Arnstein Partner Authors DBR Article “Bridging Cultural Gaps with Chinese Real Estate Buyers”
Lately, with increasing frequency, I find myself dispensing solicited and unsolicited cultural lessons to colleagues and business contacts.
"Insist on paying for dinner, even if it means taking off your tie and physically wrestling the check from the waiter. And yes, do wear a tie, even if you know these executives from Shanghai just finished a round at the Biltmore Golf Course."
Some of the tips have become common knowledge, most are easy to follow, and all can be essential in bridging the cultural gaps.
"With a slight bow, present your business card with both of your hands and place it directly into the recipient's hands. If the CEOs of multibillion-dollar Chinese companies are doing it, you should, too. Tossing your card across the table is disrespectful."
Almost three years after its decennial leadership transition, China is encountering a slowing economy in the midst of an extraordinarily volatile stock market. Yet there are numerous news articles about the flow of Chinese money into the South Florida real estate market, and local observers continue to anticipate an influx of investments from China.
Unquestionably, South Florida has a wealth of opportunities to offer to the Chinese. In turn, funds from China have the potential to transform blocks, neighborhoods and cities. The $74.8 million cash purchase of a block in Miami's Brickell district by American Da Tang Group, the awe-inspiring Brickell City Centre project being developed by Swire Properties Inc. and the noticeable increase in commercial and residential property acquisitions by Chinese buyers are all welcome signs for a region traditionally dominated by money from Latin America.
From Meetings To Sales
"I understand her children are studying in Ivy League schools, and she spent years in New York, but English is still her second language. So enunciate and speak at a moderate pace."
South Florida brokerage firms, large and small, are scrambling to hire Chinese-speaking sales associates as more prospective Chinese buyers are landing in MIA and FLL despite the lack of direct flights and currency conversion restrictions.
Having the ability to communicate freely helps, as does having the opportunity to present, in person, brochures featuring spectacular projects like Echo, Muse or the Porsche Design Tower.
Nevertheless, the challenge is how to convert these visits and interactions to actual sales, which require an authentic connection and a trusting relationship. Naturally, knowing how to navigate the cultural differences respectfully is a necessary first-step.
Level Of Sophistication
"Yes, her accent may be thick, but so is her resume; given her experience and track record, she is likely twice as sophisticated and prepared as you."
Much like other foreign buyers, Chinese investors vary substantially in their background and focus. Realtors and professionals should determine if the clients are sophisticated Chinese-Americans who have already done deals in other parts of the U.S., recently immigrated families who want to buy a solid home in areas known for good public schools like Weston and Pinecrest, or buyers who will remain in China but are purchasing luxury condo units as investments or places to live for their children studying at the University of Miami.
Having working knowledge of numbers useful to prospective Chinese buyers can concretely demonstrate the Realtors' value, such as the currency conversion rate, the price per square meter in Chinese currency, the estimated real estate taxes, maintenance estimates and rental income.
Almost as importantly, sellers should have professionals who are a phone call away and can explain, preferably in the foreigners' native language, issues such as the Foreign Investment in Real Property Tax Act of 1980, estate planning, 1031 exchanges, and title and premises liability.
Trust Is Key
"As you typically distinguish your European visitors as being British, German and French, you should try to know if the person is actually Chinese, Japanese, Korean or otherwise. More importantly, you may describe your rugs and paintings as Oriental, but not your Asian business contacts."
Unfortunately, Chinese investors have already encountered negative experiences with locals who view them as one-time prey rather than long-term business partners. Recently, a Chinese investor, recklessly encouraged by his broker, almost paid a substantial nonrefundable deposit for the purchase of a commercial parcel with intent to develop a project but without obtaining any zoning, environmental or economic reports. It is one of the sad but true (and increasingly common) anecdotes.
In order to win over these prospective Chinese buyers and persuade them to direct funds into the farthest U.S. city from China, we will need to understand their needs, establish a knowledgeable and supportive network, and build meaningful relationships on a solid foundation of trust. Familiarizing ourselves with the cultural differences is a helpful start.
Reprinted with permission from the Daily Business Review.