11/07/2016

Chinese Immigration to Canada Market Research

01/23/2017

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THE AFOREMENTIONED STATEMENT

SUMÁRIO

1. Market Overview ...............................................................................4

1.1 Chinese Immigration to Canada .................................................................................... 4

1.2 General understanding of competition pricing .............................................................. 5

1.3 Rich Chinese immigrants' deception costs ..................................................................... 6

2. Chinese Global Citizen Characteristics .............................................. 12

2.1 Investments - Overseas Asset Allocation ..................................................................... 13

2.2 Reasons for Immigration ............................................................................................. 15

2.3 The main obstacles to migration ................................................................................. 15

4. Definition of HNWI ........................................................................... 16

4.1 HNWI : High Net Worth Individual .............................................................................. 16

4.2 What Makes a HNWI? ................................................................................................. 16

4.3 Where HNWIs Live ...................................................................................................... 17

5. HNWIs plans .................................................................................... 18

5.1 Most Suitable Emigration Destinations for Chinese HNWIs ......................................... 18

6. References ....................................................................................... 21

1. MARKET OVERVIEW

According to the 2002 statistics from the Citizenship and Immigration Canada, the

PRC has supplied the biggest number of Canadian immigrants since 2000, averaging well

over 30,000 immigrants per year, totaling an average of 15% of all immigrants to Canada.

This trend shows no sign of slowing down, with an all-time high of more than 40,000

reached in 2005.

1.1 Chinese Immigration to Canada

In 2011, the immigrant population comprised 20.6% of Canada’s population, so one

in five people were immigrants. The number of immigrants from China grew 63.9% from

332,825 in 2001 to 545,535 in 2011, making Chinese the second largest foreign-born

group in Canada. Over 49% of Chinese immigrants resided in Ontario in 2001 and 2011;

most of them (224,915 or 84%) lived in the Greater Toronto Area in 2011.

In 2011, 30.7% of the Chinese immigrants resided in British Columbia; most of them

(159,200 or 95%) lived in the Greater Vancouver Area. Prince Edward Island experienced

the highest percentage increase of Chinese immigrants (1556%) from 90 in 2001 people

to 1,490 in 2011. Landing Year Total

2006 33,493 2007 27,63 2008 30,031 2009 29,622 2010 30,381 2011 28,491 2012 33,012 2013 34,116 2014 24,624 2015 19,512

2006-2015 290,912

1.2 General understanding of competition pricing

Mei He’s Beijing-based Wailian Overseas Consulting Group, and the hundreds of

other so-called “migration agents” that woo investors on the ground in China have been

among the biggest profiteers from the EB-5 immigration program. That’s thanks to the

massive fees these migration agents charge developers and the regional centers hired to

market projects to Chinese nationals. The consultancies can make up to $200,000 on every

investor — each of whom is required to contribute a minimum of $500,000 to a project.

On a $100 million capital raise, that amounts to a massive $40 million.

As competition has ramped up, the fees charged by migration agents have increased

substantially over the past couple of years. Sources told The Real Deal that top migration

agents are typically paid by the regional center (or developer), drawing an upfront fee of

$50,000 to $75,000 per $500,000 investment they bring in, plus a 3 percent to 8 percent

share of the interest over the term of the loan.

By the end of a five-year loan term, some of the highest-paid agents will have raked

in close to $200,000 per single investor. That’s double the amount they got paid even two

years ago, sources said. The increasing costs of hiring migration agents also means it’s

often financially impractical for regional centers to hire both migration agents and

accredited broker-dealers.

1.3 Rich Chinese immigrants' deception costs

The huge influx of rich Chinese is already a hotly debated issue in Vancouver, which

has seen property prices soar. From 2005 to 2012, a total of 29,764 rich Chinese, mostly

from the mainland but also from Taiwan and Hong Kong, are known to have moved to BC

under the programme, which required applicants to loan Canada C$800,000 (HK$5.54

million) per family and have minimum assets of C$1.6 million. Yet in the same period, only

13,872 certificates of permanent residency were issued to applicants from greater China

who nominated BC as their intended destination.

