Victor Ugochukwu · Dec 14, 2020 . 5min read
Sinochem China’s largest oil firms introduces blockchain warehouse receipt platform
China's Sinochem has launched Blockchain Warehouse Receipt Platform to help the industry combat the rising costs of operations and trade financing.
By Komal Joshi · Oct 18, 2020 . 6min read
Today Sinochem revealed its new blockchain warehouse receipt platform, which integrates the internet of things (IoT) and blockchain. The platform will help in fighting against the rising costs of operations and trade financing. The state-owned firm is one of the biggest oil producers in China. Additionally, the first transaction was for oil trader Beijing Longrun Kaida Petrochemical Products. It acquired a warehouse receipt from the Nanchu Management Group. The receipt was then used to secure trade finance from China Construction Bank. The advantage is same-day financing and a 40% decline in cost.
There have been various trade finance scandals where bills of lading or warehouse receipts have been used to boost finance from more than one bank. In 2014 at China’s Qingdao Port, there was a prominent fraud of 12.3 billion yuan ($1.83bn) that involved fake metal warehouse receipts and another 3.6 billion yuan ($530 million) reporting to shipping cargo.
Augmented demand for more environmental and safety measures among the Covid-19 pandemic has further driven China’s petrochemical trade costs. Small enterprises were already fighting to adhere to financial lenders’ credit conditions. A lack of effective risk control measures and difficulties in securely tracking bulk commodities transaction processes have led financial institutions to squeeze lending on warehouse financing.
Blockchain digital warehouse receipt platform eliminates issues in the petrochemical industry
Keeping all the petrochemical supply chain’s pain points in mind, Sinochem Energy High-Tech has developed a blockchain digital warehouse receipt platform. It opens up third-party warehousing services, a key node of liquid logistics. The company conducts consistent research on the digital warehouse receipt pledge. It also constantly describes the financing business model to China Construction Bank. Moreover, it continuously polishes products and working plans.
The system provides a solution for risks like fraudulent warehouse receipts, unclear property in goods, forged delivery documents, repeated pledges, impairment or loss of collateral. Moreover, these usually lead to frequent arguments on goods property and warehouse receipt finance.
Sinochem Energy High-Tech competes as a trusted technology provider. However, the next steps involve expanding the Platform to involve more participants. It includes the Shanghai Petroleum, Natural Gas Exchange and China Association of Warehousing and Distribution.
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