China-Owned Sinochem Partners Global Enterprises to Launch Blockchain Trading Platform
A subsidiary of Chinese state-owned multinational conglomerate, Sinochem, has gone into a joint venture agreement with nine other companies to establish a blockchain-based digital service global commodity trading platform called TradeGo.
Sinochem Energy inked the deal with Chineses companies: PetroChina, COSCO, Bank of China, China Construction Bank (CCB), China Merchants Energy Trading, and Wanxiang Blockchain. Other partners in the agreement signed at the 4th China International Import Expo (CIIE) are Australia’s Macquarie, Saudi Aramco Energy Ventures (SAEV), and Japan’s Mitsui.
The nine companies used the CIIE, held from November 5 to 10 in Shanghai, to introduce themselves as the first batch of ecological partners of the TradeGo platform with the aim to enhance the digital construction of international trade in bulk commodities.
The CIIE had nearly 3,000 enterprises from 127 countries and regions participating, according to its organisers. It is described as a meeting point for countries along the “Belt and Road” including those that are developed, developing and the least developed of them. The international event’s venue also saw China’s digital yuan in use.
The TradeGo digital platform is meant to support the business expansion and innovation of clients including to help them gain first mover advantage in the digitization trend as an Asian or even global leading blockchain infrastructure, notes SAEV, the corporate venturing programme of Aramco, the world’s leading fully integrated energy and chemical enterprise.
For Mitsui, which will take a 5% stake in TradeGo, the blockchain system will operate as an international electronic document platform to improve bulk cargo trading where paper documents are still being largely used for customs clearance and delivery. It adds that this function is particularly needed now that delays in customs clearance and delivery have become serious social issues due to increased logistics volume, global economic development, restrictions on travel and movement and the stagnation of the postal networks.
The Japanese company points out that the TradeGo platform will start operating firstly in China as a major marine trading power then will consider expanding its services by introducing a transaction matching function. The plan may bode well for Mitsui which has identified “Market Asia” as a priority area in its Medium-term Management Plan 2023.
The TradeGo blockchain architecture will seek to ensure the privacy of traders to the utmost extent, solve the authenticity and timeliness issues in international bulk commodity transactions. It is to help address issues such as slow delivery, easy forgery, and fragility of international bulk commodity trade paper documents which have become increasingly prominent in the context of global trade facing the impact of the Covid-19 epidemic.
Coming as China’s cross-border demand has reportedly surged – including in the e-commerce space – by over 20% since the beginning of 2020, according to NielsenIQ, TradeGo is not the first blockchain-based platform to be introduced as connecting Chinese companies with others from across borders. Last month, the TradeTrust blockchain framework was launched to connect cross-border Singapore-China trade flows.
Two digital letter of credit (L/C) transactions, involving electronic bill of lading (eBL) transaction simulations, were completed using TradeTrust as part of the pilots conducted in mid-September 2021.
The pilots, which come under the Singapore-China Smart City Initiative that was established in 2019, helped demonstrate a reduced processing turnaround transaction time from a few days to within an hour. It also enhanced paperless workflows within the trade ecosystem and lowered transaction costs for businesses to boost competitiveness.