Will cuts on luxury goods taxes in China prevent Chinese from buying abroad?

Last year Chinese tourists bought almost two-thirds of luxury goods sold in Europe as they went on a record spending-spree. But while mainlanders are happy to splurge on foreign soil, what their government needs is for them to open the purse strings at home. Domestic consumption has shrunk to just 36% of gross domestic product and is increasingly the weak link in China’s growth.
One step to redress this spending imbalance is to cut penal mainland taxes on consumption and luxury goods. Analysts say such a move now looks likely.
This could have far-reaching consequences for one of the biggest investment stories of recent years — outbound spending by mainland tourists.
Everyone from retailers in Hong Kong, to London or Seoul could feel the fallout, while foreign luxury brands seeking to expand in China should be buoyed by any duty cut.
Expectations that a move is imminent were fuelled by widely reported comments earlier this month by former deputy commerce minister Wei Jianguo, to expect at least two rounds of reductions on import taxes on consumer and luxury goods. Then, this past weekend Finance Minister Xie Xuren promised to improve China’s consumption tax.
Among the spending habits likely to catch authorities attention say Credit Suisse is the revelation that Chinese residents spent 300 billion yuan ($47.4 billion) overseas on their bank cards in 2011, up 66.7% on a year earlier, according to data from China UnionPay.
And as well as accounting for 62% of all luxury consumer sales in Europe last year, mainland shoppers spent a whopping $7.2 billion during the recent Lunar Year holiday, up 28.6% on the previous year according to the World Luxury Association.
If you look at existing tax rates in China, it is easy to see why shopping overseas is so popular.
Import duties on general luxury products range from 10%-25%, and can be as high as 35%-60% on luxury cosmetic products and alcohol. Add on value-added tax (17%) and a consumption tax depending on the merchandise and prices on the mainland are penal. According to a survey by the Chinese Ministry of Commerce, prices for luxury goods in China are 45% higher than in Hong Kong, 51% higher than the U.S. and 72% higher than France.
If these taxes were designed to promote social fairness and curb bourgeoisie shopping habits by targeting rich consumers, they appear to be missing the mark — luxury spending at home is just being diverted overseas by globe trotting mainlanders.
Another reason to expect action on taxes is the government’s recent focus on boosting growth through domestic consumption. This past weekend in Beijing Vice Premier Li Keqiang said expanding domestic demand is a “strategic point” for economic development. Another official played up China’s readiness to import, predicting it may soon become the world’s largest importer.
This eagerness to import, however, comes at a time when China just recorded a monthly trade deficit in February of $31.5 billion. With export growth expected to remain relatively weak, this provides another reason for authorities to be less sanguine about yuan leaking abroad through unchecked tourist spending.
Meanwhile, it is also worth considering that for many mainlanders, shopping abroad is not just about getting a tax-free bargain.
China’s capital controls and limited domestic investment options mean luxury shopping often fulfills various secondary needs.
In Macau, for instance, purchasing luxury goods can be a handy way to access hard cash. A typical story is a mainlander shopper can buy an expensive handbag or watch on their credit card, which can then be sold back for something like 90% of the value in cash.
In fact, luxury handbags have almost become a money substitute. Milan Station Holdings Ltd. , a chain of shops that trades second-hand handbags even listed on the Hong Kong stock exchange last year, which gives you an idea how big this business is.
This, as well as a preference by many mainlanders to conceal conspicuous luxury shopping overseas, means old shopping habits could be hard to change.
If we do get a cut in luxury taxes, Credit Suisse, say luxury brands who import their goods into China will benefit such as Prada, Coach, Hugo Boss, LVMH or Tiffany.
The flip side, they add, is that for the retail and tourism industries that have benefitted from outbound Chinese tourists, any reduction in import tariffs will be incrementally negative.
But according to China Elite Focus, a Shanghai-based marketing and research firm specialized into reaching to affluent Chinese outbound tourists, these tax modifications will have small impact on the behavior of Chinese shoppers “Buying abroad luxury goods is first and foremost a sign of social status” said Pierre Gervois, China Elite Focus’ CEO. He added “ The fact that Chinese buyers will pay less their luxury goods if they buy in the U.S. or in Europe is a minor factor compared to the prestige of having bought a Tiffany diamond in New York City or a Louis Vuitton bag in Paris”
On the list of potential casualties is Hong Kong, Macau, South Korea to retailers in Europe. Hong Kong could be particularly vulnerable given 28 million mainland tourists visited last year (four times its population) and its huge concentration of luxury retail brands — Louis Vuitton has seven stores in the city, one more than Paris.

