Can Hong Kong really become a fintech hub?

Jeffrey Broer has recently published a blog post called Fintech, the polarizing industry for Hong Kong. Through a bunch of interviews he shared the pros and cons for starting a fintech company in HK. Fintech is indeed a loaded topic in HK- the scene is small and people have strong opinions on its good, bad and ugly corners.

It’s no secret that HK lags behind London, NY and Singapore in fintech. Since HK has made it clear that it wants to be a fintech hub, let me ask more specifically: what’s standing in its way to become one? What’s going to really move the needle?

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Can Hong Kong really become a fintech hub?

The tech founder’s guide to cracking China: 8 product gaps to fix before you go into China

In this series, I will try to share a list of product/tech gaps that tech companies need to address when approaching China as a market. The lessons are partly based on my own dumbass moments. I’ve tried to share them in a way that’s useful to western techies who know very little about the tech landscape of China.

Being a techy who decided to take his company to China, I was eager to quickly master the product/tech landscape in the country. China, of course, had different plans for me: it forced me to learn 10 cultural lessons for every product lesson along the way. Which explains why 99% of the books and blogs about China will only touch on cultural gaps such as “face”, guanxi (relationships) and handling broken communications with pretty much everyone around you.

You need to go a long long way to succeed as a foreign technology company in China. 70% of your struggles will be completely unrelated to your technology (ask Uber). But if you’re an existing tech company that wants to go to China, or an executive at one, it’s worthwhile looking at the tech related 30% first. For one thing: there is a good chance that your product wouldn’t work if you tried to use it from China right now. Here’s a small list of common product gaps in China, some of them non-trivial. Make sure you close them in advance. It’s no fun trying to fix these when you’re already trying to do business in China.

0. embrace Simplified Chinese

AKA localization for dummies. Pretty straightforward. Your first Chinese staff should be able to read and speak English (more on that when I discuss hiring). But make no assumption about the actual users of your software, whether it’s B2B or B2C. In fact, do make the following assumption: nobody will be able to read English. Not even the amount of English that allows them to find the “switch language” link. We make software for financial institutions, perhaps the most world-facing sector in China, and we still get non stop requests to translate our software for B2B users who can’t use it in English. Action items:

  1. Get good quality translation management software and use a translation service (I recommend HK based OneSky and heard good things about Transifex)
  2. Make sure your app starts with a full Simplified Chinese interface (Traditional Chinese is the written language only in HK and Taiwan. No need to add it for China).

Fun fact: Simplified Chinese is a character set that introduces easier ways to draw thousands of characters (words) compared with traditional Chinese. It was introduced to China by Mao Zedong only in the 1950’s and 60’s, and it had one purpose: to increase literacy rate. Today it’s the de-facto standard of written Chinese. So it’s essentially one of the most ambitious and successful “top down” operations in the history of human language!

1. get your head around Operating systems and platforms (mobile, web and desktop)

To the Western techy, the platform landscape in China is plain jungle. China doesn’t care if you like the dominance of IE6 or the invisibility of Google Play Store- and you have no choice but to play along. Check out my previous post for the full picture across web, mobile and desktop platforms: Localizing for China: the mobile-web-desktop platform Landscape (or: welcome to the jungle)

2. solve Connectivity and hosting issues

China has a shaky internet infrastructure, especially outside tier 1 & 2 cities, and the Great Firewall of China adds a variable (usually heavy) tax on the internet traffic. Jitter and occasional disconnections happen quite a lot. The final picture will make your CTO grow a couple of white hairs. I have no doubt that within a couple of years the Chinese internet will leapfrog towards (and beyond) what’s known to the rest of the world, but this optimistic thought won’t help you when setting foot in China today. Action items:

  1. Test for connection quality at least from 10 tier 1 and tier 2 cities (we found the local 17CE or the international CatchPoint useful). The less heavy your content is (think video) and the less connection sensitive (think finance), the better off you are.
  2. Disappointed with the test results and unwilling to relocate servers to Asia? Consider acceleration services such as Aryaka. Most of them have cooperations with local Chinese CDN’s such as ChinaNetCloud or ChinaCache. Paying extra dollars for the joint product will help you serve Chinese users from local POP’s (points of presence) all across China. The results are impressive, but price is a major consideration in this setup.
  3. Disappointed with the test results and willing to relocate your servers? Well, if you’re only starting in the China market, there aren’t many reasons to host websites inside China itself (which requires an ICP license anyway). HK is considered the next best option, and the result is perceived as excellent by all companies I’ve spoken to (even in the financial space). Singapore and Tokyo are also popular.

