Sunday, June 3, 2012

Migrants mean business: The Australian perspective

ROWAN CALLICK, ASIA-PACIFIC EDITOR From: The Australian


THE battle to bring workers from a land of surplus labour to a land of surplus resources -- now being fought between unions and miners over Gina Rinehart's $9.5 billion Roy Hill iron ore prospect -- is not new.

It began in the gold rushes 150 years ago, when there were frequent skirmishes between miners of European backgrounds and those who came seeking their fortune from southern China.

It continued through Federation, when pressure from organised labour led to the Immigration Restriction Act of 1901 that privileged "white Australia".

Now Australia is seeking to benefit further from its connections with China, its major trading partner, through upgrading the business migration scheme, which Immigration Minister Chris Bowen has revamped.

This comes into effect from July 1, and follows an internal review similar to that run last year by Michael Knight into student visas.


Australia has always depended heavily on foreign investment to build the country's economy. Today not only does China have the deepest pockets, it has also nurtured a new generation of hungry businesspeople.

Some of this generation are eager to try their hand in a new environment, especially one as green, as promising for their children's education and as economically successful as Australia.

Chinese applicants -- including those from Hong Kong and Taiwan -- dominated the 7796 business migrant visas that Australia issued in the past financial year, taking 61.5 per cent of the places. Next came South Korea with 8.2 per cent, then Malaysia with 5.3 per cent.

The 13 former business visa sub-classes are being reduced to three:

lBusiness talent -- sub-class 132 -- for entrepreneurs sponsored by states or territories, who have $1.5 million assets or $1m funding from a member of the Australian Venture Capital Association

lBusiness innovation and investment (provisional) -- sub-class 188 -- for people with successful businesses, net assets of $800,000 and annual turnovers of $500,000, or who invest $1.5m in state or territory bonds for four years, and have $2.25m in net assets

lBusiness innovation and investment (permanent) -- sub-class 888, the ultimate lucky Chinese number -- for those who have met the provisional visa requirements, have successfully operated a business in Australia for four years, and gain permanent residency.

Bowen has foreshadowed a further category, for the significant investor, who will invest at least $5m in Australia, and who may be fast-tracked to permanent residency on arrival.

Most business migrants will enter under the 188 sub-class, under which they will be awarded points according to age -- 25 to 32 scores highest -- English ability, qualifications, experience in business or investment, net assets, business turnover, and innovation capacity, with patent holders especially valued.

Politicians across Australia have held out the expectation that business migrants will transfer factories from China, invite them to cut ribbons for TV cameras and announce hundreds of new jobs.

Instead, they mostly comprise people such as Liu Jie who is running a retail arm in Melbourne for her family furniture factory in Guangdong, or Michael Li, whose Headway Logistics business is steadily acquiring Australian clients able to fill containers that formerly returned to China empty.

Li, who has visited numerous Rotary clubs in east Melbourne, where he now lives, to help improve his English and build his new Aussie "guanxi" or network, says: "I hear many Australians say they want to export to China's middle class, who are now the biggest buyers, for example, of Australian wines. But they need to learn more about the different Chinese markets first."

Bowen's new measures will place greater weight on business skills and capacity to innovate.

Business migrants will also have to bring more money with them to Australia. But that is not a problem for the nouveaux riches, whose wealth has grown at a pace that often astonishes even them.

The challenge for the immigration officials in Hong Kong, who will assess the applicants at first -- thanks to the new requirement to register an initial "expression of interest" -- is to fathom who could do well in Australia, who is truly committed to a new life there, and who has most to offer for the long term. State as well as federal departments can gain access to information on these potential migrants, via the confidential website AUSkey.

States are key sponsors of new business arrivals -- and adjust their priorities frequently. Recently, for instance NSW decided to stop sponsoring people planning to buy or open restaurants.

Would Frank Lowy have got a tick under the new rules? One of Australia's most famous immigrants, he was born in Czechoslovakia, lived in Hungary and arrived after a few years in Israel with very modest assets. His first business was a partnership with a fellow Hungarian migrant in a deli in Blacktown, western Sydney.

Any premier with instant success and new jobs as priorities might today be impatient with Lowy who, of course, has famously gone on to build the world's biggest shopping mall empire.

Maria Jockel, senior immigration lawyer for Melbourne law firm Holding Redlich, says that since 1994, when Australia began seeking business migrants, it has struggled with the gap between its ambitious aims and the results.

There are now 3000 pages of laws on migration and 16,000 pages of policy guidelines, administered by 7000 bureaucrats, who must process 13,000 applicants per day -- to attain the goal of 190,000 new permanent residencies in the next financial year.