Source: The Wall Street Journal, Article by Craig Stephen

InterContinental Hotels targets Chinese travelers with a new hotel brand

InterContinental Hotels Group Plc (IHG), the world’s largest provider of hotel rooms, will begin opening locations as soon as next year under a new brand designed to appeal to Chinese travelers.
The Hualuxe brand of hotels will have teahouses instead of bars and feature other designs that target Chinese consumers, Chief Executive Officer Richard Solomons said in an interview. They’ll first open in China before expanding overseas targeting Chinese travelers, the company said.
InterContinental in the past was “based on bringing western brands into China,” Solomons said in Beijing. “What we have done is to, first time ever, create a brand that really talks to Chinese hospitality.”
Growing wealth and the construction of highways, rail lines and airports is boosting demand for hotels as more Chinese travel. One in four of the hotels in InterContinental’s pipeline is in China, Solomons said. The company’s operating profit in China, Hong Kong, Taiwan and Macau increased 24 percent last year to $67 million, according to its website.
The company has already signed 20 letters of intent to build Hualuxe brand hotels across China. InterContinental will manage the hotels built by the property developers that are its partners, Solomons said. Hualuxe hotels may be opened in 100 cities across China in the next 15-20 years, he said.
InterContinental’s sales in Greater China accounted for about 12 percent of its total revenue last year, Solomons said. This year, Greater China’s share of total revenue will be “a bit higher” than 12 percent, he said.

Watch the video on this link  http://youtu.be/E98PpvglVr4

Bloomberg TV: Wealthy Chinese Boom in Orange County, CA

Bloomberg TV’s Cali Carlin reports on China’s growing crop of millionaires eying greener pastures in the United States. Their motives range from escaping the one child policy to wealth security and better food safety standards. However, as Bloomberg TV reporters, the top concern is their children’s education.

In the U.S., Canada or Africa, wealthy Chinese hunt for social prestige

A number of wealthy Chinese, who have likely vanquished their business competitors or perhaps fantasize about doing so, have taken up big game hunting and are spending small fortunes to kill a giraffe, a lion or even a rhinoceros. 

At least 100 super-rich Chinese have taken safaris to foreign countries, mostly to Africa. These are not sissy-foot tourist adventures where participants merely snap photos of wildlife. These guys are out to bag a trophy and bring it home, even if it’s an endangered species.

”Most hunters are rich businessmen who are in their 40s or 50s. They have a lot of spare time, enjoy the outdoors, drive big SUVs, and have no trouble shooting,” said Wang Wei, general manager of Zheng’an Safari Club, in an interview with New Weekly.

Wang started his business in 2004 when he took the boss of a real estate company on a hunting safari to Africa. Since then he has taken 20 to 30 Chinese abroad to hunt big game. 

W. Scott Lupien has taken 20 Chinese hunters to Africa since his first group of four went to South Africa in 2009. “Most of the Chinese hunters in my club are green, some have only hunted pheasants or boars in China,” said Lupien, the American CEO of 52Safari Club.

Most of the hunters who have joined his safaris take down seven or eight big game, said Lupien, adding that the animals are taken to a taxidermist and then shipped home.