3. do Payments right

If you accept online payments, make sure your PSP can accept China UnionPay (CUP) cards. With little challenge from Visa and Mastercard, CUP is the network behind 80% of the cards and 72% of the card transaction volume in the country. Recent studies have found that China UnionPay has a shocking 100% brand recognition among Chinese living in China. Other payment methods (AliPay, TenPay) are nice to have. I’ll discuss them in future posts. For now take note: doing online business in China is not possible without China UnionPay, so make sure your current PSP can accept it or partner with a new PSP for China.

chinese internet users

4. forget about google

Make this your first Chinese lesson: Google is blocked. This will affect you right away if you use Google CDN (common use: loading JQuery). Our users in China suffered from dead slow startup time for our web platforms until we removed all references to Google. I heard from another tech company that all critical call to action buttons (think “buy now” button) disappeared in China because their CSS files were hosted on Google CDN’s. Nice! Action items:

Continue reading “The tech founder’s guide to cracking China: 8 product gaps to fix before you go into China”

The tech founder’s guide to cracking China: 8 product gaps to fix before you go into China

‘Blockchain’ has officially turned into an empty buzzword

We need to talk about something, fellow fintech folks: the word ‘blockchain’ has left the ground and started going completely out of control recently. It takes only a quick look at Twitter’s #blockchain page to get that.

I started suspecting when well intentioned marketing people of a large bank used it non stop in a fintech event in Hong Kong. Banks seem to be all over the blockchain right now. I doubt that this technology can solve any acute problems for HSBC or Citibank, but I get them. “Blockchain” sounds cool and they’re too rich and too threatened by Bitcoin (the asset) to ignore the technology behind it.

On another event I heard the following question from an investor: ‘I got pitched by several blockchain startups. Would you advise me to invest in them?’. Yesterday TechCrunch joined the bandwagon and announced that the blockchain might be the next disruptive technology. For serious media that wants to look deep into the future, it’s a fair title and it can invite a serious discussion (which the Bitcoin community doesn’t lack). But the content mostly glorified ‘blockchain’ as a buzzword, and that’s wrong.

Continue reading “‘Blockchain’ has officially turned into an empty buzzword”

‘Blockchain’ has officially turned into an empty buzzword

Localizing for China: the mobile-web-desktop platform landscape (or: welcome to the jungle)

In this series, I will try to share a list of product/tech gaps that tech companies need to address when approaching China as a market. The lessons are partly based on my own dumbass moments. I’ve tried to share them in a way that’s useful to western techies who know very little about the tech landscape of China.

Most makers in tech (especially non-technical product managers) hate dealing with platform compatibility issues. Exotic resolutions? Extinct devices? Old operating systems? Screw that. Usually we have the privilege to dismiss such cases as low-ROI steps. As head of product management at Leverate, I remember turning down requests to make our trading front ends run on the web browser of Blackberry. Time and time again, I was crossing my fingers for Blackberry’s market share to drop to zero before I’m proven wrong. It did happen eventually. Phew.

But when we started looking at China as a potential mega-market in 2013, finger crossing didn’t help. China has a different, very different, platform landscape across web, mobile and desktop devices. Getting quality data in English is hard (lesson #1: forget about Google Analytics- it’s useless as Google is blocked in the whole country). Re-designing or even re-testing for China is even harder. But with China being such a big market, the ROI can be huge. When I heard that a hugely successful Israeli company employs a full engineering team to maintain old versions of their products for IE6, just for China, I felt like the world has been defeated. Looking back, it was just the final stage in the journey of understanding the platform market in China: denial, anger, bargaining, depression and acceptance.

