Four Brokers, Four Questions: A Quick-Fire Q&A on Working in China

It’s a warm winter Monday in Hong Kong and inside the city’s largest convention centre, overlooking Victoria Harbour, the iFX Expo and Finance Magnates’ teams are busy readying the exhibition area, speaker hall, bars, lounges and lunch rooms that, starting tomorrow, will play host to East Asia’s greatest retail trading event.

As I write, leading figures in the industry, whether it be eToro’s Yoni Assia, CMC Markets’ Biyi Ching or our very own Head of Content Michael Pearl, are taking to their planes, trains, and automobiles and making their way to the Fragrant Harbour’s skyscraper-sodden shores.

For those of you already lounging in Hong Kong hotels or who are based in the city, we’ve decided to post a little something to whet your appetite so that you can get a taste of what the iFX Expo will be like this year.

We asked four senior executives at four major brokers, all of whom will be attending the event, to provide some insights into their experience working in China and the broader Asia-Pacific (APAC) Asia-Pacific (APAC) The Asia-Pacific (APAC) region is one of the fastest growing in terms of population. This region in particular is of great importance to the financial services industry, as it is seen as the largest growth market for clients.APAC is comprised of diverse currency markets that are shaped by various and, at times, competing forces, from global regulation to local capital controls.The region has been seen as one of the hardest to enter by FX brokers for this reason, as well as grappling cultural or The Asia-Pacific (APAC) region is one of the fastest growing in terms of population. This region in particular is of great importance to the financial services industry, as it is seen as the largest growth market for clients.APAC is comprised of diverse currency markets that are shaped by various and, at times, competing forces, from global regulation to local capital controls.The region has been seen as one of the hardest to enter by FX brokers for this reason, as well as grappling cultural or Read this Term) region.

From Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term in the world’s second-largest economy to cultural differences between Asia and Europe, we covered a lot of ground in this quick-fire question round. So sit back, enjoy and get some pre-event insights before you’ve even stepped foot into the iFX Expo Asia 2019.

Payments, payments, payments

Legend has it that Barack Obama once asked James Mattis, the former Head of US Central Command, what the three biggest threats to American security were.

“Iran, Iran, Iran,” was Mattis’ reply.

If you were to ask brokers operating in China what the biggest threat to their operations are, there’s a good chance they might say; “payments, payments, payments.”

Perhaps because they do things more 'above board' than some of their competitors, the brokers we spoke to were not badly affected by payments problems in China, but they were not immune from them either.

“There is nothing much we [can do to] change or improve the situation, unless the Government changes its policy,” said Benjamin Chang, CEO of Swissquote Asia. “But for us, there has only been a minor impact as most [of our] clients don’t use credit cards or Union Pay to fund their accounts.”

For Daniel Lawrance, Chief Commercial Officer at Scope Markets, difficulties with payments in China can be overcome by ensuring everything is done with local knowledge and within the country itself.

“Those issues haven’t affected us,” said Lawrance. “We always provide our clients with local solutions that are familiar to [them] and are reliable within the country’s payment system. We avoid cross-border payments and we make sure our providers have the necessary infrastructure already in place and can provide us and our clients effective and immediate solutions.”

Reaching clients in China

Aside from payments, marketing has been a major problem for brokers operating in China.

Bans on online advertising, in particular, mean that brokers have frequently struggled to attract new clients to use their services.

Struggling to do something doesn’t mean, though, that you cannot do that thing. And for the brokers we spoke to, onboarding new clients hasn’t been a problem.

“I don’t see any difference between onboarding Chinese clients and clients in another country,” said Francis Lee, CEO of ADSS Asia. “We still follow the same KYC and various licensing requirements. ADSS never lowers its standard because it’s easier or harder to onboard certain clients from different countries.”

Though Lee may not see any difference, for Swissquote the changes have not affected the company as it has taken a different approach when reaching out to new clients. Instead of lamenting the fact that it cannot bombard them with pop-up ads and short video clips, the company has taken a word-of-mouth approach to get new clients.

