Live from iFX EXPO in Hong Kong: How to structure YOUR brokerage in China, where culture meets technology
WeChat, online seminars given by stars in the making whilst holding a smartphone, localization on a very granular level, and culinary, er, intrigue. A very detailed discussion among those in the know from the retail, institutional and FinTech sectors on how to successfully market in China
All eyes are on China and South East Asia more than ever, and with the balance of opportunity in the most futuristic nation on earth’s rapid development with regard to its domestic FX industry which encompasses all aspects from liquidity and tailored execution to the economies of scale created by giant introducing brokers (IBs) that adorn the Second Tier development towns across the People’s Republic, and the complete compartmentalization of China’s business environment is at a major crossroads.
Here today at the Hong Kong Exhibition and Convention Center in Wan Chai, the first day of the iFX EXPO Asia 2017 FX industry conference is underway, produced by ConversionPros and industry news and research group Finance Magnates, this year’s event marking the 10th iFX EXPO conference since the inception of the series, a considerable amount of focus is being concentrated on the increasing levels of comprehensiveness and sophistication that now exists in China, its rise to the top having been very fast indeed, whilst the Western markets, with all their familiarity and ease of business, are having to come to terms with obstacles such as prime brokerage counterparty credit restrictions and regulatory pondering over the entire OTC derivatives industry.
This juxtaposition has led to a massive need for institutional, technology and dealing partners in Western nations to adapt rapidly and take a localized approach to gaining presence in China, and here in Hong Kong this morning, senior FX industry executives from institutional, technological and strategic backgrounds convened to discuss exactly how to market an electronic brokerage and succeed in China.
Moderated and hosted by Finance Magnates intrepid Managing Editor Avi Mizrahi, himself highly experienced in the Far Eastern operations of the FX industry, the discussion began with a detailed debate on the online differences between West and East.
Commencing, Morten Fillipsen, Partner and Head of Asia at MediaGroup Worldwide
“In terms of online operations, it has been said before and I will say it again, localization if you want to go into China is a must.”
“I have been approached by a number of company executives who explain that they have a global marketing strategy and that they are ready to go, but sometimes this causes delays on the website because some developers put a Facebook snippet on it or a it contains Google code. Developers in China know not to use Google or other major sites that are blocked.”
Mr. Fillipsen continued “The same applies to software developers that are using live chat to provide customers with access to customer support. My advice is to get rid of that, and use QQ because that is what everyone uses. I have seen brokers start off with live chat and then eventually realize that they must move to QQ. This kind of thing adds another layer of complexity for the clients.”
Rosiva Merrilyn, Senior Business Development Manager at FXPRIMUS clearly agreed with the necessity to be specific with regard to geographic requirements, and to ensure that every aspect is localized, without losing the credibility within mainland China of carrying the flag of a global company.
“It is essential that in order to be able to gain any form of traction in Asia, companies must localize but stay global. Global products have prestige. Brokerages seeking clients in specific regions in Asia have to be culture sensitive” she said.
“My specialist market is South East Asia” said Ms Merrilyn, “and therefore I have to consider many things when entering a new market, even if it is still within the same region. It is essential to translate wesites into different languages, but what is vital is to develop and maintain an on-the-ground approach” she explained.
“Staff within support, business development and operations divisions need to understand local needs. For example, marketing in mainland China can center around vast national events such as the Dragon Boat Festival, where brokers could actually put offline marketing in place. I’m from Indoensia, so when I approach clients on a daily basis, many potential partners will say that they will work with me because I am Indonesian, this is how important local presence is, however whilst the IBs and partners need local specialization, the companies they prefer are those with a global presence with the preferred regulatory status and proven senior management”- Rosiva Merrilyn, Senior Business Development Manager, FXPRIMUS
From a FinTech perspective, Ryan Liew, Director of Business Development at Singaporean financial markets alerts tracking software company Call Levels said “Asia is not just one country, it consists of a number of different jurisdictions and languages, few of which are interchangeable.”
