Mr. Lu’s Tea Leaves
With Luc Lu
A seasoned veteran of the Chinese RCBI industry keeps readers abreast of overarching trends in the world’s biggest investment migration market.
As we enter 2020, even the youngest of those born in the 1980s are in their thirties. In China, this generation is quickly becoming the main driver of the country’s investment migration market. Millennials, here defined as those born between 1980 and 1996 account for about 23% of the overall population. Due to the rapid economic transformation of the country in the years since they were born, China’s millennials are very different, both from their parents and their children (who are just now being born).
Compared to their parents, millennials want very different things from life, work, and – the focus of this discussion – immigration. What worked with Generation X won’t work with Generation Y. This article will contrast millennials with the generations that came before and illustrate how that will change the shape of Chinese investment migration.
The lonely generation
The “one-child policy” was initially introduced in July 1971 and included in the constitution in 1982 as a “national basic policy”. Consequently, an overwhelming majority of millennials do not have siblings. What is really interesting is that while most post-80s do not have siblings, they have plenty of cousins, a phenomenon ascribed to their parents’ multiple brothers and sisters. With the passing of older generations, such kinship weakened, and this is one of the reasons millennials are called “the lonely generation”.
35 years following the implementation of the “one-child policy, China’s birth rate plummeted, giving rise to series of social issues such as the loss of “demographic dividend“, a critical population pyramid problem, and an egregious gender imbalance, to name just a few.
It was in 2015 that China passed Amendments to Population and Family Planning Law of the People’s Republic of China, which put a formal end to to the one-child policy. For millennials in their prime child-bearing years, however, while now free to have more than one child, haven’t really taken advantage of their newfound liberty to procreate. While many wish for their own children not to grow up alone as they themselves did, they are also confronted by economic limitations and, as such, opt (by their own volition) to have just one child.
But the biggest reason the Amendments to Population and Family Planning Law of the People’s Republic of China has not produced the desired result of widening the bottom of the population pyramid is that the Chinese are marrying much, much later than their parents.
While Chinese culture celebrates children, it celebrates education and professional achievement even more. Chinese parents tend to insist that their only child – boy or girl – get a good (i.e., long) education and a “good job” before even dating, let alone getting married and having children. As a consequence, many millennial men and women in China, therefore, wait until their mid-to-late thirties to procreate, a stage of life at which there is only enough time left on the biological clock to have only the one child, if that.
And the one child that they do have becomes the subject of intense prioritization and hopes for a better life in the future. Therefore, in China, there is still a huge demand for children’s education (abroad), social welfare (often to be found abroad), and high-quality life (you get the idea).
Career development, business opportunities, education, quality of life
At the beginning of the 1950s, China rolled out a planned economy nationwide with the goal of making a “Great Leap Forward”. Then, starting in May 1966 and lasting until October in 1976 (when Mao died) the unprecedented period of turmoil known as the Cultural Revolution brought about retrogression in economic and social development. While millennials did not experience the Cultural Revolution, they indeed suffered from the consequential stress at the initial stage of economic recovery.
At the end of the 1970s and beginning of the 1980s, the Chinese government began to carry out the “Reform & Opening Up” policy, which ushered in an economic boom. It was after the introduction of the Reform & Opening Up that the first cohort of Chinese investor immigrants made their money, a period during which a solid foundation for continued prosperity of the Chinese investment migration market (and, indeed, all other markets in China) was laid.
After Chinese people got rich, their eyes fell on the dual goals of high-quality lifestyles and their children’s education. Compared to members of Generation X who achieved tremendous leaps in wealth and career prospects (like a balloon held underwater and then let go, the Reform & Opening Up period allowed for massive wealth creation from a very low base), millennials did not have the same room for advancement. The low-hanging fruit had mostly been picked by their parents.
Perhaps as a consequence of this, millennials regard job-hopping as both legitimate and normal. I am not saying that millennials had no opportunities – far from it. A non-negligible share of them indeed found great opportunities in internet-based businesses that their parents had no access to, such as online retailing, online finance, as well as science and technology. But, on the whole, those born in the 1980s had to innovate to get rich, while their parents merely needed to open businesses or buy properties that they previously had been barred from.
Millennials, partly because they must be creative to get rich, partly because they were raised to be intensely focused on career development, place a premium on business opportunities when it comes to investment migration programs. They want to know whether a certain program will give their business access to big markets, or better professional prospects, or more investment freedom.
They are also keenly interested in the educational prospects of their children, who they would like to help avoid the stresses and pressures of the Chinese educational system.
Eschewing politics, welcoming internationalization
While their parents’ generation were keenly interested and involved in politics, millennials have little enthusiasm for it (especially now that there’s no money in it). Millennials find themselves at the lower end of the political totem pole and, if involved at all, it is in junior positions and have little-to-no say in the political sphere. At the same time, the world of business unquestionably offers much greater room for development and material wealth.
Against the backdrop of internationalization, millennials are “bowled-over” by the diversity the world can offer and the emergence of the internet has allowed them to gain rapid access to information.
In the early days of the millennial generation’s coming-of-age period, older generations labeled them “xenocentric”, a mistakenly applied label not rooted in empirical reality. In fact, millennials are the closest thing we’ve ever seen to a perfect blend of Chinese and Western cultures; they are more open to new ideas and to shaping their own points of view than any generation in China before them.
Take, for instance, the different perspectives millennials and their parents have on the purpose of insurance. Their parents bought insurance policies that aimed at protecting wealth and ensuring their children could inherit them. Millennials, meanwhile, are buying insurance against severe illness and disability, demonstrating a highly refined pragmatism.
Millennials, moreover, are innovators. Their parents were not. To become a middle-income economy, you don’t need to reinvent the wheel; you merely need to begin selling wheels where such products were previously not available, for whatever reason. But once you have become a middle-income country that wants to move up to the big leagues with advanced economies, you have to come up with products and services that don’t already exist elsewhere. Millennials, better educated and more exploratory of spirit than their parents, will be crucial to China if it is ever going to escape the middle-income trap.
Though the Chinese passport doesn’t rank very highly in terms of mobility, this limitation has not held back Chinese millennials’ interest in, pursuit of, or ability to explore the world. With the exception of Anglosphere countries, you’ll find that the lion’s share of Chinese nationals living abroad were born after 1980.
Chinese millennials are keenly aware of the opportunities in the rest of the world. They are interested in what’s outside of China. Where their parents would ask “can I find authentic Chinese restaurants in Malta?”, millennials are asking “what’s the local specialty in Malta?”. Increasingly, they master English (to a far greater extent than their parents ever did, at any rate).
Stay tuned for Part 2, where we’ll discuss several other characteristics that explain why Chinese millennial investor migrants are drastically different from their parents and what you must do differently to capture their patronage.