In Africa, Chinese tycoons are paying exorbitant license fees to kill: a giraffe costs $3,000; to shoot a lioness costs $15,000 and to bag a male lion they pay $50,000. The cost of taking down a rhinoceros is $100,000.

Wang said the total cost to hunt down and kill a leopard is almost 300,000 yuan ($47,557) in Mozambique, while its pelt is only worth 50,000 yuan locally. The fee for taking down an elephant in Botswana is 480,000 yuan.

All the hunts are legally sanctioned by the hunters’ host country. 

Africa is the favorite destination of Chinese hunters who seek to become members of the Big Five club – hunters who have killed an elephant, rhinoceros, Cape buffalo, lion and leopard.

Canada is another destination for Chinese hunters who pay 500,000 yuan for a 14-day expedition to kill a male bear.

Foreigners have been coming to China to hunt long before Chinese were going on safaris in Africa. In 1987, the Qinghai Dulan Hunting Ground was approved and it has received over 700 foreign hunters, reported Xinhua.

In August 2011, the State Forestry Administration approved the applications of two groups of foreigners who applied via Chinese tourism agencies to hunt Tibetan antelopes and blue sheep.

Hunting is a huge global industry that is permitted in about 100 countries. In the US, over 300,000 wild animals are killed by 10 million hunters who spend $20 billion annually.

Wang says his clients prefer Tanzania because it is cheaper and is home to a wide variety of big game. In the US, local hunting regulations often don’t allow foreign citizens from obtaining required permits to hunt, Lupien told News Weekly.

“There is no reason people should be hunting in this day and age, unless people have to live on it,” said Feng Yongfeng, a researcher with Green Beagle, an environmental NGO in Beijing.

“There are no spare species for human beings to stalk or kill in nature,” wrote Feng on his blog, adding that he blames man’s sense of superiority over the animal kingdom for the continuing inhumane killing big game for trophies.

“These wealthy people are just showing off,” said Jiang Jinsong, an associate professor with Tsinghua University and animal rights activist. Jiang says big game hunting cannot be ethically justified.

“It is local people who have the right to hunt animals, not the rich,” said Jiang who worries foreign hunters may be upsetting the balance of nature that could affect locals who rely on it for their life.

Jiang says the hunters’ creed of “hunting the male and old, not the female or young” cannot justify their actions. He believes hunters are in it to show off their masculinity.

“Hunting is popular overseas doesn’t mean it is a good habit for Chinese people to follow,” said Jiang, who suggests it’s an uncultured Western tradition.

“Hunting itself is boring. Hunters just pull the trigger and all the important preparation jobs have been done by their guides,” said Jiang sarcastically.

Jiang is also worried that Chinese hunters might create a negative image of China among local Africans.

“In Africa there are local cultural taboos and it is dangerous for rich Chinese who know nothing about them,” said Jiang.

“Hunting must be strictly managed and regulations followed. Objective, long-term and dynamic monitoring of the animal populations need to be practiced. Revenues from hunting should be used to benefit locals who help protect the wildlife,” Kang Aili, the executive director of the Wildlife Conservation Society China, told the Global Times.

“Modern hunting won’t affect wildlife reproduction as it follows designed plans, not like poaching or traditional hunting,” said Li Feng, a professor with Wildlife Resources Institute of Northeast Forestry University.

“There won’t be any problem so long as it is properly managed,” said Li, explaining that the high income from hunting can be distributed to local people and used for animal protection.

People have a misunderstanding of how to use wildlife resources rationally, according to Li. “Mineral products and petroleum can be exploited, why can’t wildlife?”

“Hunting animals doesn’t mean their lives not being respected,” said Li, suggesting that the natural order is to eat or be eaten.

“It is good that people have become more aware of wildlife protection, but it cannot be too irrational,” said Li, who suggests hunting is helping the process of natural selection.

“If they’re not hunted, the weak will be eliminated by nature sooner or later,” said Li.

Li says hunting is more than just pulling the trigger. In most hunting grounds vehicles are not allowed and hunters need to ride a horse, which is a strength-consuming activity.

