In China, FXDD is a major force. FinanceFeeds’ recent on-the-ground investigations within China’s provincial IB network which comprises of large…
In China, FXDD is a major force.
FinanceFeeds’ recent on-the-ground investigations within China’s provincial IB network which comprises of large companies with between 50 to 80 staff that manage customer accounts and trade between 40,000 to 60,000 lots per month concluded just that.
From Shenzhen to Zhengzhou, and Guangdong to Shanghai, FXDD was one of two large brokers (the other being FXCM) that such firms refer business to.
Today, FinanceFeeds is back in the Western hemisphere, at FXDD’s head office in New York’s palatial 7th World Trade Center in downtown Manhattan, where FXDD’s Chief Operating Officer Lubomir Kaneti explained the firm’s success in the Far East.
The IB model is still the best way
“For us, China is a major market” explained Mr. Kaneti. “We operate it on an IB model, as it is against our policy to have an actual call center in China. I do occasionally see companies that try to push that limit and then they find that the Chinese govenrment has no tolerance for it” he said.
“Our Chinese IBs work with our office in Malta, however large part of the support is conducted here in New York. As you know, we have no business in the US anymore, therefore the focus is on supporting our international operations which include the Chinese IBs and ensuring that the functionality of their systems and the quality of the trading environment remains as high as possible, as they are very discerning customers.”
Understanding the requirements of Chinese IBs
Through a great deal of research and meetings with IBs in China, FinanceFeeds clearly understands the need for brokers to which said IBs are referring business engage on a personal basis with the IBs by spending time with them, at their offices and listening to their requirements.
Whilst Mr. Kaneti firmly agrees with this, he considers there to be far more to the art of ensuring that a smooth and long term partnership can be fostered. “It is not just a case of traveling to see IBs” he said.
“The IBs have to promote their brand whilst adhering to the very stringent rules in China. They may push the limit here & there and we will call them if we see something not right to ensure that we can help them operate within the appropriate limits across the entire chain. Overall we have been very good to them and that is critical. In China, companies appreciate this kind of very detailed service.”
Entrepreneurship is paramount in China
Mr. Kaneti has a very concise understanding of the modus operandi of Chinese IBs. “The Chinese IBs are entrepreneurs in their own right, and respect companies that let them focus on building their business. They need to focus on building their network and developing more business, whilst the broker has to be reliable in delivering a comprehensive brokerage service that does not impede the IB’s goals and allows them to concentrate on their business.”
“You don’t have to be the latest and greatest, but you have to be serious and provide top quality service, and build trust. The IBs are very keen and actively looking to sell a specific premium brand to their customers, therefore it becomes easier to do so as it becomes a well known brand in China if the company provides good quality customer service.”
In terms of gaining trust, Mr. Kaneti considers it to be rather like growing a traditional British garden. “The similarity is that after several years of cultivation and attention, an immaculate lawn will result, but after the lawn has been completed, you have to go back over the parts that have already grown and ensure that no weeds have appeared, and then plant some flowers to show additional attention to detail.”
Good habits lead to good results – Lubomir Kaneti
“Good habits lead to good results” said Mr. Kaneti. “Legendary business philosopher Peter Drucker once said that ‘culture eats strategy for breakfast’. This is very telling. For example, if the culture within a brokerage is to is churn and burn through customers and take no prisoners, then customers will treat the brand the very same way. If you focus on service and customer satisfaction and you do it properly then you get long term results and lots of referrals.”
Why do Chinese IBs worry so much about sending client funds abroad?
Mr. Kaneti remenisced on some of his inaugural ventures into the Chinese market which paved the way for today’s business success there. “On some of the early trips to China that I went on, there were, for example 300 people waiting to take notes on a seminar which is great, but then they ask what is the risk of their clients losing the funds and if their money will never be seen again, even for small deposits.”
This is very understandable, as the Chinese government has jurisdiction only over its domestic enterprises, and is not responsible for any loss of funds that have been sent abroad, plus Chinese investors cannot instruct a lawyer to recover anything from abroad.
Mr. Kaneti always addressed this matter by explaining that at that time the operation was not regulated, funds were not segregated and if they did not want to take the risk, then it is best not to send anything and not to trade. This method demonstrated to the clients that the company was not out to take their money, and has their best interests in mind. According to Mr. Kaneti, the customers and IBs in China respect honesty, and straight forward answers and therefore they would rather go ahead and trade with a company which demonstrates that. This is certainly something that FinanceFeeds agrees with.
Culture eats strategy for breakfast! -Peter Drucker
Many companies focus on China – not all manage to crack it
“So many people in this industry want to do a lot of business in China, but many companies do not realize that these are very different businesses compared to other regions, as their business methodology is unique. You have to respect them and understand that they have their own ways.”
“I actually remember before I came to America, the country that I lived in at the time in Europe was coming out of communism, I was aware of the circumstances that surround this, but did not really need to give it much thought at the time. I would say that now, this experience is very relevent and has helped me understand how to manage cross-cultural business” recalls Mr. Kaneti.
“A country as big as China needs a government system which keeps it on track. Over the years, a very large number of very smart people have worked for the government, and today the country is so sophisticated both culturally and financially.”
“Inexperienced foreigners, often think that one needs a call center there to handle the business in China. We have seen that this is not the way to do it. The government will come and close it down.”
“It is never wise to challenge their status quo. Chinese businessmen clearly understand that they are big enough and strong enough so the best way is to set it up so that the business should be run by Chinese executives and senior management, with Chinese staff, and have Chinese participation in all aspects.”
To conclude, Mr. Kaneti said “In a way, by operating in this manner, we promote Chinese entrepreneurship. The Chinese government has been very keen on encouraging entrepreneurship to strengthen the country. The system is aimed to grow the middle class and promote business in China.
Photography: copyright Andrew Saks-McLeod#China, #chinese ibs, #featured, #FXDD, #interview, #lubomir kaneti, #New York