Watching "Once Upon a Time in America" last weekend, one of my favorite films, brought back memories of a time I spent in China about 10 years ago. It was a chapter in my life that changed everything. Here's my story.
I went back to China about 10 years ago and started a prop firm with a few friends. We each invested around 2 million. Our business model was built on using a SBLOC to apply for loans from Hang Seng Bank. Then, we would lend that money to retail investors as margin with a higher interest rate. Most brokerage firms in China at the time didn’t allow high leverage (like 2x to 10x), so our firm filled that gap by offering a more flexible and accessible margin trading option
Risk control was the critical part of our business model. We didn’t want to lose our own money if the market crashed. To make sure we were always on top of things, we used the fastest servers available to us at the time. Our risk assessment algorithm was constantly scanning every investor's account in real-time, monitoring for any signs of trouble. Thanks to this rigorous control, the business thrived. In our first month, we made around 500 million in revenue, and our projections for the year were around 8 billion
However, everything changed suddenly. One day, the government sent in an armed force of 40 to 50 officers, who stormed into our office, confiscating all of our servers and computers. Our employees were lined up against the wall, and the atmosphere was tense. Fortunately, nobody went to jail, but the entire situation was surreal. Despite our business being legally registered and fully compliant with all regulations, I was accused of 'maliciously shorting the market.' This allegation was completely baffling to me, especially since shorting was not even allowed in the Chinese stock market at that time. I had no idea where it had come from.
In the end, I lost everything—my investment, the business, and even had to pay severance to all of our employees. Looking back, I realize how much the environment in China at that time made it difficult for a business like ours to succeed, especially with the government’s unpredictability.
If I had known how things would unfold, I would never have started a business there.
It wasn’t just one month. From the registration of the
business to being forced to shut down, it lasted more than a year. About six months were spent building the business, writing the source code, recruiting the team, and setting up the servers. The actual production period—from the start to the closure—lasted around 9 months.
Watching "Once Upon a Time in America" last weekend, one of my favorite films, brought back memories of a time I spent in China about 10 years ago. It was a chapter in my life that changed everything. Here's my story.
I went back to China about 10 years ago and started a prop firm with a few friends. We each invested around 2 million. Our business model was built on using a SBLOC to apply for loans from Hang Seng Bank. Then, we would lend that money to retail investors as margin with a higher interest rate. Most brokerage firms in China at the time didn’t allow high leverage (like 2x to 10x), so our firm filled that gap by offering a more flexible and accessible margin trading option
Risk control was the critical part of our business model. We didn’t want to lose our own money if the market crashed. To make sure we were always on top of things, we used the fastest servers available to us at the time. Our risk assessment algorithm was constantly scanning every investor's account in real-time, monitoring for any signs of trouble. Thanks to this rigorous control, the business thrived. In our first month, we made around 500 million in revenue, and our projections for the year were around 8 billion
However, everything changed suddenly. One day, the government sent in an armed force of 40 to 50 officers, who stormed into our office, confiscating all of our servers and computers. Our employees were lined up against the wall, and the atmosphere was tense. Fortunately, nobody went to jail, but the entire situation was surreal. Despite our business being legally registered and fully compliant with all regulations, I was accused of 'maliciously shorting the market.' This allegation was completely baffling to me, especially since shorting was not even allowed in the Chinese stock market at that time. I had no idea where it had come from.
In the end, I lost everything—my investment, the business, and even had to pay severance to all of our employees. Looking back, I realize how much the environment in China at that time made it difficult for a business like ours to succeed, especially with the government’s unpredictability.
If I had known how things would unfold, I would never have started a business there.
Tranlation by ChatGPT:
上个周末，看了《美国往事》这部电影，这部我最喜欢的电影之一，勾起了我10年前在中国的一段记忆。那是我人生中改变一切的一个章节。以下是我的故事。
大约10年前，我回到了中国，和几个朋友一起创办了一家自营公司。我们每个人投资了大约200万人民币。我们的商业模式是利用证券抵押贷款（SBLOC）向恒生银行申请贷款，然后将这些钱以更高的利率借给散户投资者作为保证金。当时，中国大多数证券公司不允许高杠杆（如2倍至10倍），因此我们的公司填补了这个空白，提供了更灵活和易于接入的保证金交易选择。
风险控制是我们商业模式的关键部分。我们不希望在市场崩盘时失去自己的资金。为了确保我们始终处于掌控之中，我们使用了当时能够购买到的最快的服务器。我们的风险评估算法不断实时扫描每个投资者的账户，监控任何可能的风险。由于这一严格的控制，生意迅速发展。在第一个月，我们的收入大约达到了5亿人民币，且我们预期全年收入能达到80亿人民币。
然而，一切突然发生了变化。一天，政府派遣了40到50名武装人员闯入我们的办公室，没收了我们所有的服务器和电脑。我们的员工被迫靠墙站立，气氛非常紧张。幸运的是，没有人被送进监狱，但整个事件超现实般地发生了。尽管我们的公司是合法注册的，完全符合所有法规，我仍然被指控“恶意做空市场”。这一指控让我感到困惑不已，尤其是在那时中国股市根本不允许做空。我完全不知道这个指控从何而来。
最终，我失去了所有——包括我的投资、公司，甚至还得支付所有员工的遣散费。回首往事，我意识到当时中国的商业环境让像我们这样的公司很难成功，尤其是政府的不确定性。
如果我知道事情会如此发展，我绝不会在那儿创办公司。
知足常乐吧
虽然这次失败了，相信凭你的眼光和能力，以后也会抓住更多的机遇！
business to being forced to shut down, it lasted more than a year. About six months were spent building the business, writing the source code, recruiting the team, and setting up the servers. The actual production period—from the start to the closure—lasted around 9 months.