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electronic marketplaces would be much less successful in the Chinese nonferrous
metals industry than in the US.
These differences in structural conditions mean that a successful electronic
marketplace for the nonferrous metals industry in China would have to undertake the
development of infrastructure that its US counterparts could take for granted. And,
indeed, this pattern of activity can be observed in i-Metal.com, a whollyowned
subsidiary of Global Applied Technologies Holdings (GAT—China’s largest
aluminum extruder and fabricator, headquartered in Hong Kong), founded in 2000 to
operate an exchange for the nonferrous metals industry (Hempel and Kwong, 2001;
Lincoln, 2000; Trepp, 2000).
i-Metal.com provides members a full range of commercial services (some still
under construction), including industry news and market information, online futures
trading via the Shanghai Futures exchange, online spot trading of primary and scrap
metal, catalog and quotation model purchasing and ancillary services such as
transportation and payment. Today, i-Metal.com is well on its way to success. The
exchange has over 100 member companies, and trades worth over 1B renminbi
(US$120M) have been conducted through the site. But getting there has been
challenging. i-Metal.com had to partner with three leading Chinese financial
institutions to overcome the barriers to e-commerce in the Chinese financial services
industry:
•
i-Metal.com partnered with a leading bank to develop a Web-based payment
system and to implement procedures for freezing funds (to emulate escrow
arrangements—a service not offered by Chinese banks). The company is also
working with banks to introduce more flexible inventory financing.
•
i-Metal.com worked with a leading futures brokerage to enable electronic funds
transfers to brokerage accounts for online futures trading.
•
i-Metal.com worked with the Shanghai futures exchange to develop new
business practices that would ensure that buyers and sellers would honor their
online transactions despite the high price volatility that gives them an incentive to
renege.
•
i-Metal.com worked with warehousing and transportation companies to support critical
services ancillary to the online purchasing of physical metals.