Business is Personal (Finance)

At this moment, I am typing this entry up behind the Great Firewall of China. It sounds like a rather big move to uproot my family but we had been mulling it over for a while. Our reasons for the move in no particular order:

Break out of status quo

I settled in San Francisco at the age of 5 so I've spent nearly my entire life in one place. There's a lot of inertia when you put roots down -- not just in the location but also in habits, activities, social circles -- and I felt it was time to do something different after more than 3 decades in the same location. As we gave away our worldly possessions, I could feel a burden lightening on me -- what we did was now more important than what we had. I hope this dramatic move can keep our minds and lifestyles flexible -- after all, who knows where we will turn up next?

Family overseas

My wife's immediate family is still in China. Her mom had just suffered a minor stroke recently so it's been in forefront our minds that this is the opportunity to spend time with her family before mother nature/old age intercedes any further. This has turned out to be a great reason. Families are so much closer outside of the USA and it has been a real treat being able to interact with them on a daily basis compared to the once-every-major-holiday routine for most Americans.

Overseas income-exemption

U.S. citizens residing overseas 330 days in a 12-month period can deduct the first $91,400 of their earned income. Passive income is not deductible and will sit ontop of the $91,400 amount even if you didn't earned that much income. (If a U.S. citizen pays foreign taxes, they may instead elect to take the foreign tax credit instead of the income deduction -- they can't take both though.) In my case, I don't pay any foreign income taxes so the $91,400 deduction translates to roughly $15,000 less Federal income taxes annually.

Lower cost of living

The average Chinese worker in Taicheng earns about $250/mo USD. In San Francisco, I spent 15-20X that amount and I lived what my peers considered an ultra-frugal lifestyle (2 adults+2 kids in 600sf 1 bedroom apartment). With the drastically lower cost of living and the tax deduction, I can live it up and still cut $50K of expenses annually. Imagine if you had another $4000 to invest monthly -- how much farther ahead of schedule would your financial plans be?

Ramp up business

Like most small businesses, we are understaffed and overworked. We may get new customers to bring in more revenue but it's usually only enough to hire just for the new customers. It takes years of multiple new accounts combined before we finally can hire the extra infrastructure/support person needed to partition off a complete set of job duties to create a totally new position. To break this cycle, I broached the idea of working from overseas to my partners in order to build a support office that would finally let us expand without putting more job duties on our existing USA-based employees. My partners would watch over operations state-side while training new management talent (replace us fully so we can retire). Meanwhile, I would work remotely to handle my existing duties while overseeing overseas office build-out and staff training.

I know some people feel very strongly about outsourcing so I will say in this case that no American jobs or potential American jobs were outsourced. We have the revenue to hire X people in the USA. Whether we have a China office or not does not change that equation. The only difference is without a China office and Chinese workers, the partners would split roughly an extra $600/mo in after-tax profits. With minimum wage in San Francisco at $9.79, all we could do is pay somebody to come in 2 days a week for the most basic job duties.

Other possible business opportunities

We are currently live in Taicheng Township -- a city of 100K in Taishan County (pop 1M) in the Pearl River Delta region of Guangdong Province. You probably are familiar with some of the bigger Pearl River cities like Hong Kong, Macau, Guangzhou. Other important cities in the area would be Shenzhen, Zhuhai, Jiangmen, Zhongshan, Foshan. I read there's more economic activity going on in the Pearl River Delta region than any other place on Earth -- after seeing this place, it's not too hard to believe. It's as if 2 New York Cities and 4 Los Angeles and 6 Seattles were all located within a 2 hour driving radius.

I'm sure plenty of people would rather prefer a more quiet lifestyle -- suburban, rural or perhaps even deep in the woods/mountains. But if you want to make your fortune, this is the place to do it. We've been catching up with my wife's friends and relatives and the number of people who've went into business for themselves is astounding. People start with nearly nothing and wheel/deal/work their way up in life.

Now this doesn't mean I'm going to throw my money at every idea that comes my way. My primary focus will be on my USA-based internet ASP but if the right idea and circumstance piqued my interest, it would be yet another arrow in my investment portfolio. And after only this short time, people I know on both sides of the Pacific are salivating on the prospect of getting into the action here.

Quitting the rat race

Most people can't just quit the workforce if they get sick of their job. Perhaps they have to tough it out until they get their pension or social security -- or to keep their health benefits. Unfortunately, I've been running a business for more than a decade now and my wife a half a decade -- and it would be very hard for us to go back to working regular jobs. Hence, we want to stay in China long enough (not just a mere vacation) to decide whether we could handle the lifestyle here if we had to retire early if needed.

Improved language skills

It doesn't take living in this area to realize China is a rising power. They've clawed their way up from 3rd world country status in just 20 years. Other than the United States, there's no other country with more fingers in the global pot and more deals going on. Whether you like China or not, those who can speak both English and Chinese and understand the cultures will have a leg up for jobs and business opportunities. While I hope to improve my Cantonese and learn Mandarin, my primary goal is for my kids to grow up speaking English and both Chinese dialects.

Education for my kids

Besides the language factor, schools in China are far superior than those in the United States for academic subjects. In US schools, they repeat the same basic math for 7 years in order to allow everybody to reach Algebra in the 8th grade. My dad had already taught me all the basics by the 3rd grade so I spent the next 4 years just twiddling my thumbs at the glacial pace of teaching. My rough plan is for grades K-to-5 in China to give my kids a huge leg up on the competition back in the USA because they would already know most everything taught in grades 6/7/8 before they even started middle school.

Allergies

The past few years, I've been suffering awful coughing spells. I finally found a doctor well-versed in coughs and his diagnosis was allergies. After living 30+ years in the same location, my body has gotten super aggressive with the local fauna. Anytime the trees & flowers bloom, I would get nasal drip down into my throat causing me to cough nonstop. (The key symptom was my cough would stop if I actually got sick.) Anti-allergy medicines can help alleviate the symptoms but the most direct solution is to get away from the trees & plants of San Francisco. Since I've been over here in China, my allergies are totally gone.

... Stay tuned for Part 2 on how the move went down ...

(Filed in china, life changes)