“Even within mainland China, this should not be viewed as just one large country, because huge differences differences in business culture exist from north to south, and from the coast to inland. There are differences in investment appetite, and how people trade. Everyone wishing to enter China from the outside should ask themselves how they can position yourself to reap rewards of all these investors” – Ryan Liew, Director of Business Development, Call Levels
Mr. Liew then began to explain that knowing these differences on a granular level is fundamental. “Not only is the decision by any company to enter China going to be a big challenge, but the success is about knowing who the potential investors are. When I say that, we should perhaps talk about KYC, which I understand is not a popular subject but knowing the profiles of potential clients is vital, even down to very detailed demographic information such as whether they were born before, during or after the 1980s because there are huge differences in every aspect of doing business with Millennials compared to members of Generation X, even in China.”
“Also knowing the topography of Tier 1, 2, and 3 cities is important, as is understanding culture including languages. These are localizations that need to be done to position yourself better to attract those customers that may otherwise pass completely by” said Mr. Liew.
Mind your Ps and QQs!
In the Western world, email is used as an absolute standard in business communication, however in China it is virtually non-existent.
FinanceFeeds is fully aware of the absolute necessity to concentrate on cross-platform mobile messaging services such as WeChat or QQ, and eschew email, or any legacy communication channel that is associated with desktop devices.
Looking at the Chinese market from the ultra-modern FinTech perspective, Thomas Gluckstein joined Mr. Liew in the discussion.
Mr. Gluckstein is Head of Marketing at GateCoin, and considers that with regard to digital assets being a major power in China, “The main concern is regulation.”
“In China and Japan, there is scrutiny from major banks and regulators, therefore it is very difficult to define how any digital asset class can be provided. Based on what governments decide that this asset should be classified as will define how it is sold” he said.
“No provider will be able to get away with marketing practices that focus on rewards rather than risks, and all exchanges and platforms will have to make sure there is regulatory awareness. I still think that there is a general lack of education among the investor base not only in China, but also within other promising markets such as Japan. People dont have a good understanding of what the value of digital currency is, not just with Bitcoin but also with other blockchain assets” = Thomas Gluckstein, Head of Marketing, GateCoin
“Education is something other firms in our industry will have to focus on, which should include conducting educational and grassroots events on how digital assets work and how to incorporate how risk awareness. One of the challenges we face is informing people of the risk but still ensuring they realize it is something to make money from” he said.
Mr. Gluckstein then interjected with a very important matter that is likely patently obvious to a forward looking FinTech leader, but is perhaps anathema to some longer established standard asset class brokers which are well established in Western nations and have a long standing reliance on Western business practices.
“Anything that requires a signup in China leads with a phone number, not an email address” said Mr. Gluckstein.
“In China, email is rarely used. It is losing efficiency in the West but it is useless in China. Everything is communicated via QQ, WeChat or SMS, therefore every company wishing to participate in any business in China has to modify their signup more to be focused on Phone applications and WeChat” he said.
“So many people are on WeChat, however there are questions as to whether it can really be used as a marketing tool.I have never seen seen anyone use it as an efficient client generation tool. It is not built as well as Facebook for sharing, and with WeChat it is less easy to spread information out on networks, however it is an ideal tool for existing customers with regard to engagement, but spending a lot to build it up as a lead generation channel is very difficult” said Mr. Gluckstein.
From the institutional liquidity and prime of prime brokerage sector, Natallia Hunik, Global Head of Sales at Advanced Markets & Fortex, which has a tremendous presence across China, said “I certainly agree that the online environment in all areas of businesse is very different in China to that of the West.”
“Business-to-business activity is mostly conducted via WeChat in China, and at Advanced Markets we do not use any other social media tools. We have to publish updates, but WeChat is mostly a branding channel” she said.
“I have seen many people generate promotions on WeChat, but I still think that it is mostly a branding tool” continued Ms Hunik.
“QR codes is something I have seen in regular use in China. Here in China you have to scan the QR code if you want to know who someone is. Whereas building a strong client base in the West relies on sending emails constantly, in China this does not work and companies must use WeChat or SMS. For example, if a liquidity provider has to send a very important email to a client which would usually be a retail broker to explain that they are getting a margin call and therefore getting liquidated, a Western firm would see this immediately and be able to take action but in China it would not be seen at all, hence why we should emphasize the importnce of using QQ, or of making an actual phonecall, because these are the ways to keep you keep yur clients informed in China” – Natallia Hunik, Global Head of Sales, Advanced Markets & Fortex
Thus, Ms Hunik said ” The entire business-to-business relationship is completely different in the West to China. For client acquisition, it is all about the personal touch, having to regularly meet, and to understand that it is hard to gain customer confidence, therefore it is relationship based.”
