Buying overseas real estate is popular among affluent Chinese for a number of reasons. They may be buying property for a son or daughter studying overseas, as a tangible investment or the first step in a long term goal of emigrating to a new country. The following is a curated list of articles that provide insight into the growing trend of Chinese purchasing real estate for personal and investment reasons overseas.
The number of foreign-born Chinese Americans in the US doubled between 2000 and 2010, according to a UN report, and experts attribute the increase in large part to China’s growing middle class, who have left in droves to pursue education or business opportunities abroad.
Among approximately 3.79 million Chinese now living in the United States, 2.2 million were born in China, according to the report by the UN Department of Economic and Social Affairs (UN-DESA).
“There has been an astronomical increase in Chinese students coming to US, driven by economic growth in China, improved educational infrastructure and a continued uncertainty about China’s trajectory,” said Madeleine Sumption, a senior policy analyst and assistant director for research in the international program at the Migration Policy Institute in Washington. “Having an education outside China is viewed as being an insurance policy, and more and more parents are able to afford to take advantage of that.”
In 2000, 22,000 visas were issued to Chinese nationals in the US; in 2012, that number jumped to 189,000. Increased government investment in China’s education system has also contributed to a larger portion of the Chinese population being able to apply for study abroad, she said.
Zai Liang, a professor in the sociology department at the University of Albany with a focus on immigration and Chinese demography, said he believes that the UN figures are slightly misleading. A significant portion of the 2.2 million Chinese-born immigrants currently in the US are in the country on temporary visas for school or short-term business and will not stay, he said. Some of the students may have been counted twice as a result of exiting the country for holiday trips or other short vacations, he said.
Other factors possibly contributing to increased immigration from China include lenient US immigration policies that encourage high-skill workers from China to take jobs in the US, said Karthick Ramakrishnan, associate professor of political science at the University of California, Riverside. Ramakrishna directs the National Asian-American Survey, and is working on a book on immigration legislation.
The US is working to make its policies more competitive in drawing higher-educated immigrants equipped to work in high-skill industries, he said.
Although immigration from China has increased steadily over the last decade, various push and pull factors play a role in how it plays out in developing countries. Increased wealth provides the means for people to leave, but increased opportunity can also attract many to return home upon graduation, Sumption said.
Immigration reform in the US will likely continue to prioritize visas for educated, high-skill workers from China, but will make it more difficult for Chinese families to bring extended family members with them when they relocate. Adult siblings will no longer be eligible.
The UN-DESA report, which was released ahead of a summit on migration and development held by the General Assembly in early October, noted that 232 million people now live abroad worldwide. In 2000, that number was 175 million. The US remains the world’s most preferred destination for immigration: between 1990 and 2013, nearly 23 million immigrants arrived in the country.
“Even though many people think of immigration as being most important to the Latino community, it’s also incredibly important to the Asian community as the US’ fastest-growing racial group,” Ramakrishnan said.
777 THINGS YOU SHOULD KNOW ABOUT INDEPENDENT CHINESE TRAVELERS
1 – Wi-Fi. Wi-Fi. Wi-Fi.
2 – We prefer Sprinter vans with family and friends instead of tour buses with strangers.
3 – We like local cuisine and local experiences.
4 – Restaurant menus with pictures please.
5 – Please accept UnionPay.
6 – Tell us how much we are saving when we shop in your store.
7 – Offer a global warranty and customer service in China for products we buy overseas.
BY SAGE BRENNAN, CHINA LUXURY ADVISORS
It’s not surprising that global luxury brand managers have started paying closer attention to the spendy Chinese travelers hitting their retail doors in Europe and America.
After all, China’s tourists outspent the perennial global leaders from Germany in 2012, dropping a total of US$102 billion on overseas trips compared to just US$84 billion by their German counterparts. Couple this with the fact that Chinese are now the #1 purchasers of luxury goods worldwide, with more than 60 percent of this spending occurring outside of China.