The premise for modern hunting is that it must be sustainable and so a scientific and ongoing survey of the animal population must be conducted.

“Theoretically, hunting quotas cannot exceed 15 to 20 percent of the existing wildlife population,” said Li, adding a census is usually done every two years.

Strict regulations are usually followed. Hunters must pay when they pull the trigger and hit the animal and it doesn’t matter if it’s dead or not.

Li suggests as members of the logistics team, hunting guides must be strictly supervised because they play a key role between hunters and the local government.

“As for wealthy Chinese, it’s actually trophy hunting and a high-level commercial activity,” said Jiang Zhigang, a researcher with the Institute of Zoology, Chinese Academy of Sciences, suggesting the trophies usually form part of a hunter’s personal collection and are not sold for profit.

Namibia and South Africa have been allowed by Convention on International Trade in Endangered Species to hunt up to five black rhinos each year.

Local media reports say the beast is no longer seriously threatened in the two countries, though badly endangered outside Southern Africa. South African wildlife authorities have also demonstrated that revenues from trophy hunting can improve conservation efforts and thus increase the black rhino’s population.

Jiang says hunting is more popular abroad than in China, because there are fewer remaining wildlife resources.

“Some animals are reproducing too much, and they can consume many resources and cause conflicts with local people,” said Jiang, adding that there are too many deer in the US. In East Africa the human population is increasing quickly and encroaching on protected wildlife areas that are turned into cultivated land. It is not uncommon for wild elephants to leave their habitat and hurt local people.

The wolf population in US’ Montana increased by 15 percent to at least 653 animals though the state has extended the hunting season to reduce its population, reported Great Falls Tribune in late February.

In countries like the US, Canada, Australia and South Africa, hunting quotas can be a source of funds for wildlife protection. Ninety percent of the $56 million budget of the Montana Fish, Wildlife, and Parks Commission comes from selling hunting permits. It’s estimated 100,000 people participate in the annual deer hunting in Montana which has a population of 800,000 people.

Strict rules dictate the sex, age and number of deer that can be taken.

“We are living in a diverse society, and we should be open-minded and tolerant about hunting as a hobby,” said zoologist Jiang.


