of the primary reasons given for the cancellation of the Canadian program was to “eliminate a large and longstanding backlog of applications.” Therefore, it is reasonable to assume that, whether the Canadian government processes those applications forward (which they are not going to do) or processes them backward (returning deposits to program applicants and close their files), it is going to take quite some time to complete either task. If they can’t get the applications out of the mire, it doesn’t matter direct they try to flow them, they are still stuck in the bureaucratic red tape. It will take time to process. For that reason, I do not see an impending tsunami of EB-5 investors hitting the U.S. west coast.
Nonetheless, should Canada take an inordinately lengthy amount of time to implement a new program, the number of Chinese seeking to participate in the EB-5 program could increase substantially. To my previous point about the Western Hemisphere, it may equally be assumed that some may have chosen Canada, not for its location, but because it belongs to the British Commonwealth. If that was an investor preference, it is unlikely that they will seek residency in the U.S.
It is also important to note that the EB-5 program puts their investments at risk. The Canadian program did not. That program required immigrants to invest in the Canadian economy at large by requiring a loan from applicants to the Canadian government. Exactly as it implies, the government would repay that loan to the immigrants after a period of time. The EB-5 Program requires a minimum $500,000 investment with no guaranteed return.
None of us can know how significant that was for those Chinese investors choosing Canada over the U.S. in the beginning. It could have been significant to all of them. We need to remember that the number of applicants for the EB-5 program may not be as much of an issue in our case as the U.S. limitation on the number of visas we are willing to issue. There are, without a doubt, far more interest investors than there are visas available. Which leads us to remember our own bureaucratic backlog with processing EB-5 applications. That backlog alone has the power to make the question of whether or not more Chinese investors will be attracted to the U.S. through the EB-5 program a moot point.
One of the biggest problems with government is that policy makers all too often do not count the costs of the programs that they birth. When a woman becomes pregnant, she and her husband do not plan just for the ensuing nine months. They plan for the next 18 to 20 years. Our government – indeed, most governments – should plan far into the future just as the expectant family does. We are already learning the primary lesson that the Canadians have learned. There is much more to the process than there are resources allocated to processing it.
The EB-5 program represents a golden opportunity for both the U.S. economy and the Chinese EB-5 investors. It is truly a win-win program, but, if the processing remains as stagnated as it has been, neither the U.S. nor the Chinese investors will reap the full potential and benefits of the EB-5 program.
The primary concern for the U.S. should be to get our EB-5 program operating with much more efficiency and integrity. We cannot afford to offer an incentive like EB-5 to foreign investors and then allow months to pass with little or no progress toward bringing their investment to fruition. Developers cannot afford to wait on EB-5 processing while they are trying to move forward expeditiously on their projects. And we can ill-afford to allow scamming of investors through EB-5 to continue. How the government addresses these issues is up to them. In the meantime, my focus will continue to be to help people involved in all aspects of the EB-5 program become highly successful.
EB-5 Funding Ideal for U.S. Developers
The common ingredient in every major development project is the need for funding. With an economy that is still reluctant to invest, the EB-5 program is the ideal way to fill the funding gap with high net worth, foreign business people desiring to immigrate to the U.S. by investing in multimillion dollar projects.
Through the EB-5 program, individual investments of $1 million ($500,000 in certain circumstances) can be pooled to achieve the funding needed. Developers of projects that are, or businesses that will be, labor-intensive should give the EB-5 program a good look, because EB-5 investors must put their money into projects that create a minimum of 10 jobs per investor. Hotels, resorts, hospitals, assisted living facilities, industrial complexes, and casinos are ideal for obtaining EB-5 investment funding – for both the developer and the investor.
For more information, contact American Corporate Services.
Social media has a black eye with far too many business professionals in North America. That’s too bad. It’s too bad because the misuse of social media has produced a misconception of its potential for businesses. It’s also sad, because those who thumb their noses at social media, like those who originally thumbed their noses at the e-commerce potential of the internet, are making a huge mistake and missing more opportunities than have ever been placed in front of them at one time. If as a Regional Center, attorney, developer, financial advisor, or businessman, you have misgivings about marketing on social media, why don’t you pause at this point, bookmark this page, and take a few hours to study how social media is capable of driving business to you? It’s OK. We’ll wait …
Now that we’re all on the same page, let’s figure out how to use the internet, social media, and mobile marketing to advance your EB-5 business.
