China and domains : Investments, or a form of tax evasion?


The Chinese domain market boomed in 2015.

As the focus of domain investing changed to China for the better part of 2015, many investment analysts followed closely.

In an article for DNW, domain investor and analyst, Joseph Peterson, carefully examined the trends behind the numbers of Chinese domain investing.

Many speculate that there has been an ongoing “pump and dump” scheme regarding the seemingly endless craving of short domains by the Chinese.

A new article expands even further on the reasons many Chinese invest in domains: to avoid government restrictions on how questionable or very risky investments in the stock market are made.

In 2015, in the middle of China’s ongoing financial crisis, the government tightened some forms of capital control; the Chinese citizens have strict limitations on the amount of money they can withdraw while traveling abroad, plus restrictions on how much money they can transfer overseas.

After testing the waters of Bitcoin and its obvious volatility, Chinese investors switched to domain names as a vehicle for transferring funds overseas:

“Chinese aren’t looking to make money. They’re not buying domains as investments– they’re using domains to TRANSPORT money.”

This approach appears to be a form of tax evasion, and it should make many wonder how long it can continue without the Chinese government finding out and cracking down on this practice.

“So later, you travel overseas, open a foreign bank account, then sell your domain to someone else.

The proceeds of that sale get paid to your new bank account abroad. And, presto! You’ve just moved a lot of money overseas, completely circumventing capital controls.”

For the full article, titled “Here’s the ultra-clever way that Chinese are circumventing capital controlsclick here.


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11 Responses to “China and domains : Investments, or a form of tax evasion?”
  1. says:

    Chinese people are smart. If the government tries to stop them, they will just ask people in another country like India to take care of their domains. I think some are also using domains to invest in USD and other currencies!

  2. Piotr says:

    That’s great, but it looks like the majority of once mediocre, now premium domain names has been bought from Western domain investors. I was invloved in few of those sales myself. After the purchase there is no further agreement and the money stays with the seller.

    Furthermore, you don’t need domain names to proceed with a money transfer scheme described in the article. As long as they have suitable payment options, they could buy virtually any item, virtual or not.

  3. DomainGang says:

    Piotr – Have any numbers to back up your “majority” statement? Westerner buyers are in the minority here. Check out Chinese domain auction trackers such as for current activity in China regarding short “once mediocre” domains. The article referenced examines the practice of using domain acquisitions as cash mules across the Chinese border, to evade restrictions imposed by China’s government.

  4. Piotr says:

    @DomainGang: I was talking about Western sellers, not buyers. If theory about transfering money via domain names were true, we wouldn’t see any cases when the seller and the buyer don’t know each other. Yet we see Western domain investors sell domains to Chinese all the time – why would anybody in China buy them as a way of transferring money out of China, if they can’t take the money back later on?

    For example, I’ve sold 6N domain name today to a Chinese buyer. That is not transferring money out to get it back, that is giving money to never see it again. Unless I miss something here.

  5. Steve says:

    “Chinese investor have switched to domains”
    Actually they have “included” domains as well as Bitcoin. Bitcoin trading volumes have never been higher. They are using both mediums because they are very secure and private.

  6. DomainGang says:

    Piotr – You’re not following what’s going on, apparently. Domain sales to the Chinese are vessels for a future liquidation. It’s almost as if the domain sale acts as a vault to be converted back into cash, hopefully at a profit, later on. Again, follow the stats presented by or

  7. Domain Observer says:

    The Chinese are buying not only domains but also foreign land, houses, artworks and so forth. They are the genius of trade all through their history of several thousand years. They occupied more than 80% of the world trade before the 20th century. What they are doing now is real commerce/trade/investment for profits. And taxation is their marginal interest. They will go even to the hell if there is room for profits.

  8. Piotr says:

    @DomainGang: yeah, I don’t get it. I mean, it looks like a scam to me. Could you walk me through it? Let’s say I sell 6N domain to a Chinese buyer. What happens next? If there are no end users there (I’m yet to see a single 6N domain name with a full website on it), does that mean the buyer will look for a gullible enough fellow countryman to pay for this domain name even more later on? Or something else is going to happen? And how that ties to transferring money out of China, which was mentioned earlier?

    Lot of questions, but I think many of the readers will benefit from the answers 🙂

  9. Mike says:

    Ha, hadn’t thought anyone else would be on top of this article. Should have known better! I wrote a piece on this yesterday as well, apparently a few hours after you.

  10. DomainGang says:

    Mike – Great minds think alike 😀 Going to NamesCon?

  11. Mike says:

    Unfortunately not this year.

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