This suggests at least 53 per cent of all Chinese known to have settled in BC under

the IIP said they planned to live elsewhere. Immigration experts said this was mainly done

to secure preferential treatment - for instance, by applying via Quebec's independently

run IIP to bypass the queue for the now-defunct federal version of the scheme.

Because the IIP's loan funds are disbursed to the provinces according to the stated

destination of migrants, the deception has cost BC access to about C$2 billion in interest-

free five-year loans, the Post calculates.

Among mainland Chinese, at least 60.3 per cent of arrivals in BC practised the

apparent deception. And because mainland Chinese dominated the IIP, they represented

86.8 per cent of all apparent deceivers.

1.3.1 More and More Wealthy Chinese Want to Emigrate

Last year, Chinese millionaires maxed out the quota for EB-5 visas under the U.S.’s

Immigrant Investor Program, and recently it was reported that 90% of Australia’s

Significant Investor visas were given to Chinese nationals. All over the world, immigrant

investor programs are being flooded with applicants from China.

1.3.2 Percentages of Rich People Who Leave the Country

Meanwhile, a recent survey from Barclays shows that 47% of wealthy Chinese

would like to emigrate. The response rate for the survey was 29% worldwide. Percentage

of Wealthy Individuals Who Plan to Move Abroad Within the Next 5 Years. According to

the Hurun Report’s “2014 Immigrant Investor White Paper,” the U.S. and Canada are the

first choices for wealthy Chinese.

1.3.3 Where do wealthy Chinese want to go?

1.3.4 Percentages of rich people who leave the country

1.3.5 Percentage of wealthy individuals who plan to move abroad

1.3.6 Top destinations for wealthy Chinese emigrants

1.3.7 Requirements for Getting an Immigrant Investor Visa

Types of immigration include immigrant investor programs, skilled worker

programs, study abroad, and irregular immigration. Most wealthy Chinese immigrate

through investment. Minimum Investment Required to Immigrate, by Country

For wealthy Chinese, who can easily be worth tens of millions, the threshold for

immigrating isn’t high at all. And the thresholds of many countries, including America,

have dropped considerably. As the ranks of China’s upper class swell, the low thresholds

for many countries’ immigrant investor programs are tempting more and more wealthy

Chinese to join in the rush. Total Number of Chinese to Receive Immigrant Investor Visas for the U.S., 2004-2014

In 2014 the number of applicants for the U.S. immigrant investor program hit an all-

time high, and 85% of the applicants were Chinese. This was the first time the yearly

quota maxed out, and the U.S. government temporarily ceased accepting applications.

A similar situation has arisen in Canada. Over the past few years, the number of

applicants from China has exploded, and in February 2014 the Canadian government

announced that it will be calling a halt to their Immigrant Investor Plan (IIP) launched in

1986.

Immigration Through Investment Depletes China’s Wealt

2. CHINESE GLOBAL CITIZEN CHARACTERISTICS

33% of respondents believed that 'visa freedom' is the most important defining

factor in being a global citizen; 29% opted for 'financial freedom', while 'overseas

education', 'multinational circle of friends' and 'multinational business contacts' were

chosen by 11%, 10% and 9% respectively. For financial freedom, 35% believed that assets

of 50 million yuan are sufficient, 30% thought 50-100 million yuan, 19% thought 100-500

million yuan, and 4% chose 500 million yuan or more. The average came to 120 million

yuan. International education has become part of Chinese HNWIs' 'internationalisation

strategy'.

Influenced by the concept of 'internationalisation', a growing number of HNWIs are

planning to send their children abroad to receive advanced, international educations.

According to the survey, the proportion stands at 83%. The average age of being sent

abroad to study fell from 18 years old in 2014 to 16 years old.

For the first time, HNWI parents are most commonly sending their children

overseas when they reach high school age, rather than at university age. 26.7% of parents

chose high school age, followed by 18.1% who chose middle school. The proportion

choosing to send their children overseas during primary school rose from 10.7% last year

to 12.3% this year. Those choosing university age fell from 23.9% to 22.7%. These trends

reflect the belief among parents that sending their children abroad at a younger age helps

them to acclimatise to cultural differences better.