Amid the noise in industry publications about Chinese New Year and October’s Golden Week, however, some China-watchers may have overlooked the two most important trends of the recent boom in Chinese tourism: summer is the strongest season for Chinese tourist arrivals in key U.S. gateway cities, while spring is the slowest.
Consider the data. If you look at Chinese arrivals to the United States, which reached 1.4 million in 2012, the top month for arrivals from China is August, followed by December and July. In fact, the summer quarter (June, July, and August) was the top season for Chinese tourist arrivals to the U.S. in both 2012 and 2011, with 33 percent and 34 percent of all Chinese tourist arrivals respectively.
For further proof, we analyzed overall conversation activity related to international travel on Sina Corp’s Weibo.com, the dominant Chinese social media platform. The two peak months of posting volume for 2012 were July and August, followed closely by September and November.
This adds critical context to the recent rush of breathless news stories about a slowdown in spending by Chinese tourists during March, which is what we would expect from normal seasonal patterns. A look at the underlying annual trends indicates that a slow spring is nothing to worry about, even if this spring has been a bit slower than normal.
The spring quarter is always the slowest season for Chinese tourism. Every year. And the good news is that we are rapidly approaching the busiest travel period for Chinese tourists.
When formulating Chinese tourist engagement strategies and allocating budgets, the first elements most marketers consider are typically Chinese New Year activities and promotions. Retailers around the world have fallen over each other to produce limited-edition products related to the Chinese zodiac, Chinese decorations and window displays, Chinese cultural activities and special promotions, campaigns, and parties to celebrate the New Year.
While much of this effort is sensibly aimed to bolster brand awareness and goodwill, and strengthen connections with Chinese customers, brand managers would be better off driving revenue during the key summer season.
The best returns on investment will come from activities that focus on summer travel to Europe and North America.
We will be watching closely to see if summer tourism arrivals from China revert to their late-2012 trend, after the bigger-than-usual downturn related to the Chinese leadership handover in March and the ongoing crackdown on luxury spending by Chinese government officials.
What does all this mean for retailers, tourist attractions, and hospitality providers?
- When determining your Chinese tourist strategy, do not simply consider Chinese New Year and October Holiday. Chinese tourists are traveling all year, and especially during the summer and Western winter holiday periods.
- Chinese tourists typically plan three months in advance. Act now to make sure you don’t miss the upcoming July and August peak season.
- Chinese tourists are not a monolithic demographic. They’re tour groups, individuals, young, old, travel pros, travel newbies, affluent, middle class. Do not assume they are all the same. Take time to understand your existing customer base and your relative strengths with each of these customer segments.
Remember: summer––not Chinese New Year or October Golden Week––is the busiest travel period for Chinese tourists and a must-win opportunity for retailers and hospitality providers in global gateway cities.
Affluent Chinese don’t just want to shop til they drop, though they will still continue to do just that. What they want are VIP tickets to a Lakers game and to meet Prince Albert II of Monaco at a dinner party on the sidelines of a yacht sales event. For the uber-rich of China, traditional luxury has now gone post-luxury.
“You’ve got a Chinese demographic with a lot of money now. That’s not entirely new. They’ve had money for a while. But their tastes are changing,”says Christine Lu, founder of Affinity China, a travel consultancy that puts companies and Chinese tourists together for unique experiences.
“We’re used to seeing a bunch of Chinese leaving a tour bus and sweeping into stores on Fifth Avenue. That’s still going to happen, but less so,” she says. “You’ll have more individual travel. On the higher end, the luxury traveler is going to shop as part of their vacation, but they don’t want to be surrounded by other Chinese tourists anymore. You’ll see free and independent travel. And what we find is that many of them want exclusive experiences.”
The luxury China traveler is trying to get away from other luxury Chinese travelers. A dinner party hosted by a Prince might cost them $30,000, hotel and airfare included. But beside the glam of living like Jay Gatsby, many affluent Chinese are traveling abroad in search of investment opportunities. Whether it’s a home in Laguna Beach or a college education at Boston University, the new and numerous big spender is looking beyond the Guccis, and in increasing numbers.
