Aided by Alibaba, Sinopec opens online industrial platform

Asia's largest refiner China Petroleum & Chemical Corp, known as Sinopec, is pushing big into a market-oriented transformation with the launch of the country's largest online industrial supply system on Monday, teaming up with e-commerce giant Alibaba Group Holding Ltd. It is the latest in a string of moves by State-owned enterprises to diversify their business and enhance profitability.

The online industrial product system－www.epec.com－used to be Sinopec's internal procurement platform, but the company decided to open up its access to the public as part of a restructuring amid weak oil prices.

Alibaba provides services to Sinopec in terms of internet safety, big data and technology upgrading.

Wang Yubing, president of Sinopec's procurement division, said the company plans to build the platform into an industrial version of Taobao.com, the country's largest online shopping marketplace, owned by Alibaba.

"The market value of online retail business rose to about 3 trillion yuan (S$625 billion), but the market potential for online sales of industrial products is much larger than that," he said in Beijing, expecting the transaction value on the platform to reach 500 billion yuan.

Currently, 90 per cent of the transaction of the platform came from Sinopec, but Wang said more companies will join the purchasing system since it will reduce their sourcing budget and increase the efficiency.

"This platform will benefit not only large industrial enterprises but also those small and medium-sized companies through sharing our resources in suppliers and experience in supply chain management, because it will optimize their sourcing process and reduce the procurement cost," said Jiao Fangzheng, Sinopec's deputy general manager.

The platform provides a huge array of products from more than 60 industries, including coal, steel, petrochemical and oil equipment, the company said.

Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, said that it is a great attempt, but it may take quite a long time to make the platform a real success.

"All the talk about the reform and transformation is good, but the bottom line is driven by domestic demand," he said.

He said compared with the online retailing business, which faces end users, price is more transparent for online industrial sales, making less of a difference for companies to source online and offline.

"All the kinds of industrial companies are facing the same kind of problem－weak demand and slowing economy, if that doesn't change, I don't see how the online industrial sales will surge," he added.

Sinopec is not the only company that tries to restructure the marketing business. In March, China National Petroleum Corp signed a strategic agreement with Alibaba on online payment and on sharing user information.