Buying a Business – the Easy Way to Residence?

Umm, no, it isn’t.  Here’s why.

This post was inspired by a Herald article just before Easter, about an Indian international student who bought a café franchise with a plan to use it to get a business visa.  He did this because of the difficulties which international students now face in following the pathway to Residence after completing a New Zealand qualification.  The article doesn’t tell us whether he’s got his first Entrepreneur Work Visa (“EWV”), but it’s clear he hasn’t got Residence yet.  He apparently said that he saw the Entrepreneur route as a “more straightforward way” to become a Resident.

The Hard Road to Residence via Employment

In some ways this is understandable.  The traditional route to Residence after study begins with an open 1-year “job search” Work Visa.  The difficulties begin when you want to get a suitable job offer to qualify for a 2-year “work experience” visa.  Immigration policy requires firstly that this job be directly relevant to the major subject-area of the qualification.  In the last year, this has been interpreted much more strictly, with visa officers drilling down to the list of subjects studied and declining applications which were easily approved back in 2016.  The second test is whether the candidate’s diploma or degree was a key factor persuading the employer to hire them.  This has also become a painful exercise.  Take someone who was originally hired while on the job search visa, if they then apply for the work experience visa with the same job offer, Immigration may object that the employer was not influenced by the qualification at all, because they already had the employee on the books and did not need to look at the qualification when considering whether to keep them on.

Then there is Skilled Migrant Category (“SMC”) Residence.  A new scheme was opened in August 2017 which first of all introduced a salary threshold – your job will not be recognised as “skilled employment” unless it pays at least $24.29 per hour (about $50,500 on a 40-hour week).  People who got jobs in the $40-45K range last year suddenly found themselves in a dead-end position.  Secondly, the way in which work experience qualifies for points has become more devilishly complicated – you can now only claim for the years you worked where that work would be credited as “skilled employment” itself.  And there were other tweaks which were intended to favour age and experience over diploma certificates.

As a result, the number of SMC applications, and the number of approvals, have dropped away in the last few months.  Successive Governments pledged themselves to plug the flood of offshore students filling up the places on the Government Residence Programme.  And they seem to have succeeded.

Entrepreneur Residence – Harder Still

Back to our enterprising Indian student who said that the Entrepreneur policy offered a “more straightforward way” to Residence.  Sadly, nothing could be further from the truth.

Figures recently released by the Business Migration Team show that it has been declining an average of 93% of EWV applications month on month since late last year.  Less than 1 in 10 applicants have a chance of getting through.  Officials have admitted that they have determined to send the message that they simply will not grant visas to people who have not done an absolutely thorough job on preparing their business case.

Part of the reason is the need to demonstrate that the business proposal will deliver a “substantial benefit” to New Zealand.  Not just a benefit, but a big benefit.  There are three ways this can be done, by:

  • generating export earnings;
  • introducing a completely new product or service, or a new way of doing things which the NZ market has not seen; or
  • being “high growth” – whatever that means.

After someone gains their Entrepreneur visa, they then face probably an even greater challenge.  This is that they must meet all the objectives which they set out in their Business Plan for the 3-year duration of the Plan.  They cannot afford to drop the ball on any of them.  Forget economic fluctuations, forget the intervention of a new competitor in the market, forget all the stresses and reversals which most new businesses face – you must succeed at all costs, and in the manner which you confidently predicted all those years ago.  This is because the EWV only permits you to apply for Residence after proving that you have successfully operated the business for 2 years.

We have always known that the EWV option was hard, and ever since it was unveiled in 2014 we have actively discouraged people from applying.  The way things stand now, we could not recommend this option unless someone had a truly remarkable offering, and the business sense and attention to detail needed in order to file such a difficult application.  In most cases there will be another way, whether it be looking for that elusive skilled job offer, or moving $10 million to New Zealand as an Investor.

It’s pretty unlikely that buying an Esquires coffee shop will deliver any of the “significant benefits” mentioned above.  Franchises have fared particularly badly as a vehicle for getting an EWV granted, even before the more recent tightening on the screws.  Still, we wish our Indian businessman luck.  He’s going to need lots of it.  And this is only to get, and the keep, the Work Visa which is the first step in the Entrepreneur process.

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About Simon Laurent, Lawyer

Principal of LaurentLaw Barristers & Solicitors. NZ immigration law specialist.
This entry was posted in Business, Citizenship, Immigration Appeals, Immigration Industry, Immigration Problems, Immigration Visas, Politics, Practice of Law, Property, Refugees. Bookmark the permalink.

2 Responses to Buying a Business – the Easy Way to Residence?

  1. raymond says:

    It seems that the Indian student has already obtained Entrepreneur work visa. I can not believe that he would take the risk to purchase a cafe business before his application for EWV is approved.

    Like

    • Andries says:

      Good day who is the Indian entrepreneur do you know him? So he got is entrepreneur visa? I need to get in contact with him.

      Like

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