In 2002, says Jockel, a review discovered that most business migrants were not actually living in Australia, and had never established a business here -- sometimes recycling the $500,000 investment required.

The rules were then changed to include a step before permanent residency. The new revamp will ban a shift within a family between who gains the initial visa and who gains PR. This has allowed the key business operator, often the husband, to stay running his firm in China while his wife looks after a retail franchise in Australia.

Tony Wang, who owns the Ausking Immigration and Investment Group, says: "My clients need one to three years to adapt to life in Australia. In time they will get the idea of how to run a bigger business here. They'll hold some of their resources back. No one would want to invest all their money in a project they don't yet feel comfortable about."

He and his wife, who runs their business in Wuhan, operate roadshows to highlight the idea of Australian migration to businesspeople. Education is a major reason. It can be cheaper to put a student through the Australian system once a parent has PR.

Some, Wang says, prize the more relaxed Australian lifestyle, seeking respite from China's often frenetic business world. "And it's warmer here than Canada, and less dangerous than America."

Business migrants, he points out, have to detail not only their assets but their origins -- whether from profits, or salaries, or family gifts or gambling. Applicants also have to prove they have paid appropriate tax. This can all naturally be awkward.

And the introduction to applicants to the Hong Kong office stresses that "state-owned enterprises cannot be considered as equivalent to private ownership".

Chinese people value discretion highly, especially in the face of an acquisitive and inquisitive state such as the People's Republic.

And in Australia, wealthy Chinese families are concerned about the risks of information being divulged that might make them vulnerable to crime.

Wang explains that the wealthiest Chinese, including the elite political class, are highly circumscribed in moving assets offshore. So migrants tend to come from the middle class who have not attracted any special attention.

Zhang Kai, who runs Kai Business Solutions in Melbourne, says: "I generally suggest to business-migrant clients before they come to Australia, that they change their mindset. In China, people may be used to setting up a very, very big project. But here the market is smaller, and people have to think in a more practical way."

He suggests that retail is the easiest way to start in Australia -- even though they may think it's a bit beneath them. "To get PR, you have to run a business successfully, and the government doesn't mind what type of business it is. It's best to take it step by step, I say."

Michael Li differs: "Some people tried to persuade me at first to buy a store, like a bottle shop. Maybe at the beginning that would have been better, I might have made $200,000 profit after a couple of years.

"But I have greater confidence in myself, I believe I will do better for the longer term starting my own company, using my skills in logistics."

Jean-Francois Harvey, a Canadian migration lawyer based in Hong Kong, says that "Australia is looking for active investments, while most of my clients are looking for passive investments".



Economic migrants follow a familiar path to prosperity



LIU Jie, 52, is typical of the business migrants Australia has been attracting in recent years. As it is for many, their

first encounter was accidental and positive.

She and her husband first travelled from China to Australia as tourists. "We loved the climate and the people and we decided to migrate here."

They don't have the kind of business plan that an MBA lecturer would recognise. But they have the kind of family

plan that has worked well for countless Chinese migrants who have established new homes where they have created fresh wealth while keeping hold of their culture.

Liu arrived in November, taking over a business selling traditional Chinese rosewood furniture that she and her husband had bought from Allen Siu two months earlier. Siu, originally from Hong Kong, had set up the business in Blackburn in east Melbourne 16 years ago. He had migrated to Australia 24 years before that, and has been kept on by Liu, in part because he speaks English, and she is only just starting to learn the language.

She and her husband come from Wuhan, a Yangtze River city of 10 million in China's heartland. He is running a factory where the furniture is hand-carved and assembled with no nails or screws -- in the southern city of Zhongshan in Guangdong province, one of China's core industrial zones.

They operated a furniture, wooden flooring and interior decoration business in Wuhan for 20 years before taking over the factory in Zhongshan.

Their children, a daughter aged 25 and son aged 24, are still in Wuhan, studying at universities.

Under the visa category she has been granted, she should qualify for permanent residency after two years of running her business, and could then apply for citizenship four years after that.

Business migration is family migration, with the nuclear family all entitled to come and go.

The family's aim is that Liu's husband, who is visiting Australia every month, will follow her to settle here once the business has settled into a successful pattern.

"Our main customers are Chinese," she says. But she is now considering advertising for an employee who can sell to "mainstream" English-speaking Australians.

She is receiving a new container of furniture from her husband later this month.

Typically, she says, an item that retails to their customers in southern China for $800 will cost a further $1200 to ship and import to Australia, marking the price up beyond $2000.

But if the item is shipped in a container they fill themselves the logistics cost totals only about $400.

Liu's husband is starting to look for a manager to run the factory in Zhongshan, anticipating a shift to Melbourne full-time. "We want to live here for the rest of our lives," she says.