China's petrochemical industry rolls out blockchain warehouse receipt financing trade

Friday 16 October 2020 10:14 CET | News

China's petrochemical industry has seen its first digital warehouse receipt pledge financing transaction that integrates blockchain and Internet of Things (IoT) technology successfully implemented in China.

The solution overly aims to solve expensive and slow financing for small and medium-sized petrochemical enterprises. The transaction involved China's Sinochem Energy High-Tech, China Construction Bank Inner Mongolia Branch, and Nanchu Management Group. The financing party, Beijing Longrunkaida PEC Products.

From the application for issuance of warehouse receipts to the bank’s appropriation of the loan, it took less than one day with a cost 40% lower than that of common trade finance services in the market.

Based on a deep understanding of the financial pain points of the petrochemical supply chain, Sinochem Energy High-Tech has built a ‘Blockchain Digital Warehouse Receipt Platform’, which opens third-party warehousing services, a key node of liquid logistics.

Ma Xiaohui, Chief Financial Officer of Beijing Longrunkaida, introduced the process of this financing deal, through Sinochem Energy High-Tech’s Blockchain Digital Warehouse Receipt Platform. Then Sinochem applied to Nanchu Management Group for the issuance of warehouse receipts with their stored base oil. With the receipts, the petrochemical company submitted an online pledge application to China Construction Bank and received the loan in the afternoon.

To support the development of the real economy, via partnerships between financial institutions and industries, on September 22, 2020 eight Chinese ministries or commissions including the People's Bank of China, the Ministry of Industry and Information Technology, issued the ‘Opinions on Regulating the Development of Supply Chain Finance and Supporting Stable Cycle, Optimisation and Upgrade of the Industry Chain of Supply Chain’.

The document requires financial institutions and business entities to strengthen information sharing and collaboration; improve the digitalised level of supply chain financing settlements; standardise the development of supply chain inventories, warehouse receipts, and order financing; and strengthen the risk protection support for supply chain finance.

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Keywords: supply chain finance, digitalisation, blockchain, IOT, financing settlements, warehouse receipts, order financing, data sharing, PBOC, Sinochem Energy High-Tech
Categories: Banking & Fintech
Countries: China
This article is part of category

Banking & Fintech