Mr Xue, who runs a gas station in Shandong province’s Gaomi city, immediately completed an oil products order worth 1 million yuan on China Construction Bank’s Shanrong business platform after filing for financing credit with the bank on April 22. He didn’t spend a dime and purchased 203 tons of gasoline IV through Changyi Petrochemical’s e-business department. Completion of the order marks the successful establishment by ChemChina Petrochemical’s e-business team of an Internet finance trading model. Customers will have a new credit financing option when buying oil products with ChemChina Petrochemical’s subsidiaries. The order was the first of its kind in China’s petrochemical and bulk raw material e-commerce.
The company’s e-commerce team has set its sights on building a mature business model since the beginning of this year and has formulated a scientific innovation plan. The team has found the market thirsty for capital when developing and maintaining direct customers. They discerned marketing opportunities in purchasing capital. The team settled on strategic cooperation in building the Shanrong platform with China Construction Bank in April. The platform integrates online financing, online purchase and online payment. The Internet finance e-commerce model was introduced in bulk raw material trade.
As the first to make the move, Changyi Petrochemical has maintained close cooperation in e-business with the bank since the project began. It aimed to make things easier for medium and small enterprises to buy oil products. The project made full use of “Internet plus” thinking and overturned the traditional business model. It realized the first case of online financing at ChemChina Petrochemical.
The financing model breaks the mold of traditional mortgage financing. Banks can offer a credit extension based on a customer’s credit record of oil and gas purchase at ChemChina Petrochemical’s e-commerce platform. Customers can use a bank’s capital to pay for orders after getting the credit extension. They can repay the bank after completing product sales and restore the line of credit.
The essence of the model uses Internet technology to achieve information propagation in commodity circulation. Banks can carry out real-time monitoring of commodity transaction and delivery data and easily create a credit model. The project helps eliminate risks brought by information asymmetry. Internet technology has increased the bank's trust on small and micro businesses. Therefore, funds can be invested on a complete supply chain, where participants can fully realize commodity value, and added value created from circulation will trickle to various links.
At the moment, ChemChina Petrochemical's e-commerce team is working to deepen cooperation with China Construction Bank's e-banking department. The bank will help the team develop a local direct selling market and offer online and offline market promotion services. In the future, both sides are likely to use the bank's existing database to find potential customers and develop and maintain offline customers. Financing service personnel will be assigned for the company's customers, products will be advertised online, and supervision will be in place on use of customer's money after credit extension.
The success of the new Internet financing model is an innovation by ChemChina Petrochemical. The zero-cost of online purchases will definitely raise customer purchase enthusiasm. It will play a profound role in making inroads in the direct selling market, optimizing clientele and increasing pocket margin for the company.