Rico's rants: Young, rich, and Chinese in America

08 June 2016

Young, rich, and Chinese in America

The BBC has an article by Mark Johanson about what happens when you turn rich Chinese kids loose in America:

When Michael Kwan moved to the US from Hong Kong in 2012 to attend the University of Illinois at Urbana–Champaign, his parents provided him with a generous budget for living expenses. The amount was far above what he needed at the rural Midwestern, so Kwan used the excess cash to purchase an $80,000 Cadillac Escalade.
Nicholas Lam, cofounder of New York Auto Depot, has built a business selling cars to Chinese students in the eastern US. The idea was to “have a huge car and fit in with American culture,” he said. But Kwan quickly found himself entrenched in a secretive group of about a dozen luxury car owners on campus, all of whom were from mainland China and drove much smaller sports cars, such as Nissan GT-Rs and BMW M5s. By the end of his freshman year, the now-22-year-old engineering major had traded in his Escalade for a sleeker $100,000 Maserati Quattroporte, which he brings to late night meet-ups organized on the popular Chinese social media platform WeChat.
The reaction from his American peers: envy. “There are a lot of guys who want to sit in the passenger seat of my car and I’ll take them for a ride sometimes,” Kwan said, explaining that he and his Chinese friends tend to be more outwardly affluent than the locals.
The number of students from mainland China studying stateside during the 2014-2015 academic year was just over three hundred thousand, an eleven percent increase year-on-year, and five times as many as a decade ago, according to a report by the nonprofit Institute of International Education (IIE). The University of Illinois at Urbana–Champaign alone has nearly five thousand Chinese students among its forty-four thousand student body, giving it one of the largest concentrations of Chinese students in the nation.
From the plains of the American Midwest to the big cities on either coast, Chinese students are not only changing the cultural landscape of American colleges, they’re also fueling an economic boom. The IIE believes that Chinese students last year injected a staggering ten billion dollars into the US economy through tuition and fees, and the proof of their purchasing power is more evident than ever in the towns in which they study.
New York City is a common point of entry for many Chinese students arriving in the US, and Shanghai-native Nicholas Lam is often one of the first people they meet after they land. Lam graduated from Stony Brook University on Long Island in 2013, and has built a small empire selling Chinese students new and used luxury cars though his company.
The 25-year-old admits that he didn’t know much about cars when he first moved to the US in 2009. “But after purchasing one at a price that I later found out was very unfair I decided to learn everything I could and start my own business,” he explained. Lam now has eight full-time employees and over fifty promoters at universities up and down the East Coast who help him to sell exotic cars to foreigners like the Lamborghini Huracan (with a manufacturer’s suggested retail price of two hundred thousand dollars). “We sell cars on this level about once a month,” he boasted, adding that luxury cars in the hundred thousand dollar range make up about twenty percent of his sales. Lam said that nearly a hundred percent of his clients are Chinese international students, mostly at universities between Boston and Washington, DC.
Chinese students in the US purchased just under sixteen billion dollars worth of new and used cars in the 2012-13 school year, according to the latest data provided by market research firm CNW Research. Mercedes-Benz, Lexus, and BMW were, far and away, the most preferred brands.
If there’s anyone who’s been following the luxury car trend closely it’s Timothy Lin. The 27-year-old runs a popular Chinese-language digital media platform called CollegeDaily that’s aimed at students studying abroad in America. It reaches more than six hundred thousand people, double the number of students who are actually Stateside, and delves into everything from current events (such as the rise of Donald Trump) to social tips (like how to use dating app Tinder) to the latest designer goods (including luxury cars). Lin said that, while American students might view luxury cars as an expensive folly, Chinese students see them as the bargain of a lifetime.
“What if I told you that if you moved abroad you could buy a Ferrari for half or even a third of the price back home? What would you do?” he asked. “You’d buy that Ferrari, because it’s a huge discount and a once-in-a-lifetime chance to experience a car you might never afford otherwise.”
Exorbitant taxes on luxury goods in mainland China can mean that a Ferrari 458 that retails for nearly three hundred thousand dollars in Boston costs more than seven hundred thousand dollars in Beijing. Consequently, some Chinese students in the so-called “rich second generation” look at their four-year American college experience as the time to try out a dream car, buy designer clothing and live out a discounted version of the luxury lifestyle.
Lin, who graduated from Ohio’s Miami University in 2012, views the Chinese students in America right now as The Generation of Great Gatsby. “We’re acting out an American history that was happening a hundred years ago,” he explained. “A lot of people in China are making new money, so they want to buy luxury things, luxury clothes, luxury foods, luxury cars. They want to try all the new things.”
Luxury brands are well aware of this seemingly insatiable desire. High-spending Chinese students often serve as unofficial opinion leaders for their friends back home, and brands have done everything they can to capitalize on their new found purchasing power.
Bloomingdales recently organized a fashion show for Chinese students in the Chicago area, high-end department store Bergdorf Goodman sponsored Chinese New Year celebrations at Columbia and NYU, and State College Motors (which sells Mercedes-Benz, Audi, and other luxury vehicles) sponsored an annual car show for the Chinese Undergraduate Student Association at Pennsylvania State University.
The luxury desires of Chinese students is perhaps most evident in one of the nation’s least-ethnically diverse enclaves: the American Midwest. A recent report from the Brookings Institution found that nine of the twenty-five American universities with the highest Chinese populations belong to the Big Ten, a group of fourteen universities, primarily located in the Midwest.
During the recession these large, mostly public, universities in Middle America heavily recruited international students whose substantially higher tuitions help subsidize their American peers. Enrolment has snowballed ever since.
The University of Iowa, for example, leapfrogged from fewer than six hundred Chinese students in 2007 to nearly three thousand in 2016. The impact of this dramatic shift, including the influx of luxury cars in campus parking lots, has made headlines across America.
“There is this kind of economic development story unfolding,” said Tom Snee of the University of Iowa News Services. “You have people coming here and, in a lot of ways, really changing the face of Iowa City.” Snee said there’s a shopping-mall food court one block from his office with ten restaurants. “Eight of them are Chinese,” he noted, adding that many of them used to be empty. The small university town has only one Starbucks, but there are three bubble tea shops. Iowa’s car dealerships, meanwhile, report a strong customer base of international students, according to Brittany Bungert at the Iowa Automobile Dealers Association.
As graduation approaches this spring, so, too, does a flurry of activity on WeChat as many international students sell off their cars and head back to China.
“Some people who don’t care about price and need to sell fast will sell it back to the dealership, but most will try to sell on WeChat or with someone like me,” said Lam of New York Auto Depot.
Kwan, at the University of Illinois, agreed. He said he’ll probably sell his car after he graduates this May and before he moves back home. If he does, you’ll need to sign on to WeChat to make an offer.