The news hits homes in China quickly about Senator Chuck Grassley's strong position against foreign corporation involvement in federally approved EB-5 regional centers around the country and its equity and financial involvement in development projects under EB-5 program, these large development projects mostly are located in downtown areas of big cities such as New York, San Francisco, Los Angeles, Chicago, Houston, Seattle, etc. The letter has become a hot topic among Chinese migration industry and investors alike. It is very interesting to see various opinions and feedback from Chinese market.
As more than 80% EB-5 investors have been coming from China past five years, Chinese investors have particular preference of investing along with large Chinese corporations because of name recognition and its close ties to government in China; to Chinese investors, it means "safe" to invest along side by side with EB-5 regional centers or EB-5 projects that are involved by Chinese developers, Chinese banks, Chinese insurance companies, or even private equity funds from China.
In Senator Chuck Grassley's letter, many large Chinese corporations are mentioned, however, there are other large or midsize Chinese companies in EB-5 business. Some of these companies are China's largest state controlled or state-influenced construction and finance entities. Their active participation has created an unlevel playing field which makes it most difficult or impossible for US developers (especially in rural and 2nd tier/3rd tier cities) to compete. As a result of the unfair practice and intense competition, many good and much needed job-creating projects in smaller cities, rural, priority urban and impoverished areas became absolute losers under the current EB-5 immigrant investors program. In addition, franchises are a major growth engine in the US for permanent jobs, mostly for less educated or low income workers, these small businesses fuel job growth and financing has been greatly restricted to franchises, many franchise operators turn to EB-5 program for alternative capital, however foreign corporate involvements hurt franchise EB-5 projects around the country.
The fact of Chinese corporate or state-controlled entities involvement in a US federal immigration program has also caused key concerns for many privately owned Chinese migration agencies, these agents are mostly small consulting firms who have been kept out of the business by the alliance of large US-China corporations and its big Chinese migration partners. The majority of Chinese migration industry (most members are smaller firms) have very slim opportunities of representing large and fancy EB-5 projects controlled by large Chinese corporations. Therefore, many agents see the urgent needs to keep huge foreign (Chinese) corporations out of EB-5 program.
Everyone in the market is eager to see what would happen in a future legislation concerning EB-5 immigrant investors program. A reform bill is urgently needed!
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