Alternative investment strategies for wealthy Chinese
After the reform and opening up, China has gradually become a hot spot for world economic growth, and. after entering the WTO, China has further integrated into the world market.
Along with the rapid growth of exports, the real estate market and domestic demand, massive changes have taken place in the way the Chinese people accumulate their wealth.
China's huge population has led to a comparably large number of high net worth individuals. Data shows that China has 800,000 individuals with personal assets exceeding one million dollars. In a very short period of time, the Chinese super rich have risen to 10 percent of the world total, and this figure is growing at 20 percent annually.
Investment, of all kinds, targeting the Chinese super rich is growing, from consumer investments such as luxury products and tourism, to rapid increase of speculative investment in the stock and property markets. However, some somber individuals are gradually realizing that the zest of consumer investment is to meet people short-term desire for vanity and entertainment, and the speculative investment is to meet people impulsion for quick money. The real and most basic investment for life is often neglected.
What indeed has been neglected by China rich people? We think the appropriate priority for a rich man is as follows:
1. personal safety (whether your family and you are living in a comfortable, free, and stable environment, free from worries such as air pollution and food safety)
2. wealth safety (whether your business and wealth is run and kept under a legal and stable system. You don have to worry everyday about changeable and heavy tax policies, and administrative measures that are not market-oriented.)
3. added-value of wealth (whether your wealth can gain value by investing in open, stable, safe and varied markets, instead of struggling everyday with all kinds of investment traps, and being forced to race with the GDP)
4. pension arrangements, medical spending and education for children (the attempts China has taken to reform the three sector have all failed. There is no hope of success as far as one can see.)
5. goods, leisure and travel (China rich people can only discard long-term investment and turn to investment in consumer goods, spending one day and another in a mixture of agony and happiness. These consumers still have to pay 30 percent more than their foreign counterparts.)
So, most rich men in China have neglected the proper order of investment. In fact, theye reversed these priorities. However in China immature market, the super rich do not have another apparent option. How can we resolve this situation?
Immigration and holding assets in mature markets overseas can effectively solve some of the above problems. In recent years, the US, Canada, Australia, UK, and New Zealand have become the main immigration destinations rich Chinese. But a series of problems that came afterwards have bewildered those who are in need of immigration and overseas investment. For example, investment immigration (EB5) in the US can be difficult and result in losses. Canada has a high threshold and you cannot leave the country, which is similar in Australia and New Zealand. Besides, you will meet all kinds of difficulties when you want to withdraw your investment. The UK, as it is not an immigration country, will have all kinds of questions. More importantly, these are all countries with relatively good welfare, and strictly impose high tax globally. The US and Canada have recently introduced various measures that will enable global taxation, threatening thoughtful Chinese wealthy with duplicated taxation.
But it is not possible that there is no solution for rich Chinese. Recently I have seen some investors using other strategies that can solve all the problems mentioned above by investing in offshore centers who can combine investment and citizenship.
First, nationality can normally be granted fairly quickly and there is no restriction on mobility nor a requirement for long-term stay.
Second, their global tax exempt policies are attractive to many rich men, especially business men.
Third, for jurisdictions that are a member of the British Commonwealth, you don need a visa to travel to many countries, and it will provide sufficient options for pension, medical care and education.
Just imagine it! As a Chinese superrich, one day you can spend your holiday in a beautiful coastal country each year, enjoy the heavenly scene. Meanwhile, you don have to worry about the your personal and wealth safety, nor would you be frowning about all the complexities of life. Only in this way you can become a real Chinese rich man.