“Many firms that are successful in China run regular networking events, have attendence at seminars from industry influencers from the media, the events being smaller than iFX EXPO of course, but specifically targeted towards locals, sometimes on a provincial basis, with team informing them of new offers” said Ms Hunik.
Ms. Merrilyn then said “Natallia is quite right, mobile messaging is very important, and is in use in other parts of Asia too. For example, in South East Asia WeChat is in use but not anywhere near like it is in China. South East Asia, as opposed to China, it is a bit more diverse. It depends what region youre looking for, and the use of messaging medium must be specific to that region. In Thailand for example, if a broker tries to contact clients via Whatsapp as they can do in Malaysia, the clients will not know that they are being contacted. There is a feature in Telegram, there are examples where the leads arrive but there is no way of actually onboarding the contact as a customer. It is absolutely not a sort of mobile CRM in the way WeChat is in China.”
Mr. Liew continued on this subject “Look at the landscape in China. There are 730 million internet users, out of which 700 million use mobile so it has 95% penetration, therefore you need a mobile solution, which must be a WeChat strategy which should be combined with social engagement.”
“Some of the successful methods have been via the use of live streaming of videos of teaching sessions, which in some cases 1 hour broadcasts of market views, and are actually not professionally produced. Usually, Chinese customers do not favor the professionally made videos, instead they prefer raw footage from the mobile and often like to be able to interact with the presenter, and participate in a sort of live Q&A session. This has become very popular and is a very effective way of gaining client retention” – Ryan Liew, Director of Business Development, Call Levels
Mr. Liew also said “Data analytics is a very important point to consider, especially with regard to how customers interact across different channels as well as their trading behavior. Analyzing these factors will give a better position on marketing.”
Mr. Gluckstein added that from his point of view, what is a disruptive and totally digital asset class is a moot point when it comes to marketing in China.
“The irony of marketing Bitcoin in China is that although Bitcoin is a digitally native asset, it cannot be marketed online. The only way to market it successfully is through and seminars in China, and it is the only way to build volumes of traders in China. It is very unlikely you’ll get any traction in bringing traders onto exchange in China from web portals abroad. Baidu does not allow any bitcoin businesses or exchanges to advertise at all, so it is not possible to do paid advertisments on Baidu, therefore everyone is stuck with small platforms but that is not too bad because you are preaching to the converted as the people on those sites are already in that industry or have an interest in trading Bitcoin. WeChat therefore is a CRM tool, the established brands have been on WeChat for a few years,but otherwise, seminars and events are the way” – Thomas Gluckstein, Director of Business Development, GateCoin
Observing from the moderating seat, Avi Mizrahi brought the contrasts between East and West into the equasion. ” Very interesting, he said. I would like to follow up omn market specialization. In Europee we see Financial hubs where the main headquarters of companies are based in London, for example, and approach the wider European market from there. Is possible in Asia, and can you set up an office in Shanghai and target markets from Indonesia to beyond?” he asked.
Mr. Fillipsen said “I would say that is not advisable, as dealing with China is difficult. We do it because it is a very attractive narket, is huge,and there is a vast amount of money there. There are probably companies willing to set up a head office for all of Asia in Shanghai and employ temas there but everything around it is very difficult.”
“Finding staff that can work outsode China is difficult, and a company operating liek that would be constantly hit with internet limitations, no access to sites that they would need access to to be able to work agressively with. Granted there are Chinese people outside China but even the language differences would present difficulties because it is Simplified in china nad Traditional outside. It is not a hub for the region, instead it is really only viable ot set up an office in China to focus completely on China and have regional approach elsewhere” – Morten Fillipsen, Partner and Head of Asia at MediaGroup Wordwide
Miss Hunik continued on this point, explaining “I agree with Morten. Chinese offices must focus on China alone, and South East Asian markets should be approached from a separate operational standpoint. China is a global superpower, and is homogeneous, therefore therefore should be kept separate.”
Mr. Liew then explained “We are a FinTech startup so we don’t have the budget for large scale marketing so we have to be creative. We are a Singapore company but must of our users are outside Singapore.”
“How to approach other markets in the region depends on how user engagement is approached” he continued. “It is essential to build a product that is user-friendly. Nobody has the patience to use a product that needs several clicks. We built a product that allows users to engage with your company within a few seconds” he said.
