Companies around the world are working hard to utilize new technologies. Interestingly, China’s one of the largest chemical producers launched a new Blockchain Warehouse Receipt Platform, to help the industry. It will be able to reduce costs related to operations as well as to improve trade financing.
Increased demand for more environmental and safety measures amid the pandemic affected the costs for China’s petrochemical trade. Importantly, major players in the country’s petrochemical trade started to use blockchain technology to cope with weak points in the logistics cycle. For example, thanks to the blockchain it is possible to alleviate the high financing costs.
It is worth noting that, China’s first-ever digital warehouse receipt pledge financing transaction was completed on September 27, thanks to a system that integrates blockchain with the Internet of Things technology.
Interestingly, the transaction involved state-owned petrochemical giant Sinochem. Moreover, Energy High-Tech, China Construction Bank Inner Mongolia branch, as well as Nanchu Management Group. People should take into consideration that, the financing party is one of northern China’s traders in the lubricant and base oil industries. The name of the company is Beijing Longrunkaida PEC Products.
Blockchain technology and companies
It is worth noting that, from the application for issuance of warehouse receipts to the bank’s appropriation of the loan, it too less than one day. Moreover, the cost was significantly lower than that of common trade finance services in the market.
People should keep in mind that the system offers a number of advantages. Interestingly, a system offers a solution for high risks such as fraudulent warehouse receipts. Moreover, forged delivery documents, unclear property in goods, repeated pledges, and impairment or loss of collateral. Unfortunately, all of them frequently lead to disputes on goods property and warehouse receipt finance.
Importantly, the high security of blockchain technology and the improved traceability of data in the supply chain will improve the industry’s credit rating.
Furthermore, the development and its utilization of the new blockchain platform addresses the requirements. As a reminder, recently eight Chinese ministries and commissions presented the requirements.
Notably, financial institutions and enterprises have to improve their data sharing, digitizing the supply chain financing settlements. Moreover, they have to standardize the supply chain inventories as well as warehouse receipts. The aim of all the measures stated above is to improve risk protections for supply chain finance. Moreover, thanks to these measures it will be possible to reduce financing difficulties and capital costs for supply chain firms.