With our deployment only two weeks away, our team is starting to kick into high gear on research and preparation. I thought this would be an opportune time to tell you a bit about our clients and the work we will be doing.
As I have written, there are a total of twelve of us on Team China 18, coming from nine different countries. We will be working with a total of six clients during our four-week engagement. The twelve of us have been divided into three sub-teams of four people each, each of which will be looking after two clients.
I am on Subteam 3, along with my colleagues Brett, Martin, and Renata. Brett is a technical architect from the US; he works in IBM’s consulting business like I do. Martin is a security specialist from Slovakia, and Renata is an attorney from Brazil.
The first of our two clients will be the Fanya Metals Exchange. They are a brand new, started only a year ago with the intent of becoming a commodities exchange like those in Chicago or London. As some of you know, most commodities futures and option contracts traded on an exchange are purely financial instruments. But many of the buyers and sellers trading metals on Fanya’s exchange are miners or manufacturers, so a much higher percentage of their contracts are settled in specie — in other words, they are paid in the actual, physical metals that the contracts represent.
Fanya has done very well in its first year, and would like to continue expanding and become a regional player, trading not only across China but throughout southeast Asia, and they have asked for our advice on how best to go about that. To provide this kind of insight, we will be putting together a case study on the business and marketing models of some of the world’s major commodities exchanges, and advising them on how best to emulate the success and growth patterns that some of these have enjoyed.
The other client is a financial clearing house for small and medium business called KMfex. China does not have a well-established market for commercial credit, so most small businesses looking for a loan need to look for individual investors. The goal of KMfex is to create a clearing house where businesses and investors can find one another. Like Fanya, KMfex wants us to put together a case study of companies in other regions who have enjoyed success with a similar business model.
In a lot of ways KMfex reminds me of Lloyds of London in the 1600’s and 1700’s. At that time, the only “corporations” in existence were shipping companies, and if you wanted to invest in their voyages, you had to make contact directly. There was a coffee shop not far from the docks called Lloyds where a lot of the ship owners and captains would hang out, and wealthy individuals looking for ships to invest in would often go to Lloyd’s in order to find a suitable ship and voyage. Over a period of several decades, what began as a coffee shop transformed into something entirely new: the world’s first true financial market. KMfex is in a different country and services general businesses instead of shipping companies, and its distribution channels are online rather than at a coffee shop. But in most of the important ways, they are very much like Lloyd’s was when it started: a clearing house that made it easier for companies and investors to find one another. I expect that many of the successes and failures Lloyds has experienced over time, including the massive “Names” scandal of the 1980’s could end up being quite relevant in terms of advising them.
So there you have it: a brief synopsis of what I will be up to very soon. In addition to working with these two clients, I expect to also be helping to advise and support the other subteams, just as I am sure we will be able to rely upon their expertise and support for our two clients. There are also a couple of one-day events that the entire team will be participating in; I’ll tell you more about these as the time gets nearer.
It’s less than two weeks now until we take to the skies…