CCBOT finds platform to tackle US market
Updated: 2013-11-08 07:16
By QIDONG ZHANG in San Francisco (chinadaily.com.cn)
|Video by Bonnie Wong/China Daily, Click to watch on Youtube|
Chinese enterprises that recently arrived in the US often find that their success depends as much on building a firm base from which to launch their operation as it does to eventually work in the American marketplace.
That's one of the main missions of the Northern California Chinese Enterprise Association (CEA), which held its 2nd annual conference on Nov 1 in Foster City, California.
One new CEA member that found the organization to be a solid starting point for help is CCBOT, an electronic commodities trading company, which provides service through the Agricultural Bank of China for US farmers selling products to China.
Fei Jian, president of CCBOT, said the first person he got to know in the San Francisco Bay Area when he arrived was Ben Chen, the chairman of CEA.
"Ben introduced me to all kinds of professionals, from attorneys to accountants to business associates," Fei said. "I felt so at home with his welcome."
Fei said CEA's help put him on his feet faster than he thought possible. He is registering his business in Silicon Valley and expects to launch the company by the end of this year.
"We authenticate US agricultural products by verifying product certification and location," Fei said. "Once that is done, farmers and sellers can trade on our website, which carries over 1,000 large scale buyer-distributors. The sales can be via auction or direct trade."
Fei said a 20 percent deposit to an international escrow account is required for initial trading and once a company has established a good trading record, long-term distribution can be established
"What separates us from previous business models is that individual or institutional investors can transfer funds between bank settlement accounts of financial services for selling their products to Chinese buyers directly," Fei explained. ` We actually answer prayers for both American farmers and Chinese buyers."
One of the biggest buyers from CCBOT's pool of distributors is the Shanghai Commodity Market, which is operated under the Shanghai Municipal Commission of Commerce. Fei said the Shanghai market alone with a population of 50 million has huge needs for such agriculture products as apples, oranges, walnuts and almonds.
Chen, president of the CEA, said CCBOT is typical of many companies that came to the US and found an instant home at CEA.
"Our event this year gathers over 100 Chinese enterprises, from US subsidiaries of Fortune 500 companies in China such as Huawei, China Mobile, China Telecom and BYD, to a roster of newcomers like CCBOT," he said. Other new members among CEA's 120 companies include China Eastern Airlines, Su Ning Commerce R&D LLP and China Commerce & Industrial Bank.
"We see more and more Chinese enterprises coming to the US, both public and private, carrying larger investment capital than ever when they enter the US market," said Chen, who is also a regional executive with China Unicom Americas, one of the top Chinese telecom companies.
Those companies and other Chinese companies set up in Silicon Valley to attract technology and skilled personnel and to look for opportunities from investment to trading, Chen said. Once they settle in locally, their businesses can thrive while creating a platform for information exchanges with US companies, he said.
Chen attributes CEA's strong presence to support from local and state governments, and the Chinese Consulate General's office in San Francisco.
Xia Xiang, commercial consol of the Chinese consulate in San Francisco, said his office is in immediate touch with newcomers to the area, while keeping in close contact with others to see if they need help to get established in the area. "Some of the companies get in touch with us even before they came here," said Xia.
Fei, for example, met with US government officials and traveled extensively in the country before he decided to establish CCBOT in the US.
"We met with California Governor Jerry Brown and Virginia Governor Bob McDonnell during their visits to China," he said. "I also visited Pennsylvania, Washington State, Virginia and California to meet with farmers and government officers last year."
He pointed out that one of the biggest challenges for CCBOT is that US farmers have doubts about selling directly to China.
"Their past experience was dealing with large trading international companies only to sell their products. When they sell to Chinese buyers, they usually request a 20 percent deposit from the Chinese buyers or they would not sell. They are also concerned about pest-infection issues on agriculture products. They don't know the Chinese legal system well; they are concerned about tax issues, disease control and other such issues," said Fei.
To answer those concerns, he uses the Shanghai Agriculture Commodity Zone in China as a starting point and then turns to established trading posts in Los Angeles, San Diego and San Francisco.
"Seeing is believing," Fei said. "Once they see what we have in China and what we have done here, they will trust us more."
Based in the Jinmao Tower in Shanghai's Pudong financial district, CCBOT was originally trading raw chemical material before 2006 and later changed to trading agriculture products.
Fei said he is confident CCBOT will reach revenue of $500million within five years, and now it is looking to hire local staff, finding American business partners and cooperating with US universities and colleges to utilize their resources.
He said his experience in the US has been positive, and even a venture capitalist knocked at his door.
"Their (venture capitalists) understanding of the market and business model is so impressive that it made us reconsider our business model," he said. "Maybe we don't want to do it by ourselves; maybe we will welcome large capital investment in our business and grow in larger and higher scale."
All of that and more are in Fei's pipeline for CCBOT.