They’ll take the Neverfulls, and put 30% down on a house in Laguna.
Companies will have to learn how to find these individuals, and for the post-luxury tourist, offer everything from private fashion shows at Bergdorf Goodman to planning a Malibu dream wedding for Shanghai newlyweds.
When it comes to China luxury, the Neverfulls is never the full story.
China’s New Luxury Market
Around 60% of all luxury goods bought by the Chinese are bought overseas. Luxury brand companies that have a presence in China already, the Pradas and Louis Vuittons of the world, know their customers well and cater to them when they arrive during the heavy travel seasons of October and February. Many of those brands are learning to live with and love China.
Last year, boutique hotel Zadig & Voltaire (named of the luxury French clothing retailer) learned a lesson when it said it would “not be open to Chinese tourists”. It created a firestorm in China’s social media. It had to apologize quickly. They probably don’t need Chinese tourists, but talk like that will have Paris loving Chinese taking their euros elsewhere.
Big spending Chinese travelers are no joke. By definition, a relatively few people constitute the Chinese luxury market. In China, Boston Consulting Group (BCG) estimates that there are around 700,000 households with assets greater than $1 million. They make up China’s 0.2 percenters. And they control 48% of China’s wealth.
And guess what?
They are not getting poorer.
“These are the consumers for whom money is no object and they spend on every kind of luxury goods and service,” says BCGs Michael Silverstein.
New companies are popping up to cater to this demographic. Some states have even opened travel bureaus in China to lure them in.
New York based Bomoda is less than a year old and was founded because of this market. Bomoda curates content about luxury goods and lifestyle…in Mandarin Chinese.
“The Europeans have already figured out that if you don’t staff your hotels and stores with Mandarin speakers, you are going to have a hard time serving them,” says Bomoda CEO Brian Buchwald. “Your competition is already looking to cater to them. The U.S. is slightly behind the curve on this, but they are catching up. What we are seeing now is that Chinese tourists are coming here on their own, not by the busload per se, because they want to see the flagship stores on Fifth Avenue or experience something new, like a walk through Macy’s.”
Bomoda recently started a luxury fashion consumer newsletter, the first of its kind in China. Circulation was around 100,000 in February when Buchwald and I spoke. He had returned from Shanghai three months prior to our discussion. “I fell in love with the energy there. I haven’t felt a city vibe like that since San Francisco in the dot-com days,” he says of the 1990s. “Shanghai is infectious”
If it’s a virus, it’s the kind you want. It’s coming your way to a Hamptons mansion in your neighborhood, or an Orange County shopping mall, and seated right beside you in the box seats of an LA Lakers game, only served up with a meet-n-greet with “Magic” Johnson on the side.
China’s expenditure on travel abroad reached $102 billion in 2012, making it the first tourism source market in the world in terms of spending, the U.N. World Tourism Organization said this month.
Over the past decade China has become the fastest-growing tourism source market in the world. Thanks to rapid urbanization, rising disposable incomes and relaxation of restrictions on foreign travel, the volume of international trips by Chinese travelers has grown from 10 million in 2000 to 83 million in 2012. Expenditure by Chinese tourists abroad has also increased almost eight-fold since 2000.
Boosted by an appreciating Chinese currency, Chinese travelers spent 40% more last year than they did in 2011. On the low end of the spectrum, that’s more Chinese meeting Mickey Mouse in Orlando and playing black jack in Las Vegas casinos.
On the high end, it’s more houses sold, more Coach bags bought, and more tours of colleges and universities.
“We believe the Chinese consumer, not just the luxury spender, but the entire Chinese consumer market is a secular growth trend that is really unstoppable,” says Jaime Kramer, head of thematic investing at J.P. Morgan Private Bank.
