Chinese Immigration Agent Concerned About Due Diligence and EB-5 Projects

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Recently, Jason Li, president of Cansine Immigration Consulting Group in China, spoke with EB-5 Investment Report about project due diligence and his role as the director of the U.S. China Investment Immigration Association.

Jason Lee

Jason Lee, a due diligence consultant for EB-5 projects is concerned about the EB-5 program as a whole.

We want to have someone monitor the process over a 5 year period and make sure everything is in good shape so the investors don’t need to worry about money misuse.

The reputation of the EB-5 program in China is at risk, says Jason Li, who performs due diligence on EB-5 projects in the U.S. to be promoted in China on behalf of the U.S. China Investment Immigration Association.

Li said the Intercontinental Trust of Chicago convention center project failure had a big, negative impact on the reputation of EB-5 in China. He hopes to clear up some misunderstandings about EB-5 in China. He says, “They don’t say that the project was bad, they say EB-5 was bad.”

After the Chicago convention center failure, Li and immigration agents had a big meeting in China to discuss how to avoid these types of failures by performing more detailed due diligence. He says due diligence is extremely important and involves many aspects from the immigration perspective to the economic report and background checks of the developer. He says, “We don’t want to get involved in some project that the operator has a criminal record, bankruptcy or something. We want to see the shape of the business, if it’s profitable or not.” He adds, that due diligence is an on-going process from making sure the money arrives in the U.S to the operations of the project once it is open.

Li says that because China is the biggest market for EB-5, both good and bad projects are heavily promoted with no one monitoring the process. Some agents may not even speak English and may not understand the docements, he says. That is why the U.S. China Investment Immigration Association was formed. Agents can work together to perform the third party due diligence on projects and promote the good projects together in China. Li says, “We want to have someone monitor the process over a 5 year period and make sure everything is in good shape so the investors don’t need to worry about money misuse.”

Immigration broker fees and their disclosure to investors are hot EB-5 topics in the U.S., but, Li says Chinese investors don’t care about the fees and are more interested in getting their green card. He says the current “finder’s fees” are around $40,000 to $45,000, with rates of $50,000 being considered, high-end.

Although Chinese investors may not be concerned about broker fees, they are concerned about the structure of their investment and prefer the loan model, which is more conservative, rather than the equity model, Li says. However, whichever model used is determined on a case-by-case study and in some cases the two are combined.
Having the project funded 100 percent by EB-5 is not attractive to Chinese investors, who like to see the developer put forth money as well. Li says, “We want to put like 70 percent at most.”

Projects that want all of the money to come from EB-5, raise red flags to investors who believe that means the developer doesn’t have confidence in their project, according to Li.

Li’s company, Cansine, is a Beijing based migration agent firm and is one of the largest in China with six offices and hundreds of employees. In addition to touring EB-5 projects for the UCIIA, he travels the states speaking at workshops and seminars about due diligence.

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Dwight Cromie

Bill Friedl
Altek Media Group
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