Perhaps the best place to start is with the fact that there are about 170 cities in China with a population over 1,000,000.[i] Just in case that number doesn’t resonate with you, the United States has nine. The cities in China are more often separated into tiers, based on population and per-capita GDP. Shanghai, Shenzhen, Guangzhou and Beijing are the only cities that are considered to be Tier One.
Now, your first impulse will probably be to direct your marketing activities toward those four cities. It is a natural mistake, first evidenced by the fact that China has 166 other cities whose total population exceeds 160 million. That is approximately 135 million more people than the total population of the nine American cities with populations in excess of one million.[ii] Think with me for just a minute. If you were marketing your services in the United States, would you neglect New York, Los Angeles, Chicago, Houston, Philadelphia, Phoenix, San Antonio, San Diego, and Dallas?
Here is another point to consider: current luxury spending in Tier 1 cities is reported to be in decline, even as it rises in Tier 2 and Tier 3 cities. The simple point is that all of the gold in China is not located in the four largest cities.
What about the Internet?
The first presence you need to develop is a website. But it has to be a website that is accessible and understandable in China. It does not have to be written in Chinese, but that certainly helps. The next thing is that its URL needs to be searchable--not so much in the U.S. as in China, where your potential investors reside.
Almost 90% of Chinese do their web searches on Baidu, so it doesn’t matter what analytics you get on Google. What matters is what kind of responses you get on Baidu, from its 400 million-plus users. This is where advertising on the Internet is going to become extremely difficult, unless you establish a solid working relationship with an experienced Chinese advertising Agency that specializes in digital media. Such Agencies can tailor your message to fit Chinese regulations and make it inviting to viewers, and also take care of the search engine optimization (SEO) that is most effective with Baidu.
A Chinese advertising Agency can also help you establish a social media presence on Weibo, a site similar to Facebook. Weibo has more than a half-billion users, and the numbers are increasing daily. Don’t think for a minute that high net-worth Chinese are not using Weibo as their social media access. The beauty of social media is to catch users’ attention and drive them to your website. And it is a very effective tool.
IT IS ESTIMATED THAT CHINESE PEOPLE SPEND MORE THAN A BILLION HOURS ON THE INTERNET EVERY DAY![iii]
You may be able to extend your reach with far greater effectiveness by partnering with a Chinese advertising Agency and do it at far less cost than by using an EB-5 Agency to find clients. In addition, since EB-5 Agencies admittedly seek to work with Americans who are willing to pay the largest commission, you may save a great deal of money by establishing a powerful online presence in China.
Once you have one or more websites up and running and you have your social media sites active, you can bring greater credibility to your website by blogging on the site, to share insights and information that will help you attract additional customers.
A Word about Mobile Marketing
Smart phone technology and use have been growing at a rate faster than any other consumer technology. With more than 1.1 BILLION mobile devices, China is the largest smart phone market in the world.[iv] It won’t be long before the marketing opportunities on mobile devices will be greater than on the good old Internet.
Your specially designed phone app can link directly to your digital marketing and social media sites. In addition, mobile apps can be “localized” for use in selected areas of China. Banner ads and pay-per-click ads are already becoming as popular on mobile apps as they are on websites. This is an opportunity that should not be ignored.
Fortunately, Agencies that provide these specific China-oriented services have locations in both North America and Asia, so they are easily accessible. The digital concept may seem inscrutable to you, but experts are available to help you take advantage of the most powerful advertising forces in human history to reach the greatest number of qualified candidates directly.
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”
More information: http://www.business-visa-usa.com/Book.html
[i] Joe Mullich, “Chinese Second-Tier Cities Take Off”, published by the Wall Street Journal in “Doing Business is China,” 2011
[ii] List of United States Cities by Population, Wikipedia
[iii] Online Advertising in China, Wikipedia
[iv] Mobile Marketing in China, How?, published by Glogou at http://mobile-marketing-in-china.glogou.com/
Updated 06-05-2014 at 10:01 AM by EB-5Blog