I can’t believe this week is almost over. It is Friday morning in Shanghai. I don’t know the Mandarin for TGIF but actually my week has been so great I almost wish it wasn’t over.
It is too bad Shanghai isn’t as close to Chicago as say Kalamazoo. I’d drive there all the time.
We are making final presentations this morning to the lovely folks at the Shanghai Futures Exchange. Today’s topic is the impact of the internet on financial services and some side topics on Dark Pools, MFID, Dodd-Frank etc. It is most enjoyable to talk with these extremely intelligent and driven young people about their goals for making their exchange competitive in the global market. I look forward to seeing what they accomplish in the years to come with all of their plans for growing their exchange. They are all very enthusiastic and driven and it is great to be around them. I have probably learned more from them than they have from me.
I mentioned in my blog yesterday that one of the hottest companies in China is Alibaba.
Alibaba’s founder and Chairman is a former English teacher named Jack Ma, who started the company out of his apartment in the ancient city of Hangzhou in 1999.
Alibaba is one of the top internet companies in China with revenues of over $7.5 Billion last year. Mr. Ma is shaking up the financial system in China with his Yu’e Bao money market fund. Yu’e Bao (which translates in Mandarin as Savings Balance Treasure) has had inflows of over 90 Billion in just one year from average Chinese citizens. Paying rates as high as 8%, Yu’e Bao has been taking business away from the big Chinese banks in huge percentages. By giving the Chinese consumer higher rates than the banks are paying, Mr. Ma has become hugely popular. The banks aren’t thrilled by the fact that they have funded a firm that has become one of their biggest threats. But Alibaba is so successful and so popular with the Chinese that the regulators and even the banks don’t want to go against them. Mr Ma is forcing the Chinese banks to change and adapt their businesses to the benefit of all financial customers. Alibaba is looking to launch an IPO in the states and is expected to generate 20 Billion in US dollars. I’d like to get some of those shares.
Alibaba is a company to watch and also to learn from. As we are bogged down in the states with new regulations, low volatility, low volume, low interest rates and the major banks getting out of the trading business, we have significant challenges ahead. In my presentation today I pointed out the gamechangers in other industries and how they transformed their businesses and the marketplace by brilliant innovation. In addition to Mr Ma, I mentioned Apple blowing up the music industry with iTunes and their market cap of $602 Billion. How Netflix is changing the face of linear television with a $30 Billion market cap and 50 million subscribers. I talked about Facebook (banned in China) which started as a site to rate the looks of college students and is now a company with a market cap of 194 Billion and 1.5 Billion users. What can we learn from these companies as we look at the futures industry in 2014. What is the gamechanger that we need to transform and bring the listed derivatives exchange space to new heights? Is there an English teacher in a Chicago apartment that we can look to? Can Alibaba create an exchange? Is there a Steve Jobs or Mark Zuckerburg that can breathe new life into the futures business? Maybe you are reading this right now….
So as I leave Shanghai and take my 14 hour flight home I wanted to say thank for reading my blog this week. It has been an incredible experience being in Shanghai. I hope to return again soon. And thanks to John Lothian and his gang for printing my words.
Zài jiàn – 再見/再见 – Goodbye