In terms of preferred study destinations, the United States finds the most favour,

with 33.2%, followed by Britain with 23.6%, with Australia and Canada in third and fourth

place. These four nations are by far the most popular destinations currently, and all of

them have significant numbers of Chinese students. The United States, with its quantity

(more than 3,000 universities and nearly 3,000 high schools) and quality of schools is the

dream destination for Chinese students, while Britain, although it cannot match the United

States in terms of options, has a unique appeal based on its heritage of educational rigour

and tradition. Australia and Canada are viewed as providers of high-quality and cost-

effective educational opportunities.

2.1 Investments - Overseas Asset Allocation

This year's survey data show that risk diversification has been displayed by

education as the main driving force for overseas investment. 28% of respondents said that

high quality education was the most attractive aspect of investing overseas. Nonetheless,

risk diversification is still important, with 20% of respondents citing it as their biggest

priority. Immigration investment is growing in importance, with a further 20% putting it

as their main overseas investment motivation, up 4% on last year.

2.2 Reasons for Immigration

Quality of education - 21%, Environmental pollution - 20%, Food safety - 19%, Social Welfare - 15%, Medical level - 11%, Asset security - 8%, Fertility Restriction - 2%, Fertility considerations - 2%, Other - 2%, IPO - 1%, Tax considerations - 1%.

2.3 The main obstacles to migration

Waiting time is too long - 28%, language disability - 15%, Difficult to integrate into the mainstream society - 14%, Difficulty applying - 13%, The cost is too high - 10%, Living abroad is helpless - 8%, Family can not peer - 7%, The company's future is uncertain - 3%, other - 3%.

4. DEFINITION OF HNWI

4.1 HNWI : High Net Worth Individual

High net worth individual (HNWI) is a classification used by the financial services

industry to denote an individual or a family with high net worth. Although there is no

precise definition of how rich somebody must be to fit into this category, high net worth is

generally quoted in terms of liquid assets over a certain figure. The exact amount differs

by financial institution and region.

The categorization is relevant because high net worth individuals generally qualify

for separately managed investment accounts instead of regular mutual funds. This is

where it comes into play that different financial institutions maintain different minimum

standards for HNWI classification. Most banks require that a customer have a certain

amount in liquid assets and/or a certain amount in depository accounts with the bank to

qualify for special HNWI treatment.

4.2 What Makes a HNWI?

The most commonly quoted figure for membership in the high net worth club is $1

million in liquid financial assets. An investor with less than $1 million but more than

$100,000 is considered to be "affluent" or perhaps even "sub-HNWI." The upper end of

HNWI is around $5 million, at which point the client is then referred to as "very HNWI."

More than $30 million in wealth classifies a person as "ultra HNWI."

HNWIs are in high demand by private wealth managers. The more money a person

has, the more work it takes to maintain and preserve those assets. These individuals

generally demand (and can justify) personalized services in investment management,

estate planning, tax planning and so on.

4.3 Where HNWIs Live

The Capgemini World Wealth Report reveals that as of 2015, the United States

boasts the most HNWIs in the world at over 4.45 million. HNWIs represent over 1.3% of

the U.S. population. Moreover, 61.2% of the global HNWI population reside in four

countries: The United States, Japan, Germany and China. The two Asian countries on the

list, Japan and China, had the largest increases in HNWI population between 2014 and

2015 at 11% and 16%, respectively. The biggest drop in HNWI population was suffered by

Brazil, which had 8% fewer HNWIs in 2015 than in 2014.

5. HNWIS PLANS

Up to 83% of HNWIs have plans to send their children abroad for study, with the

average age of going overseas to study falling to 16 years of age.

The Chinese Immigration Index 2015 assesses the attractiveness of the world's

major emigration destinations based on eight categories: education, property investment

preferences, immigration policy, cost of living, personal taxation levels, visa-free travel,

medical care and ease of adaptability. According to the latest government statistics, the

ethnic Chinese population of Canada is 1.5 million.