Racing pigeons lure rich Chinese aficionados

Rich Chinese pigeon fanciers are offering tens of thousands of euros to buy Belgian champions, to the despair of local pigeon-lovers unable to compete in such sky-high auction bids.
Pigeon-breeding is an old Chinese passion, even though long-distance pigeon-racing has never caught on the way it has in northern Europe.
In Belgium, the Netherlands, northern France, and Britain pigeon-racing can take place over distances of over 1,000 kilometres (660 miles) with birds vying to return as quickly as possible to their home roost, their homing instinct allowing them to find the way.
Champion racing pigeons can win large sums in prize money for their owners.
In Belgium, pigeon-fancying had been on the decline in recent years, but the arrival of Chinese aficionados has changed the market’s dynamic.
Pigeon racing in China goes back to the Ming dynasty, when they were used as carrier pigeons. Banned during the Cultural Revolution, it made a comeback in the 1970s.
According to Chinese state media, there are about 300,000 people in the country involved in the sport.
In late January, a rich Chinese industrialist Hun Zhen Yu came to Europe and paid 250,000 euros ($328,000) for “Special Blue”, a world record for a champion of legend.
The bird’s former owner, Pieter Veenstra from Holland, has sold 245 pigeons over the past few years for more than two million euros, according to the specialised Pigeon Paradise (PIPA) website which claims that half its customers are from China.
Rich Chinese fanciers will pay very large amounts “if the pigeon has won several prizes and is of good lineage,” said Nikolaas Gyselbrecht, the head of PIPA, speaking on the sidelines of the second world pigeon fair in Kortrijk, Belgium.
Even Chinese luxury travel clubs such as the prestigious Shanghai Traveler’s Club have their members interested in Pigeon racing. One of the Shanghai Travelers’ Club member, a wealthy banker, said “Pigeon racing is a very exclusive activity. It shows you are a person of great taste. It’s not for everybody”
“I think Belgium is the kingdom of homing pigeons,” said one of the fair’s visitors, Johnson Kiang from Taiwan.
But not everyone is pleased by the Chinese invasion.
“I find it too expensive. 200,000 euros, that’s not a normal price,” said Marcel Candenir, who travelled to the fair from Lille in northern France.
“It’s daft, it’s killing the sport, how do you expect a young person to start out?” asked fellow Frenchman Gilles Vanneuville.
Willy Anquinet, a 75-year-old from the village of Gooik, near Brussels, fell victim to this new golden goose-like craze.
In early February, one of his champions — the “Black” — was stolen from his pigeon loft.
“I’d been offered 15,000 euros (19,600 dollars), but I wanted 20,000 so that I could buy a new car,” he said.
A few days after a visit by would-be customers, “the lock to the pigeon loft was broken”.
“They stole “Black” and tried to take another, but just broke its wing,” he said, saddened by the loss both of his champion, and by the injury that will force the second bird to retire from competition.
Marc De Cock, who owns 600 pigeons in Temse, northern Belgium, has invested in a top-of-the-range secure lock-up for his birds, some of which are worth 100,000 euros.
They are watched by 15 video cameras, have their own shower and solarium, a sort of sauna for pigeons, and are treated like top sport champions.
De Cock is looking to sell many of his birds to Asian clients.
“The Chinese attach a lot of importance to prestige. Even if they don’t want to breed them, or race them, they want to buy a luxury pigeon much like an art collector would like to buy a Rubens or a Rembrandt,” said De Cock who remains very discreet about his earnings.

First China-owned luxury cruise ship sets sail

Legendary Chinese admiral Zheng He (郑和) might well approve. A Wenzhou-based tycoon is launching mainland China’s first cruise ship, and has his sights set on building up a world-class fleet.
Billed as “the world’s only six-star, twin-hull cruise ship,” the 12-deck China Star (中华之星) will embark on her maiden voyage from Hong Kong’s Victoria Harbour on March 8 at 2.30 p.m.
The 131-meter-long, 295-ton vessel will carry 200 passengers and 200 crew on a two-day, one-night voyage around the South China Sea. According to China’s state-run newspaper, Global Times (in simplified Chinese only), China Star is the only mainland-owned cruise ship.
The China Star has a checkered history. China Cruises Company Limited (CCCL) bought the 20-year-old Finland-built ship from Macau casino tycoon Stanley Ho (何鸿燊) last June for US$45 million and shelled out another US$20 million refurbishing her.
The company changed the 172-cabin cruise liner’s name from Asia Star to China Star in order to express its CEO’s patriotism.
According to Huang Weijian (黄伟建), 40, CEO of CCCL, China Star will be a “high-end business and entertainment venue which will have the normal cruise amenities and be a platform for Chinese mainland culture.”
Chinese features have been included on board to keep passengers from the mainland happy.
“We also added balconies to the cabins, and expanded the biggest one to 24 square meters,” said Huang.
Besides Western dishes and drinks, the restaurant serves green tea and traditional Wenzhou fish cakes.
Entertainment facilities include a theater, a karaoke room, a game center, an indoor wine and cigar bar, an open-air bar, a library, two Chinese spas including a foot massage parlor and duty-free shops.
“Later on, we plan to bring in ‘more culture-oriented events,’ such as holding beauty pageants and inviting film crew to shoot onboard,” Huang added. China Star is part of the effort for CCCL to realize its ambition of building a “cruise ship fleet” in China.
The company has announced its plan to purchase two to three 1,500-passenger cruise vessels in the next two years.
”The development of cruise tour in mainland China has seen an ‘explosive growth’ in the last two years,” explained Huang. “I’m pretty sure it will be the world’s biggest market for cruise tour shortly.”
Most recent statistics revealed that 790,000 Chinese travelers cruised overseas in 2010, a rise of more than 20 percent on 2009.
And mainland China received 223 international cruise vessels in 2010, which is 42.9 percent more than the previous year.
Although the Middle Kingdom has moored many foreign cruise ships since Costa Cruise took the global lead and entered the market in 2006, no mainland company had stepped into the luxury cruising business before.
According to Cheng Weihang (郑炜航), general secretary of China Cruise and Yacht Industry Association, the gap in the market was caused by the high investment threshold and Chinese people’s lack of experiences in running cruises.
China Star’s first official voyage is due to take place in early May from its homeport, Zhoushan (舟山) in Zhejiang Province, to Kaohsiung and Keelung in Taiwan.
CCCL will launch a series of routes to neighboring countries later on, including Japan, Korea and Vietnam.

