Tales from Retardicon 6 The Business of Investor Visas – part 2

“Many migrants interested in starting a business or investing hire lawyers or migration agents to help them with the applications. One agency in Christchurch told me the fees would cost NZ $12,000, which included the company writing a business plan, but the fee could vary depending on my business plan. No one in New Zealand can actually give you a straight quote. When pressed, the answer is “it depends”. The migration agency told me that they had teams of experts etc, but of course, they would not guarantee a successful application or make payment contingent on success. These “immigration consultants” are one of the parasitic industries that the New Zealand government is keen to assist at the expense of migrants with fat wallets.

The woman I met was a South African, but she exhibited the mendacity and treachery that is common with the lower end Afrikaners in South Africa and which you will find amongst many Kiwis. In addition, she seemed quite dumb. Anyway, I told her that for that money, I would just find a Kiwi girl and be able to stay permanently with much lower costs and fewer complications. In actuality, I actually did manage to find a lovely Kiwi girl of Swiss extraction and I applied for permanent residency that way.

Anyway, I later saw an advert on http://www.seek.co.nz where that same migration agency was looking for people to help write business plans. The agency’s “experts” were actually lowly paid part-time contractors, yet the agency billed some outrageous hourly fee to people like me. Thankfully, I did not use their services.

At any rate, many entrepreneurial migrants interested in escaping the rat race or older migrants with sizeable sums of money, but who are otherwise ineligible to migrate to New Zealand under the Skilled Migrant category because of age/skills gap ultimately still consider migrating to New Zealand under one of the Business or Investor categories. Many hear tales of the wonderful New Zealand lifestyle or they have even enjoyed visiting New Zealand on holiday. They also hear of the many and varied business opportunities in addition to New Zealand’s high rankings on ease of doing business etc.

Admittedly, it is very easy to open a business in New Zealand. You simply fill out a form online, pay a fee with a credit card, and fax your signature and articles of incorporation. Unfortunately, this is where the ease of doing business stops.

After selling a small business in the United States, I spent nearly three years searching for a business to buy or start in New Zealand. In fact, I actually opened a small online side business offering investment/relocation advice to Americans interested in living or investing abroad. I will tell you more about that later.

I looked to buy a business in New Zealand, but everything on offer was ridiculously overpriced given the actual earnings or earning potential of the business. The New Zealand government actively encourages migrants to buy established businesses because it offers a better guarantee given that the business is presumably profitable and has customers and revenue. Below are some of the most ridiculous examples.

• A tour boat business had a boat valued at NZ $50,000 and $20,000 in annual profit was on sale for NZ $200,000
• A backpackers in Wanaka that earned NZ $30,000 was on sale for NZ $120,000. However, this did not include the building
• A small bus/van shuttle service earning NZ $50,000 per year in profit was on sale for NZD $150,000. The business had two small ageing vehicles that were probably worth no more than NZ $20,000.

In addition, I looked at other franchise opportunities. A Dominos Pizza franchise costs about NZ $400,000 to establish, yet the projected earnings after royalties, staff, rent, utilities, etc are only about NZ $70,000 per annum. The NZ $70,000 you earn after toiling seven days per week working the business yourself, which is simply not worth it.

Other franchises were even more parasitical. One fellow wanted NZ $25,000 to buy a recruiting franchise whose name I had never heard of. It would give me the rights to a region. In addition to the fee, I would have to pay substantial royalties in return for business cards and advertising. Of course, the franchise agreements never specified in any detail what the franchisor must do for me, but it did say that I was responsible for hustling and finding business.

Aside from the businesses that earn no money, one also has to beware of businesses that lie or exaggerate earnings. I encountered one online travel agency business that claimed to earn NZ $110,000 profit in its first year on sale for NZ $300,000. However, when one starts to ask questions or request things like tax returns or the ability to audit the business etc, one suddenly finds the vendor is not very willing to continue discussions.

In other cases, unscrupulous people will create businesses, trade for a year and actually pay tax on fictitious earnings, then sell the business to someone for an inflated price and leave them holding the bag with something worthless. If you then try to pursue the person for fraud, you quickly learn about the inefficacy of the New Zealand (in)justice system.

The police will do nothing because it “is a civil matter”. In fact, I know one migrant who established a business and partnered with a Kiwi, who embezzled about NZ $200,000 from the business. He went to the police, who said he must go to court because it is a civil dispute. He pursued the matter in court only to learn that the judge was a business associate of the man he was suing. The judge refused to recuse himself because New Zealand does not have corruption and, predictably, he sided with the swindler. The man subsequently appealed the ruling, but the New Zealand courts did not order a retrial because, in their eyes, the evidence was in favour of the defendant, despite the facts being otherwise. As an added insult, he also had to pay the defendant’s legal costs, which the lawyers always manage to inflate since their relationship with judges trumps whatever the legal merits of the case might be.

I raise this anecdote because New Zealand touts itself as the pinnacle of transparency and claims to have magnificent legal and political institutions. The reality is quite different. It took me about a year of living in New Zealand to begin realising the charade complete and put the pieces on it. Fortunately, I never rushed into anything and I managed to leave the country with more money than what I had when I originally arrived.”

coming up – Keep your investments abroad

Tales from Retardicon 6 The Business of Investor Visas part 1

Tales from Retardicon 6 The Business of Investor Visas part 3

One thought on “Tales from Retardicon 6 The Business of Investor Visas – part 2

  1. New Zealand businesses are joke, I am Indian national living in NZ for last five years, need not to mention, absolutely loathing my life here and the harrowing experiences I have been through. My uncle purchased a furniture manufacturing business here in year 2008 for around a million mark. Later we came to know that the financial documents were forged and business had zero goodwill. He did got his permanent residency, but this setback made him so stressed that he passed away in 2011. Somehow I managed to recover the business and sold it to a Chinese migrant investor for a huge loss.

    Sir, can understand your feelings here, as I feel the same everyday. I was born in a business family, know how to do business, and in my opinion this country is full of incompetent morons from top to bottom. I haven’t seen an iota of true business leadership in kiwis, except their worthless boasting. So my advise to potential foreign investors is to scrutinize the paperwork before proceeding. These loathsome business directors could be worse than a slippery snake on a wet grass, and once they cross you over, the law of the land wouldn’t help. Because law here is merely to keep the traffic violations and petty crimes in check. High level corruptions are rarely under the scanner, and most culprits get away.

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