Continue reading “Localizing for China: the mobile-web-desktop platform landscape (or: welcome to the jungle)”

Localizing for China: the mobile-web-desktop platform landscape (or: welcome to the jungle)

The maker crunch: is the HK tech scene doomed?

In a talk titled Inside Israel this month, I shared my company’s story and my insights on the tech scene in Israel. The next thing everybody wanted to know was what HK can learn from “the tech miracle” of Israel, a country only slightly bigger than HK in population.

It’s a good question, because the scene in HK is still hardly impressive compared to that of Tel Aviv, or London or Singapore (yes, Singapore). The government and local entrepreneurs have plenty of pride and good will. Some people say that HK will eventually explode. I understand where the argument comes from. After all, startup scenes are magic. The success factors (risk tolerance, talent, capital, ideas and heroes) get built up slowly and reinforce each other. Once they reach a tipping point, the scene catches fire and sustains itself in a big party. But I have a feeling that HK lacks some big things if it wants to catch up with the fully burning ecosystem in Tel Aviv or the catching-fire scene in Singapore. Let me present the most obvious one, in my opinion. Let’s look at some facts:

Continue reading “The maker crunch: is the HK tech scene doomed?”

The maker crunch: is the HK tech scene doomed?

The tech founder’s guide to cracking China

It’s evening in Hong Kong. Just got back home from the first day of the notable Rise 2015 conference- probably the most pornographic celebration of startups that has ever happened in HK. Instead of getting high on drinks and networking on the startup tram, I’m stuck at home with a terribly sore throat and a glass of boiled ginger water. “Dude, you’re missing out a night of networking that would totally change your life”, the ghost of Rise founder Paddy Cosgrave whispers in my ear. I’m doing my best to ignore it (a skill I’ve developed after accepting no less than 22 emails from Rise over the last few months).

But seriously, can I do something productive tonight?

Yes! I’ve decided to make a long time plan come true and publish a series of posts for tech founders who would like to take their company into China.

The posts are based on my own experience moving to Hong Kong in mid 2014 to take my company’s growth and operations in Asia to the next level. China has been by far the most attractive (and least straightforward) market in the region. Soon after moving to HK I’ve realized that it’s not appropriate to target China as a market yet to have presence only in HK. So we’ve decided to start an additional branch in Shanghai. As a business step it’s delivered very well so far. As a learning exercise re China it’s been priceless.

Continue reading “The tech founder’s guide to cracking China”

The tech founder’s guide to cracking China

Bitcoin for brokers – what every broker should consider before offering Bitcoin trading

During a strategy meeting in early 2013, a product manager in my team at Leverate made a tongue-in-cheek suggestion: “why don’t we become the first technology company to allow brokers to offer Bitcoin trading?”. I chuckled. Bitcoin was still largely an esoteric concept. Interesting discussion for geeks, definitely. But not something worthy of a serious business discussion.

Just 6 months down the road, Bitcoin got its media breakthrough and officially became part of the zeitgeist. Dogecoin, Litecoin, Zerocoin and others joined the general crypto buzz. I developed a genuine interest in cryptocurrencies and became passionate about the value that they bring to the world: cheaper transactions across borders, fairness, transparency, global financial inclusion and above all: a huge ground for new business models and innovation. I found myself in circles of techy libertarians who believe that cryptocurrencies are the true capitalistic dream.

Over non-stop media buzz and with BTCUSD rate around 1200, all retail brokers who are our clients developed interest in Bitcoin. Those who understood the power of trends for their online marketing believed it was urgent to add it to their offering. From social trading to these new currencies- the retail FX market absorbs new ideas and quickly evolves to meet the needs of traders worldwide. We responded rapidly by including Bitcoin and Litecoin in all of Leverate’s products, from social FX platforms to binary option platforms. Hundreds of brokers who use the Leverate platforms and products now faced a new business decision: should they add Bitcoin to their offering to traders? What are the risks and opportunities in doing so?

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Bitcoin for brokers – what every broker should consider before offering Bitcoin trading