Source: http://www.cnngo.com/shanghai/visit/first-china-owned-luxury-cruise-ship-set-sail-651654

Speeding US economic recovery with Chinese tourists

With easing travel restrictions and growing spending power, American politicians and businesspeople look to the increasing number of Chinese travelers to speed economic recovery.
Amid the commotion of shuffling lines and muffled voices, Tina Tian sits in disbelief outside the U.S. Embassy in Beijing. Her head hung low, Tian’s phone rings. She answers her father’s call with a sigh of resignation.   

Five years later, Tian still remembers the disappointment of being denied an entry visa to visit the United States.
“I want to visit America because it is a superpower,” Tian says, now a recent college graduate from Sichuan University. Despite being denied a visa twice, Tian remains determined. “I am a big Lakers fan, I watch Gossip Girls and love to drink Starbucks. My daily life is very influenced by the United States and that is why I want to visit.”
Though Tian has yet to make the trip, Chinese travelers are landing at U.S. airports in record numbers. In 2011, over one million travelers from the Mainland arrived in the U.S., with hundreds of thousands more pouring in from Taiwan and Hong Kong. With expanding incomes and an eagerness to venture abroad, American politicians and businesses are lining up to greet Chinese tourists at the gates.

Speaking at Disney World in February, President Obama announced his vision to expand international tourism as a means to economic recovery.
“Every year, tens of millions of tourists from all over the world come and visit America,” Obama said. “And the more folks who visit America, the more Americans we get back to work.” With the Department of Commerce estimating that Chinese and Brazilian travelers spend an average of $6,000 per visit, ensuring the U.S. is a top travel destination is more national priority than marketing material.
For Tian, that means the third time may be a charm. Obama’s plan included several steps for increasing access to the U.S., including simplifying and accelerating non-immigrant visa processes, making the Global Entry Program permanent and nominating Taiwan to the Visa Waiver Program. The bottom line for the President’s push?
“We need to help businesses all across the country grow and create jobs; compete and win.”
The U.S. Department of Commerce estimates that arrivals from China will increase by approximately 274% between 2012 and 2016. Last year, arrivals from China were estimated at 1,098,000 and 294,000 from Taiwan. If Taiwan is accepted into the visa waiver program, numbers are expected to rise even more as citizens would be eligible to travel to U.S. territories for 90 days without a visa.
With that number expected to top 3 million visitors from China by 2016, American businesses are preparing for their arrival in a big way.
“The number one reason Chinese tourists come to the U.S. is for shopping,” says Pierre Gervois, President and CEO of China Elite Focus, an agency specializing in wealthy Chinese outbound tourism.
This statement holds true as Chinese travelers spent $7.2 billion abroad on luxury goods, a 29% increase from the $5.6 billion last year just during the weeklong Spring Festival holiday.
“The second reason,” Gervois continues, “is that the U.S. is well known for their movie stars and Hollywood scenes and they want to do a lot of sight seeing.”