“Our most efficient or common clients’ onboarding channel is via their friends’ recommendations, who already had [a] relationship with us,” said Chang. “So, yes the restrictions or tightening on marketing practices might limit a broker’s branding or exposure, but, because of the way we do business, it hasn’t had an impact on our operations.”

For Scope Markets, it comes back down to having local insight and knowledge. The firm has also been focusing its efforts on institutional clients, making things smoother than they might have been had the firm targeted retail traders.

“Scope Markets specialises in institutional and partnership,” said Lawrance. “As we deal with corporate entities the onboarding process has been seamless. We feel it is best to partner with local partners who understand the restrictions and have a local understanding on local practices and thus have the local knowledge to act swiftly for their clients.”

Bridging the gap

Unlike payments problems or advertising bans, which come from external sources, there are also the simple day-to-day challenges that come with running a cross-cultural business.

All of the brokers we spoke to operate out of Europe and have a non-Chinese cohort of founders and senior executives.

What, the author asked, does that mean for firms that want to start doing business, not just in China, but in the broader APAC region?

“The most obvious difference is language,” said Jasper Lee, Managing Director of eToro Asia. “And I don’t just mean in terms of communication. You can’t translate your site from English to Chinese or from Chinese to Malay. When doing that, you also have to build a user experience that fits with the local culture.

“Another issue is payments, Westerners may like credit cards but, in Asia, most people prefer debit cards. Even if you do have a credit card, there’s a chance it won’t be accepted. So you have to realise that what works for you in Europe may not work for you in Asia.”

The most obvious means of ensuring your employees understand the audience they are catering to is to hire locals. For Swissquote

that meant establishing a base of operations in Hong Kong to handle the broker’s Chinese operations.

“Culture and political issues are always two major challenges when running a business in China,” said Chang. “We are fortunate in that Swissquote has its wholly-owned subsidiary in HK to take care of business in the region. It means our staff all fully understood the local culture and how to serve Chinese clients.”

It’s not just understanding clients that can be tough. As noted, many brokers have a non-Chinese leadership team with a base of operations in Europe. That means Chinese teams have to spend time communicating what needs to be to done back to their head office in Europe.

“As the local head of a foreign FX firm like me, I have spent a lot of time communicating with colleagues back in headquarters about what exactly I want for our Asian business,” said ADSS’ Lee. “But I believe it’s the same challenge when we enter any other non-English speaking country. Whoever can provide the best local service wins.”

Catering to new demands

Providing the best local service means giving traders the services and products they demand.

In China and the wider APAC region, those demands are changing. No longer a nascent industry in the region, people are familiar with the retail brokerage industry and want exactly the same technology that their counterparts in Europe have.

“Traders in Asia are a lot more mature than ten years ago,” Lee told Finance Magnates. “People are gradually becoming familiar with low spread and ‘expert advisor’ trading. We have also seen increasing demand from clients for a greater set of products. Therefore, competing in lower cost might not be the best way to satisfy clients in Asia.”

For Lee and ADSS, technological and product demands aren’t ‘one size fits all.’ Instead, the company sees demand vary across APAC with different countries each having their own nuances.

“It really goes by country,” said Lee. “In China, for example, we need fancier tools on mobile - all the way from trading platforms to customer service. But in Taiwan, clients care more about offline seminars, educational tools and market information. In the Philippines, everything is done on Facebook. That means you need more content, it could be live-streaming or short educational videos, up on social media sites.”

Live at iFX Expo

Well, that’s it for our four e-panelists folks.

If you want to see more then head over to the speaker hall at the iFX Expo in Hong Kong this Wednesday and Thursday.

And if you can’t make it, then you’ll just have to wait until the highlights are up on YouTube. Just remember, as that annoying five-second ad is playing before the video begins, to buy your ticket for next year’s event.