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The Chinese Are Coming, Part XII. To A Public School Near You.

By Dan Harris on Posted in China Business

I gave a talk a couple years ago on what Chinese companies look at in determining whether to expand their business to the United States.  My thesis was as follows:  

Chinese companies looking to buy American companies are usually looking for a valuable technology or commodity or, to a much lesser extent, a strong brand name. If the company you are pitching has neither, the chances of a Chinese company buying it are really slim. People have told me that Chinese companies “have to be” interested in companies with really good marketing people. They tell me Chinese companies are terrible at marketing and so they obviously will be buying American companies that are good at it. That’s true in theory, false in reality.

I then talked of the following oddball/outlier purchases:

– The wealthy Chinese businessperson who owns a Chinese company and wants to buy an American company so his son or daughter can go to UCLA. These purchases tend to be more random.

– Haier. Even though I am convinced Haier’s setting up production in the United States is a money losing proposition, I still think it was brilliant. I believe Haier came to the United States despite its doing so hurting the bottom line. I believe Haier came to the United States so as to minimize export/import risk in the long term, so as to improve its reputation in the United States, so as to learn from the United States, so as to improve its marketing in the United States and the West and so as to be better perceived in the United States. In other words, it did what Toyota and Honda did when they built US car plants back in the 1970s. This sort of prescience from a Chinese company has so far been vary rare, but I do see it slowly increasing.  

My own experiences have forced me to add an additional reason: sending kids to United States public elementary schools.  Not kidding.

I should have realized this sooner, because this has been true of many of my firm’s Russian and Korean clients for many years.  

At least half the time, my meetings with Chinese companies looking to come to the United States devolve into a conversation as to whether it is really true that they will immediately be able to get their five year old kid (yes, the kid is usually five years old!) into a top neighborhood school for free. I swear that our saying “yes” to that question triples the chances of some sort of transaction going through.

The United States and Canada are the number one and two most desired countries for people from Asia, according to this recent Gallup survey. (h/t Global Small Business Blog) The reason the US scores so well is “opportunity,” including for children, which translates into education.

What do you think?  

UPDATE: Shanghaiist did a post, entitled, “Special delivery: mainland mothers heading to US to give birth,” on how wealthy Chinese mothers-to-be are hopping on airplanes to the United States so their kids can attain United States citizenship by being born there. 

  • http://chinabizgov.blogspot.com G.E. Anderson

    This is a big surprise to me. I assume it’s the “free” part they are after because my impression is that Chinese kids run circles around American kids in math and science.
    I have known Chinese who would take a bus across town to save 2 yuan, just so they could brag to their friends about the deal they got. Maybe the same concept is at work in this case.

  • http://kennytanlaw.com Kenny Tan

    There’s quite a bit of truth about the wealthy Chinese coming over here to purchase nice homes in prestigious school districts. Prices of real estate had gone down in many places in California but in the Chinese communities like the city of Arcadia, prices have held up pretty good partly because of inflow of buyers from mainland China. They’re sophisticated enough to know about the good school districts. Many would pay premium for a great school district. School district would rank very high on the list of factors for them.

  • http://www.gweipo.blogspot.com gweipo

    I’ve just been paging through “the schools guide” The best of British Education, published in Chinese by the Hurun Report. (www.hurun.net/education), I notice they also have a “best of” for USA education and apparently next year will have a Canadian guide. These guys usually are ahead of the curve, so I’m sure this is a trend.
    I guess more than anything Chinese kids abroad will be able to distinguish themselves in a way that is very hard back at home where they are just one of millions and millions of extremely hard working and diligent pupils.

  • Daniel

    That’s 100% true. I went to a Chinese American church in Orange County, California, and we had a lot of affluent folks from the Diaspora. Many, many of them were there so that their kids could go to the great public schools in Irvine and Fullerton.

  • David Oliver

    Most certainly believable. Recently I was talking to a Chinese deal maker about an investment opportunity in my home country and he said apart from the commercial logic of the deal I should be looking at how the key people in the Chinese company could benefit – mainly by buying property and moving their family out of China.
    While I’m sure education & lifestyle opportunities play a big part there is also the chance to funnel money of dubious origins out of China.

  • http://www.laduidefenseteam.com Joe

    Really? Like a few other commenters, I thought America had bad public schools. Isn’t the media always telling us how far behind other nations we are?

  • Tony

    Joe,
    It depends on the school. Take Silicon Valley; some areas have very prestigious public schools, e.g. Cupertino, Los Altos, MSJ in Fremont. Some people will pay a lot more money for a house, lie about where they live, or have their kids stay with relatives in those areas, to get into those schools.
    Even then, many Chinese parents pay for extra tutoring, SAT tutoring, and such. Frankly, in the US I think it’s a waste (and, in fact, can be counterproductive).

  • http://joyceyland.blogspot.com Joyce Lau

    I agree with Tony. While there are problems in some places, there are also excellent public schools in America. I went to school “for free” in a pleasant Connecticut suburb. My parents didn’t pay for tuition or even books from kindergarten to 12th grade. I had a great education, took a bunch of AP courses, and most of my high school friends went to good colleges.
    (Note: My parents were not high-flying Chinese investors who “bought” their way into America — we started as run-of-the-mill immigrants. And this was many years ago.)
    As for Asians running circles around Americans in math and science — well, that may be true. But I think it’s widely known that Western-style education — which includes participation, independent thinking, extracurriculars, etc — is superior to Chinese rote-learning. Plus, there’s the advantage of learning English in a native environment, and growing up to be multicultural.
    Oh, and face! That all-important Chinese consideration. It’s pretty cool to say your kids are studying in Silicon Valley instead of Shanghai.

  • anon this time

    It’s not just the highly-regarded school districts, it’s nearly any of them. Some “bad” schools have magnet, AP, IB, or other specialized programs. And the kids are guaranteed teachers who speak nice crisp American English from the giddy-up, which is something many immigrant parents prize. You can send your kid to the Shanghai American School, or the Shanghai British School, but that’s not quite what they want. Full on immersion, kids who can act as translators at Walgreens or the Cheesecake Factory… that’s the ticket. I even have heard tale of Chinese parents who enroll their kids at more “average” schools in unusual locales because they know they can easily outperform (grade-wise) the “American” kids, guaranteeing them a better chance at a place in a good university. Seems lots of people have already figured out that the LA burbs and their ilk are already full to brimming with SAT superstars, it’s harder for kids to compete in these places.
    Typically most Chinese who can afford to come over with the whole family have a little more cash to spend on housing, so they buy the nice cribbos in the places like San Marino, Monterey Park, South Pasadena… No surprise there. The less-monied, who come over solo and kind of live on the margins, doing things like overstaying tourist visas or doing the Chinese restaurant shuffle, they cannot bring their kids… or if they are young enough, they wait and have kids after arriving.
    I have taught at public schools (mostly adult ESOL) in the U.S. for years now, and I have noticed how the different $$$ classes of immigrants approach these things. It’s actually really interesting and adventurous, I don’t know if I’d have the stones to try the same thing in a really alien environment. As a former long-term resident of China, I can really empathize with and understand a lot of the students I get, so they tend to open up to me and tell me about their lives, or at least some of them do.
    Finally, have you seen how much out-of-country students pay to go to UCLA, U of Michigan, etc? WOWSERS! University admission committees know a cash cow when they see one… even run of the mill schools charge an arm and a leg and get foreign students standing in line to get in. Enrolling your kids with full US citizenry benefits is the only way to roll.
    Forget plastics… the real money/future is educa$ion.

  • jenny

    I have always loved this series. Why have you not written more on incoming China investment now that it is really starting to pick up?