5.1 Most Suitable Emigration Destinations for Chinese HNWIs

In compiling the China Immigration Index, Visas Consulting Group and the Hurun

Research Institute have assessed the ease and desirability of resettlement in eligible

countries worldwide across eight key categories, namely education, property investment

preferences, immigration policy, cost of living, personal taxation levels, visa-free travel,

medical care and ease of adaptability, using the data gathered to determine the top ten

most desirable nations for emigration. The United States, Britain, Canada, Australia,

Singapore, New Zealand, Germany, South Korea, Hungary and Portugal were the nations

that made the cut.

With a score of 9.10, the United States topped the index. Boasting one of the world's

most developed education systems, the United States is the first choice for Chinese

students looking to study overseas, with 304,040 Chinese students registered at American

schools in the 2014/15 academic year. The United States is also the favoured

destination for global investors, accounting for 50% of property investment worldwide

according to Jones Lang LeSalle's latest report, with 16 of the 30 most desirable cities

located there. Investment immigrants (category EB-5) are offered a warm welcome, with

10,692 visas granted for such purposes in the fiscal year 2014, of whom 9128 were

Chinese, an increase of 46% on 2013. China is now the United States' largest source of

investment immigration, with the proportion of EB-5 visa program applicants accounted

for by Chinese nationals rising from 26.7% in 2008 to 85.4% at present, with the annual

average over 85% over the past three years.

In second place, Britain scored 8.70 points. In many respects, Britain is very similar

to the United States in terms of what makes it attractive as an immigration destination.

However, when it comes to investment immigration, the minimum sum of £2,000,000

required is well in excess of what the United States requires, and its cost of living is

slightly higher. On the other hand, Britain fares better than its cross-Atlantic cousin in

terms of personal taxation and healthcare.

Canada ranked third with 8.30, while Australia and Singapore came fourth and

fifth respectively. Similarities in language, culture and cuisine, as well as the fact that 70%

of the population are ethnic Chinese, very much spoke in the latter's favour, while its

highly efficient healthcare system - accounting for only 4.5% of GDP despite life

expectancy being as high as 82.1 years - saw Singapore take top spot in the medical care

category. Its enormous tax advantages also helped secure its high ranking. While it enjoys

a strong economic reputation, sixplaced Germany's entrepreneurshipcored immigration

policy is more stringent than in the United States, Canada and other destinations. Seventh-

placed New Zealand enjoys a strong balance across a range of categories. South Korea,

Hungary and Portugal did not put in as strong a showing as the top seven, which is why

they are not yet considered to be mainstream destinations in the Chinese mindset.

6. REFERENCES

chinafile.com (2017). [online] Available at: https://www.chinafile.com/multimedia/infographics/wealthy-chinese-are-fleeing-country-mad#sthash.MSfxQIjG.dpuf [Accessed 19 Jan. 2017]

news.gc.ca (2017). [online] Available at:

http://news.gc.ca/web/article-en.do?nid=814939 [Accessed 19 Jan. 2017]

money.cnn.com (2017). [online] Available at: http://money.cnn.com/2014/03/25/news/economy/china-us-immigrant-visa/ [Accessed 19 Jan. 2017]

cic.gc.ca (2017). [online] Available at: http://www.cic.gc.ca/ENGLISH/immigrate/business/investors/index.asp [Accessed 19 Jan. 2017]

scmp.com (2017). [online] Available at: http://www.scmp.com/news/world/article/1426368/canada-scraps-millionaire-visa-scheme-dumps-46000-chinese-applications?page=all [Accessed 19 Jan. 2017]

canadaimmigrants.com (2017). [online] Available at: http://canadaimmigrants.com/chinese-immigrants-to-canada [Accessed 20 Jan. 2017]

therealdeal.com (2017). [online] Available at: https://therealdeal.com/issues_articles/eb-5s-gatekeepers/ [Accessed 20 Jan. 2017]

ecns.cn/ (2017). [online] Available at: http://www.ecns.cn/2015/05-04/163979.shtml [Accessed 20 Jan. 2017]

chinafile.com (2017). [online] Available at: https://www.chinafile.com/multimedia/infographics/wealthy-chinese-are-fleeing-country-mad [Accessed 20 Jan. 2017]

scmp.com (2017). [online] Available at: http://www.scmp.com/news/world/article/1612403/rich-chinese-immigrants-

deception-costs-british-columbia-billions [Accessed 21 Jan. 2017]