When I spoke with Lu over the phone in her Los Angeles home this week, I told her about a summer day-trip I took with a visitor from Brazil. I showed him the two Vanderbilt mansions of Newport, Rhode Island — both The Breakers and The Marble House. Back in the mid-90s when I was a tour guide there, guests were all white Americans and a few Europeans. But by last summer, the tour guides have all been replaced by self-guided headsets. In the room where you get those headsets were dozens of Chinese tourists. I had never seen so many in my summer at the mansions. They were the dominant nationality on display oohing and wowing at the view from the upper loggia of the Breakers. Alva Vanderbilt’s Chinese Tea House, original site of some of the first women’s suffragette meetings, was also a curiosity on the Marble house lawn overlooking First Beach.
Meanwhile, Lu is helping wealthy Chinese to go post-luxury. She got one man a rental manor in the Hamptons. He shipped in 20 friends for the weekend and they pretended to be American robber barons. She’s now working with the Hawaiian International Film Festival to bring in some Chinese tourists in October, maybe get a VIP experience with some Chinese actors. The Chinese have yet to discover our 50th state, Lu says.
California is currently the Chinese luxury travelers favorite destination in the U.S., followed by New York. The South Coast Plaza in Costa Mesa is so used to seeing foreign Chinese it now has a Chinese speaking concierge. Napa and Sonoma Valleys have become new hot spots for Chinese tourists escaping their 0.2 percenter peers crowding French wineries.
At a time when most Americans are still struggling to make ends meet, foreign millionaires parading around in $1,000 shoes carrying pink poodles might be humbling. For Lu, she sees it as a blessing in disguise.
“What we try to do is work with the charity organizations attached to famous people,” she says. “So we are working with former Mexican president Vicente Fox’s foundation (Centro Fox) to see if we can organize a private dinner with him for Chinese clients that are interested. The money goes to the foundation. It’s our social side. It gives the wealthy Chinese the access they are looking for, and if it helps build a new hospital, all the better.”
BEIJING — The local government in China’s southernmost city has vowed to “delay not a single day” to accelerate the city’s construction in the South China Sea.
The local government also said it will put safegarding national sovereignty in a better position. The pledge by Xiao Jie, mayor of Sansha, was made on the sidelines of the first session of the National People’s Congress (NPC), China’s top legislature.
Xiao’s promise came as Chinese Foreign Minister Yang Jiechi said Wednesday that the central authorities’ decision to set up Sansha city last year was an important move after taking into account situations at home and abroad.
Home to about 1,000 residents, Sansha was officially set up as China’s youngest city in July last year to administer about 2-million-square-km islands, coastal areas and territorial seas in the South China Sea.
The city of Sansha gets its name from three island groups under its jurisdiction — Xisha, Zhongsha and Nansha — and their surrounding waters in the South China Sea.
Special work teams have been established and local laws and regulations have been passed to accelerate the construction of infrastructure facilities in Sansha city, said Xiao, who is also a deputy to the 12th NPC session.
Located on 2.13-square-km Yongxing Island, the Sansha government and local residents rely on ships for fresh water and other materials.
More than 180 sea miles away from the Qinglan port in Hanhai Island, transport and logistics support remains vulnerable for the city, said Xiao.
More office buildings will be built for local villagers’ committees, Xiao said, adding that the city is also preparing ship routes and logistics supports for opening the islands and their surrounding waters for tourists.
“When conditions permit, we will open for tourism,” said Xiao, “I believe it won’t take too long.”
In the government work report to the opening session of the 12th NPC on Tuesday, Premier Wen Jiabao said the government should strengthen comprehensive marine management, protect the marine ecological environment and safeguard China’s maritime rights and interests.
While deliberating on the report with other national lawmakers from the province, Yang said people in Hainan have contributed greatly in safeguarding the security and sovereignty of China along with the whole nation.
“I believe the establishment of Sansha city will bring great opportunities to the province’s development and opening up drive,” he said.