Reaping a harvest of nervous capital

ANN FINLAYSON October 15 1984

Reaping a harvest of nervous capital

ANN FINLAYSON October 15 1984

Reaping a harvest of nervous capital

When fortune-teller Joe Yip set up shop in a small park in Hong Kong’s financial district last month, he deftly fielded the predictable queries from local residents: “Will I have a son? Will I get married? Will my business deal come through?” But Yip later recalled that he was surprised by another question that recurred with telling frequency: “Will I be able to emigrate to Canada?”

Indeed, for many Hong Kong residents, years of uncertainty about the terms of Chinese sovereignty over the British colony have caused anxiety and personal upheaval. And while those terms are now settled, Peking’s willingness to guarantee local autonomy has not allayed all the misgivings of its new Chinese citizens. As a result, for the colony’s worried investors and for others who simply find life increasingly difficult in one of the world’s most densely populated cities, the solution is to emigrate. The country of choice: Canada, where a resource-based economy offers the opportunities the would-be immigrants are seeking.

Demanding: But to reach a land still called by its poetic Chinese name, the Golden Mountain, the Chinese must cross two oceans—the Pacific and the bureaucratic. The paperwork can be more demanding than the water. Like many other countries, Canada has tightened its immigration restrictions in recent years in response to high unemployment. At the height of Canada’s recession in 1982, the Liberal government clamped down on entry restrictions for nonnuclear families and skilled workers. But at the same time, the opportunity of luring Hong Kong capital to create jobs and spur economic growth has prompted Canada, in company with other countries, to ease entry requirements for the colony’s business class.

In 1978 the federal department of employment and immigration introduced the Entrepreneurial Program, which enables well-heeled foreign investors to earn landed immigrant status by gaining prior approval for business proposals. Early this year Ottawa relaxed the program guidelines. Now, an experienced businessman can enter the country on a two-year temporary permit. During that time, Ottawa expects the investor to canvass business opportunities before committing himself to a specific proposal. Said one senior department of external affairs official, with an eye on the year sovereignty over Hong Kong reverts to Peking: “We are taking

as many as we can. And we realize that, closer to 1997, businessmen who have a lot to lose may start to flood out. We are making sure that we can benefit from the situation.”

Last year alone, 338 Hong Kong entrepreneurs took advantage of the federal government’s program, an increase of 247 over 1982. The new arrivals brought

with them more than $225 million in investment funds. “Canada is not desperate to encourage entrepreneurs to come to Canada,” the senior official added, “but there is a recognition that the U.S. recovery was fuelled by smallbusinessmen.”

For their part, provincial governments have joined the stampede to attract nervous Hong Kong investors. Quebec Immigration Minister Gérald Godin visited the colony in February, declaring that he wanted to take advantage of Hong Kong’s political uncertainty to lure “some millionaires” to the

province. A Quebec trade mission followed in May, designed to encourage the flow of investment. And next month Quebec, following Ontario’s and Alberta’s lead, will establish a formal delegation in Hong Kong to encourage trade and immigration. Under a 1978 federalprovincial agreement Quebec is the only province with the right to screen immigrants and to issue immigration certificates that are binding on the federal government. Last year the province, using capital wealth as one guideline, granted 59 permanent visas to Hong Kong residents. The unofficial capital requirements: as little as $100,000 for an investor wanting to open a restaurant; $300,000 for commercial real estate investment; and as much as $2.5 million for a mining operation.

Frightened: The modern-day exodus from Hong Kong’s Chinese community to Canada began in 1967 after Communist-led riots and Red Guard rampages followed the beginnings of China’s ultra left-wing Cultural Revolution. Hundreds of frightened businessmen fled the strife-torn territory, many of them to British Columbia. But the welcome proved less than warm. Some Chinese businessmen found themselves blamed for initiating Vancouver’s inflationary real estate boom in the 1970s. Now, although the province continues to attract investment—more than half of Vancouver’s West End apartment blocks and many downtown buildings are owned by Hong Kong Chinese—the more recent pattern is for Hong Kong money to move east. Between 1974 and 1982 Torontobased real estate firms handled an average $125 million a year in Hong Kong investments entering Ontario. Last year, noted Frank Chau, owner of Goldyear Realty Inc., that figure soared to a record $300 million. The Montreal law firm of Stikeman, Elliott, which has a Hong Kong office, has handled an additional $250 million in Canadian real estate business in the past year. Chau, who said Hong Kong business has lagged lately, refused to disclose how much of his business results from offshore investors.

