Malaysian casino operator Genting envisions red and gold pagodas and a panda exhibit on the 87-acre plot of Las Vegas land it bought this week, a new gambling playground for rich Chinese moving their money overseas.
A 90-minute flight away, in San Francisco, China's biggest property developer has formed a joint venture to develop two high-rise condominium towers that are likely to draw wealthy Chinese buyers. It is China Vanke's first foray into the U.S. market, and probably not its last.
Combined, the two deals are worth about $1 billion, which could rise to at least $3 billion as Genting builds out its resort, which is due to open in 2016.
That's just a fraction of the $102 billion in outbound investment from Asia-Pacific companies in 2012, according to Thomson Reuters data.
But it signals a strategic shift.
Instead of hunting for natural resources, the driving force behind many of Asia's biggest foreign acquisitions over the past year, these companies are investing in the United States to cater to Chinese consumers abroad.
Beijing bars individuals from moving more than about $50,000 a year out of the country. Yet vast sums leak out illegally. Estimates vary widely on just how much, but research group Global Financial Integrity said it could have been as much as $472 billion in 2011 alone.
The money goes to places such as Hong Kong, Singapore, Sydney, London and San Francisco, where a heavy flow of Chinese buyers has driven up property prices. But until the Genting and Vanke deals, there was little evidence that large Asian companies were chasing the cash to the United States.
"You have Chinese money sitting in U.S. houses and Chinese money sitting in U.S. banks. If you're smart, you start setting up places for Chinese people to stay and things for them to buy," said Derek Scissors, an economist at the Heritage Foundation think-tank in Washington, who tracks Chinese foreign investment.
Risk to Rivals
Scissors said the Genting and Vanke deals represent another step in the progression of Chinese investment in the United States since the global financial crisis.
First, individual Chinese investors started pouring money into U.S. property in late-2009. Then, a couple of years later, Chinese property developers began scouring for deals, largely unsuccessfully. The Genting and Vanke transactions are early signs that Asian companies see ways to tap Chinese demand beyond China, something few U.S. firms seem to have recognized.
The property that Genting bought had been abandoned since 2008, and the deal is the biggest new investment on the Las Vegas Strip since then. In that time, China's gambling capital of Macau has opened four new casinos - two of them built by U.S. gaming company Las Vegas Sands.
Genting has casinos in cities such as Singapore, which is popular with Chinese visitors, but not in Macau, the world's biggest gambling hub. The firm is not guaranteed success in Vegas, a market with thinner margins and tougher competition than in its power base in Singapore where it operates one of only two casinos.
Its arrival could spell trouble for casino rivals, too.
Ratings agency Fitch warned that Genting's arrival was a "risk" for U.S. operators because its project will add 3,500 hotel rooms in a city where occupancy was flat last year and the average daily rate up a tepid 2.8 percent.
"We believe the property will target high-end Asian customers, which has been the principal catalyst for gaming revenue growth on the Strip since 2010,"
Fitch said, adding that high-end properties run by Wynn Resorts, Sands and others were "especially vulnerable to the increased competition from Genting."
For Vanke, venturing into the United States makes sense now because Beijing is clamping down on property speculation at home. New restrictions announced on Friday may speed the flow of Chinese property investment abroad.
Vanke "will go anywhere mainland Chinese want to go," said Jinsong Du, a property analyst at Credit Suisse in Hong Kong. "Their target customer is not overseas Chinese. Their target customer is mainland Chinese who want to migrate to overseas, or have a home outside the country."
Vanke President Yu Liang, however, said the company had no intention of building a Chinese community overseas. "What we are looking for is overseas resources and market, not Chinese immigrants. We place emphasis on the concept of harmony," he said.
Other Asian companies might learn from the example set by Vanke and Genting.
Jonathan Galaviz, managing director at Galaviz and Co, a California-based research and strategic advisory firm, said real estate and hotel companies such as Singapore's CapitaLand and Hong Kong's Sun Hung Kai Properties run the risk of losing global relevance as they lack a U.S. presence.
In an emailed statement Sun Hung Kai said it aims for a balance between steady cash flow and fast asset turnover. "Geographically, Hong Kong remains our focus. The Group is also positive about the long-term outlook for the mainland and will continue to expand its business there." A spokeswoman for CapitaLand declined to comment.
"Companies like these, and others in Asia, need to also recognize they are investing in potentially overheated markets in mainland China - and elsewhere in Asia - and diversifying some asset holdings in America would be something smart to do," Galaviz said.