The future mode of the chemicals E-business 01-28-2016

Since the H2 2014, the B2B e-business among the chemical industry has flourished for a good year. The chemical products like styrene, ethanediol and diglycol became popular in the market of e-business. The growing speed of the chemical B2B e-commerce platforms, such as and the, was striking.


Image Source: Baidu


Take the as example, the company was established on May 2014 while created more than RMB 260 billion of the cumulative transaction amount till the end of 2015. Why the turbulent chemicals e-business should achieve such a high-speed growth? And where the future growth points of the industry would lie in?


Why is the chemicals e-business?


According to the statistics, the correlation degree between the goods for everyday consumption and the chemical industry reached to 96%. With the advance of the new urbanization and the upgrading of the national consumption, the demand for the basic chemical raw materials has grown rapidly.


Last year, the chemical industry gained RMB 8.76 trillion, accounted for 13.8% of the GDP; simultaneously, the costs for the raw materials, capital and logistics of the chemical industry have rapidly increased as well. It has been well concerned among the industry about how to cut the cost and improve the efficiency through the innovation of the production and supply chain.


Meanwhile, with the opening-up of China’s market and the worldwide excess of the staple chemicals and petrochemicals commodities, the petrochemical enterprises of Japan, Korea, Middle East Asia, America and Europe joined China’s market one after another. The foreign enterprises especially those Middle Eastern and American ones who enjoy the advantages of the raw material costs have caused extreme threat to the domestic chemical production and distribution enterprises in China. China’s chemical companies also accelerated their steps in developing and making use of the Internet technologies to reduce the operating costs.


What are the chemicals e-businesses doing?


According to Mou Bin, CEO of the, the enterprises could achieve the transformation and upgrading by the means of “Internet” on the basis of finding the proper mode for the characteristics of the industry and the enterprises themselves.


Chemicals e-businesses are basically aimed to provide online transaction services for the customers of the chemical and plastic, including the bulky matchmaking services, the self-supporting services of the fine chemicals, consulting services for the customers’ operating and decision making, and the services of the online supply-demand release.


Take the relatively fast-developed chemicals e-business as example, the cumulative matchmaking transaction amount of the top three chemicals e-business platforms was more than RMB 27.5 billion during the period of January to July 2015, among which the was RMB 11.6 billion, the was RMB 8.2 billion and the was RMB 7.7 billion. Up to the end of 2015, the cumulative transaction amount of the has exceeded RMB 26 billion, which means RMB 2 to 3 billion per month. The fast transactions accumulation created conditions for formulating closed-loop of the supply chain.


According to the experts of the industry, the information flow (matchmaking transaction) is not the core competition of the chemicals e-business platforms. The success of the business relies on the information flow, logistics and cash flow of the chain, while finishing the closed-loop of the deal should be the future mode of the chemicals e-business.


According to Li Li, the vice-president of the, large amount of the transaction statistics provided original sources for analyzing the market and the price trend, which not only benefited the transactions of the customers but also the centralized purchasing of the small and middle enterprises. After breaking through the barriers of cumulating transactions statistics and making preparations for improving the logistics services and financial services, the chemicals e-business finally created closed-loop of the deal for the upstream and downstream customers.


What other growth points the industry has?


When talking about the profit model of the chemicals e-business, Bian Kailing, the investment director of the Ether who has the experience in dealing more than 300 B2B program, believed that the B2B e-business platforms are mainly used for attracting traffic through matchmaking transactions at present, the value-added services of the logistics and finance are the key points for making benefits. The future B2B pattern would grow into a one-stop comprehensive service platform of transaction, finance, logistics, storage, processing and consulting in the specific areas.


According to many players of the industry, earning the commission and price differences through matchmaking the transactions was the most barbaric way how the businesses grow.


According to Zhi Jianpeng, the founder of the, the future chemicals e-business players should keep the foothold on developing the mobile and internet technologies for the deals between the upstream and downstream market; and to make preparations for establishing the risk control models and estimating the demands of the fine chemical products, they should also draw on the experience of the matchmaking transactions, cultivate the cognition and habits of the upstream and downstream online transaction, accumulate the transaction statistics, and structuralize the whole process in the scale-manufacture mode.  


After finishing the strict early-stage preparations, the industry should pay attention to the supply-chain finance, which provided a mode of severe pain spot, light pattern, low risks and high yield. With the further expansion of the scale in the future and the formation of the high barrier, there would be more and more derived service mode beyond the expectations.


*This article is a translated and edited verison. The original article comes from Economic Daily.


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