But Gordon Dewhirst, director general of the policy, research and communications branch at the Foreign Investment Review Agency, observed that investors who remain in Hong Kong are likely to move into real estate, whereas immigrants are attracted to small businesses. “You can always get a Canadian to manage property,” he added, “but it is much more difficult to manage a busi-


ness from thousands of miles away.” Not all of Hong Kong’s would-be immigrants are wealthy. Although the colony seems to have more millionaires per square mile than anywhere else on earth, it also has more than half a million people crammed into squatter settlements. The very poor, who have little cash and even less influence, have little chance of leaving; they cannot afford to. The luckless denizens of the squalid towns that dot Hong Kong’s rocky hills share a sad joke about the $170,000 airplane ticket—the amount that they claim is necessary to gain a visa to Canada, Australia or Brazil.

Magnet: But for many among the large middle class there is an opportuni-

Ity to emigrate. Last year Canada’s immigration office in Hong Kong—the largest of any Western nation in Asia —processed nearly 6,000 immigration applications in addition to those filed under the entrepreneurial program. This year, external affairs experts predict that the number will rise to 9,000.

I Nearly half the successful applicants will be entitled to bring their spouses and dependent children under 21 with them. But aunts, uncles, brothers, sisters and oth; er relatives must meet I separate requirements

that take into account age, education, language skills and financial resources. Explains William Sinclair, senior immigration counsellor at the Canadian Commission in Hong Kong: “The system is economically oriented. We are looking for people with real entrepreneurial skills who are willing and able to create jobs in Canada.” Because Canada is receptive to Hong Kong immigration, the colony has become a magnet for Canadian immigration lawyers, travel agents, accountants and real estate agents eager to cash in on the exodus. More than 100 consultants have set up shop to advise both prospective immigrants as well as more than 6,000 Hong Kong residents who already hold Canadian passports on making the journey to Golden Mountain.

Others have taken precautions against the time when they can no longer prosper in the colony. Half of Hong Kong’s population is under 30, and thousands of middle-class parents have sent their children to foreign schools in an effort to ensure they acquire skills that will enhance their chances of emigrating. Last year, more than 20,000 Hong Kong residents studied in Canada. Another 60,000 have re| turned home after comz pleting some part of their 3 education. Already, I Hong Kong boasts the

largest chapter of the University of Toronto alumni association outside Canada.

Reassuring: Still, not all of those eligible will move. Many who adopted a wait-and-see attitude before last month’s agreement on the colony’s future have said that its guarantees are reassuring. Says Kim Cham, the Canadian-educated chairman of the Hong Kong commodities exchange: “I am keen to stay on as long as I can. But if things don’t work out, naturally I shall have to exercise my alternatives.” Others may decide to postpone their departures until 1997. Said the editor of one Englishlanguage Hong Kong newspaper: “A lot of people feel that there is plenty of time to make a fortune or two before then.”

With last month’s accord on Hong Kong’s future, some of the colony’s investors have been reassured. “The rate of investment has slowed,” said Goldyear’s Chau. He added that some entrepreneurs who bought Canadian real estate are now selling their properties to raise cash to reinvest in Hong Kong. “We are in a period of uncertainty now,” Chau said. “It is too soon to say exactly what effect the agreement is going to have.” Before that uncertainty is resolved, some Hong Kong citizens will probably decide that the prudent course is to leave. If they do, the door to the fabled Golden Mountain is open—provided the immigrants bring a substantial bank balance.


Ross Laver

Wendy Lin

Hilary Mackenzie