“Secondly, social media is important. We actively source interns from A-list schools for three months, we give them products, and every week they help us write a blog. We talk about risk management, how to hedge portfolios and other technical matters. We can recycle the same content across different channel across blogs and websites, start content partnerships and use infographics.
“Infographics are universally appealing whether the customers are from Germany, US, or Japan. If there is another event in the markets, an infographic can be updated by just adding another column to the timeline. We find these to be good validations once an audience has been captured” he said “Chinese investors are smart and don’t like to be pushed about which products they should buy, therefore gaining better integrity is to appeal to the analytic nature.”
Avi Mizrahi then asked if there had been any culture shocks or surprises when entering the Asian market
Mr Fillipsen said “Many companies have tried to come here and use marketing techniques they are used to , and find they get used and abused here.”
“For example, brokers ask their customers to try the platform and use a bonus to test it, but that gets out of hand sometimes, as has been well documented in recent years. Also, if considering offline events and seminars, be careful to do them with the right partner. In some events, 50% of the attendees are sleeping and 50% are 80 years old plus and they come to collect their phone vouchers which is what they have been promised for attending the event, and in some extreme cases, elderly ladies come and take all of the brochures to sell them for cardboard!” – Morten Fillipsen, Partner and Head of Asia, MediaGroup Worldwide
You are what you eat!
Culture can be a massive factor in a nation with a rich and historic past such as China. “I have been working with China since 2013, before that I had never dealt with anyone from here, so when entering the Chinese market I went through a wave of culture shocks” said Ms Hunik.
“In China red is considered a good color, whereas green conjures up negative images, which is the opposite to what we are used to in the West and this manifests itself on a daily basis” she continued.
“This small detail can even be part of merchandising considerations. We once wanted to give a gift to clients, and being based in Boston, Massachusetts, Celtics is a very famous NBA team and all of their jerseys are green. Therefore we had to order the black hats for our clients in China because apparently buying green jerseys would not be appropriate. Another example is in how things are numbered. In the West, the number 13 is often avoided, but in China its the number 4. We had a demo account with the numbers 444, and Chinese clients kept asking us to change the account number” said Ms Hunik.
Finally, on a rather unpalatable note of gastronomic ghastliness, Ms Hunik pointed out that “Culture shocks vary due to the vastness of the country and the differences in social habits. We have a team member from Guangzhou, and they eat weird stuff like snakes and dogs there. This particular employee lived in America for a while and whilst living in America, he told us about them raising dogs for food in Guangzhou, and everyone in the office wanted him to stop right there and did not want to continue the conversation. In fact, some of the team members come back from business trips to China and will bring cookies and sweets for the office in America, and once they brought the cookies which are made with chicken fat, which was, er, quite interesting.”
Indo – Culture – a guy from a western country is dealing on teh daily basis with talking to the partners. Talking to a partner in Malaysia to sit and negotiate, All say fine yes, all good, but never cntact back or just block. Never know why as they dont say no. They talk about planning for busienss, etc but they cant say no. If you contact twie and dont answer again, move on.
Religious sensitivity also exists within certain countries in Asia. Ms Merrilyn pointed out that in certain places, sending champagne as a gift during holidays to Muslim customers results in them wondering why they had been sent a useless gift (Islamic law prohibits alcohol consumption – Ed.)
She continued “Another method of corporate gift presentation that is not common for westerners, is that if a client is a married man and a company wants to give a gift, the best approach is to give the gift for his wife rather than himself” at which point Ms Hunik said “I like that idea!”
Mr. Liew concluded by saying “Even though I am Asian, I have a culture shock when I go to the mainland, so I cant even imagine coming form the west! It’s not about right or wrong, its all that we are different. China is a transparent society. When I see the live footage of a teaching session on a scheduled broadcast on a live chat on a WeChat channel, it is often scheduled for 1.5 hours, twice a week. They say what have you got to talk about?, Despite this, the teaching sessions have hundreds of thousands of followers. People then start asking live questions.”
“What if they start asking difficult ones? Well if you put yourself in that position you had better be prepared! It became not just a client acquisition tool but a revenue earning tool. The person who gives the sessions has a real chance of becoming famous and marking himself out as the Guru of the Hang Seng Index, and can become wealthy quickly rather than earning a monthly wage working for a bank.”
Food for thought. Literally, in some cases…….