Immigration Issues Affecting Chinese Investors In The United States

Tuesday, November 22, 2011 - 15:31

The Editor interviews Freddi M. Weintraub and Lisa M. Ryan, Partners, Fragomen, Del Rey, Bernsen and Loewy, LLP.

Editor’s Note: China, after having experienced rapid internal development and the accumulation of immense dollar and other monetary reserves, is now looking to make investments abroad in such areas as natural resources, technology and manufacturing to further fuel its economic growth. To the extent that the U.S. can attract a significant portion of those investments, it has the potential of creating many much-needed jobs for U.S. citizens.

Freddi Weintraub, a Partner of the firm focusing on U.S. immigration law, serves as corporate immigration counsel to clients in a wide range of industries, including a large number of fashion and cosmetics industry companies, universities and teaching hospitals, financial investment and insurance firms, media and management consulting firms, fine and performing arts organizations, as well as individual investors (i.e. EB-5), just to name a few.

Lisa Ryan is a Partner in the firm’s Global practice, which provides business immigration services to clients seeking to employ foreign nationals in more than 170 jurisdictions outside the United States. In her practice, she represents a number of multinational companies and helps new corporate clients to develop and implement global immigration programs. She also manages the U.S. operations of the firm’s Global practice, which includes extensive client service support as well as a number of business lines, including business visa, document procurement, and consular services.

Editor: Lisa, please provide our readers with a brief history of Chinese immigration policy dating back to the 1880s.

Ryan: Policies concerning immigration into China have undergone dramatic swings since the 1880s, largely dependent on political issues and foreign policy. Immigration in the early 1880s was dictated more by foreign influence and control, whereas immigration policy during the early Communist period was a direct reaction to previous foreign influence. Under Mao Zedong, China became much more insular.  After a change in leadership in the late 1970s, the immigration system started to open up, as Deng Xiaoping began to turn China’s focus on foreign trade and investment. This ultimately gave rise to the more liberal immigration approach we see today.

Editor: Freddi, tell us about U.S. immigration policy over the same period.  

Weintraub: In the 1880s the Chinese Exclusion Act was signed into law, severely restricting Chinese immigration into the U.S. It was aimed at stemming the tide of Chinese immigrants who were then coming to the United States. It was the product of both economic and political concerns tinged with racism and nativism.

During this period, Chinese nationals in the U.S. were prohibited from becoming U.S. citizens and Chinese laborers were banned from coming to the United States. This state of affairs continued virtually unchanged until the enactment of the Immigration and Nationality Act originally introduced in 1952. However, it was not until 1965 that major changes were made in the INA that large-scale Chinese immigration to the United States was allowed to begin again after a hiatus of over 80 years.

Currently, Chinese immigration is arguably hindered as a result of the per-country limits which establish that no more than seven percent of employment-based immigrant visas may be issued to natives of any one independent country in a fiscal year. Consequently, there are serious backlogs for nationals of China, with the ultimate result that it takes much longer for them to get a green card in most categories than it does other people from most other places.

Editor: How would the Lofgren bill improve the situation?

Weintraub: One provision of that legislation, which looks like it has a reasonable chance of passing – or at least some version of it - would ultimately eliminate per country limits for employment-based green cards, which means that every national of every country will eventually be on the same level playing field. There is still going to be a limit on how many people can immigrate to the U.S. per year, but it’s not going to be dictated by one’s country of nationality, but rather where one is in the queue. Thus everyone is subject to the same waiting periods, irrespective of nationality.

Editor: A Chinese company wishing to invest in the U.S. might want to send a representative to the United States for a period of time to investigate the opportunities here.  Is this possible? 

Weintraub: For those who will be sent to the U.S. for a short period of time on behalf of their Chinese employer to scout out opportunities in the U.S., the B-1 visa might be appropriate. They would apply for the B-1 directly at the U.S. consulate where the individuals would be required to establish the temporary nature of their visit and demonstrate sufficient ties to their home country (in this case, China). They must remain on the Chinese company’s payroll and cannot engage in productive employment in the U.S. However, because of the need to demonstrate very strong ties to China, the denial rate for a B-1 is rather high.

For those Chinese companies that have already established a presence in the U.S., the L-1 visa is a great option, under certain circumstances. Essentially, the company may transfer executive/managerial employees or those employees who possess specialized knowledge of the company’s services or products. Another essential requirement is that the executive/managerial or specialized knowledge employee has been employed by the company abroad for at least one of the preceding three years. Further, there must be a qualifying corporate affiliation between the U.S. and Chinese companies. 