Carol Martinez, spokesperson from the Los Angeles Convention and Visitor Authority, concurs as she says that significant focus is put on accommodating outbound Chinese tourists through measures like setting up Chinese boarding services at major attraction sites. Martinez highlights that the California Travel and Tourism Commission opened tourism promotion offices in Shanghai and Beijing.
Another compelling reason: travel to the U.S. can act as a social status marker for Chinese and Taiwanese.
“If you can afford to visit and purchase many goods from the U.S., it makes a statement that you are living a good life,” says Nancy Cheng, a Taiwan native.
In 2003, the U.S. opened the Group Visa Program for Chinese travelers, making it far easier for large tour groups, athletic teams, and entertainment groups to enter the country. The most important trend, however, is that visitors from China are beginning to travel independently. Cheng notes this phenomenon as, “a perfect example of xuan fu, which means to show off your wealth.”
“The second wave of China’s outbound tourism has started, with more self-organized travelers slowing down and spreading further afield,” says Dr. Georg Wolfgang, Director of the China Outbound Tourism Research Institute. “Increasingly travel-savvy and globally connected, below 45 years and green, the new Chinese tourist is arriving in exotic locations and staying for more than just a snapshot.”
These “new” Chinese tourists are setting a new standard for Chinese outbound tourism and are eager to explore forms of non-traditional tourism.

Ecotourism, increasingly popular with Western tourists, is also catching on with Chinese. The emphasis of nature immersion and outdoor adventures in locations such as Hawaii and Alaska is becoming more appealing as some Chinese look to escape from the hardships of modern urban living.
Mike McCartney, president of the Hawaii Tourism Authority (HTA), forecasts that the number of Chinese visitors to Hawaii will increase annually by 20% from 2012 to 2014, with those who visit consisting largely of young affluent individuals. For this reason, outdoors activities such as golfing, boating, yachting and surfing are being promoted and emphasized in their marketing efforts.
“Mass tourists will stay on the beaten track, but new Chinese tourists can be attracted to lesser known places if they are provided with a good reason to go there which translates again into prestige,” Wolfgang says. “Connecting destinations with the history of overseas Chinese living in that area might also be a good starting point.”
The exponential rise in Chinese tourists has also positively affected the EB-5 and the proposed EB-6 Visa programs. Intended to attract foreign investors, the EB-5 visa program provides foreign nationals a way to gain a green card for a minimum of $500,000 investment for a targeted employment area within the U.S. The program has created 31,000 jobs and has attracted over $1.5 billion in investments through mainly private companies since its inception. With a surge of Chinese tourists in the U.S., hopes are that the number of applicants for the EB-5 and EB-6 programs will also increase.

While statistics rise for conventional tourist arrivals, there has been a parallel spike in other “grey” forms of travel.  “Birth tourism,” as it has been labeled, sees wealthy pregnant women travel to birth their babies in foreign countries. Potentially living in the country for months before delivery, babies birthed in the U.S. provide two benefits as seen by these Chinese parents: instant U.S. citizenship and a way around China’s pesky one-child policy.
China has already overtaken Italy, Japan, France and the United Kingdom in terms of international tourist spending. In 2010, the average travel spending per Chinese visitor to the U.S. was at $6,243 followed by India at $6,131 and Brazil at $4,940, while European countries peaked at $3,132. The flood of Chinese outbound tourists offers an obvious potential cash flow. With President Obama acknowledging the need to facilitate travel, the U.S. can anticipate more Chinese tourists in more places across the country.
“The primary motivation to travel to the U.S., besides business and visiting friends and relatives, is to gain prestige and to learn,” Wolfgang notes. “To attract Chinese visitors, these two aspects have to be emphasized, ‘Be the most famous, oldest, greatest in your field and provide a mix of entertainment and education.’”
It should only be a matter of time before Tian is sipping Starbucks at her first Lakers game.

Article by Chia-ling Melody Yuan, graduate student in Strategic Public Relations at the USC Annenberg School for Communication & Journalism.