Editor: Is there some special provision of the immigration laws that would enable an investor to come here for the specific purpose of buying a U.S. company or to establish a new company?

Weintraub: Citizens of China and other countries, along with their dependents, can avail themselves of the EB-5 category, which enables them to apply for permanent residence by making a substantial investment in the U.S. The EB-5 category provides immigrant classification to qualified individuals seeking to enter the United States for the purpose of engaging in a new commercial enterprise. The enterprise must have been established or restructured after November 29, 1990, and requires that the individual make capital investments of at least $1 million, or $500,000 if the investment is made in an area with a high rate of unemployment. The investment must benefit the U.S. economy and create full-time employment for no fewer than 10 qualified U.S. employees, which includes U.S. citizens, permanent residents, as well as asylees and refugees, among others. If the EB-5 is approved, the applicant and dependents would obtain conditional permanent residence requiring a petition to remove the conditions before the second anniversary of the initial admission as a permanent resident.

Editor: If a Chinese investor starts or acquires an enterprise in the U.S., would they have a problem bringing in additional Chinese employees?

Weintraub: As long as the requirements are met, i.e., the investment has resulted in jobs for at least 10 U.S. workers, then the entity in the U.S. would be free to hire additional employees, whether they be from China or elsewhere in the world, provided that they are eligible for their own nonimmigrant work visa (e.g. the L-1 or the H-1B visa, which requires the U.S. equivalent of a bachelor’s degree in a field related to the U.S. position). The H-1B is one of the most sought-after work visas, but it is worth noting that there is a cap of 65,000 new H-1B visas allotted each fiscal year, with an additional 20,000 carved out for foreign nationals who have graduated from a U.S. institution with a U.S. master's degree or higher.

Editor: Would it be possible for a U.S. company owned by Chinese investors to hire Chinese citizens graduating from a U.S. university with a degree in science, technology, engineering or math?

Weintraub: Students, including Chinese students who graduate from a U.S. university with a STEM Designated Degree (in science, technology, engineering or math), are entitled to an extended period of employment authorization upon graduation. Typically, foreign national students are entitled to 12 months of Optional Practical Training (OPT) or employment authorization in the U.S. Students with STEM degrees are given an additional 17 months of OPT. This is a significant benefit, especially in years when the H-1B cap is met early and the student might not otherwise be able to secure an H-1B visa, The U.S. company seeking to hire this foreign national will be required to register for E-Verify, which is effectively a nationwide system to verify a foreign national’s eligibility to work in the United States.

Editor: Do you believe that China will enact policies to attempt to retain in China its highly educated cadre of professionals?

Ryan: A country’s ability to retain or encourage its top professionals to live and work in their home country goes beyond the issue of income.  Rather, individuals are looking at the benefits that surround their employment, both with regard to themselves, as well as their families. To address this issue, China has started to enact programs, such as the Thousand Talents Program, which attempt to recruit top talent back to China. While these programs typically have eligibility criteria, they offer enhanced benefits to top talent through wages, housing subsidies, spousal benefits and other incentives.

Editor: China is having to enforce its own immigration laws with people seeking higher wages who are pouring across its borders from such countries as Vietnam, Cambodia and Burma. What measures are the Chinese officials taking to stem this tide of illegal immigrants?

Ryan: Unlike the United States, which is attempting to address a long-standing and continuous problem of undocumented individuals, this is a relatively new problem for China. The primary concern in China currently is the heightened influx of undocumented immigrants entering the country. In response, China has undergone efforts to break up criminal rings focused on bringing illegal immigrants across China’s border. They have also attempted to alleviate the situation through periodic roundups of undocumented workers. Ultimately, illegal immigration in China is not yet the political issue it is in the United States. At this point in time, it seems that while illegal immigrants in China provide low-cost labor, they are not being perceived as taking Chinese jobs.

Editor: Why is your firm particularly qualified to help Chinese companies wishing to invest in the U.S.?

Weintraub: We are the largest firm that focuses exclusively on immigration and nationality law both in the U.S. and around the world through our Global practice. Our principal focus is representing companies and assisting them with bringing foreign talent to more than 170 countries around the world, either on a temporary or a permanent basis.

Because our focus is exclusively on immigration law, no other immigration firm can match our size, scope, talent or resources. With a staff of well over 1,000 immigration professionals throughout over 38 strategically located offices across 15 countries, we have professionals who are fluent in many languages, including Chinese.   

Please email the interviewees at fweintraub@fragomen.com or lryan@fragomen.com with questions about this interview. For Further information about Fragomen, please visit http://www.fragomen.com/.