FOTIC Facilitates Industry-Finance Integration, Serves Real Economy

Promoting industry-finance integration and boosting the real economy is a major focus of financial institutions during product innovation and service improvement. Recently, “FOTIC Yuhe Jingming XV-Industry-Finance Assembled Funds Trust Plan I” (Industry-Finance I), jointly established by China Foreign Economy and Trade Trust Co., Ltd. (FOTIC) and Sinochem Oil, has issued the first-tranche trust loan as a new highlight of industry-finance integration. By employing their respective advantages in financial services and oil products distribution network, the two companies are pushing industrial coordinate development and promoting finance to serve the real economy through industry-finance integration.

Boosting Oil Products Distribution through Industrial Collaboration:

FOTIC and Sinochem Oil are both subsidiaries of Sinochem Group (Sinochem). Sinochem is one of China’s four national petroleum corporations. Since the beginning of this year, Sinochem has restructured its business in response to the group’s strategy adjustments. It has established five business divisions (energy, agriculture, chemical, property and finance); built business clusters based on business divisions, and promoted the implementation of business strategies and optimization of business operations.

Sinochem Energy Business Division’s core business is petroleum products’ distribution. Sinochem has more than 20 regional oil products sales companies and more than 600 gas stations in 18 provinces and municipalities. With constant expansion of its market influence, Sinochem urgently needs to offset development constraints through business model innovation. Through in-depth field due-diligence investigation, FOTIC has given full play to its professional advantage in financing scheme design, fund raising and risk control. It has launched Industry-Finance I financial product in cooperation with Sinochem Oil to offer gas station owners package solutions for project financing, oil product supply and gas station management. Through industry-finance integration, Sinochem Oil has accomplished the transformation from heavy asset model of “buy + rent” to the light asset model of “supply chain finance + fund loan”. In this way, it has strengthened internal industrial collaboration of Sinochem and promoted the development of local real economy.

Stable Business Model, Huge Potential for Industry-Finance Integration:

FOTIC has rich experience in credit examination and risk management while Sinochem Energy Business Division has abundant customer relations and boasts remarkable capabilities of project identification and management in the field of oil product distribution. Capitalizing on these advantages in light of borrowers’ actual needs, FOTIC has optimized its transaction structure, taken full advantage of its flexibility in trust financing and designed products on the premise of risk control, thus ensuring the business stability of the Industry-Finance I trust plan and laying a foundation for nationwide business duplication.

Based on its successful project experience, FOTIC has been persistently undertaking initiatives for research and innovation. In line with customer needs and business features of Sinochem’s other business areas, including chemical and agriculture, FOTIC uses its customized financial services as tools for achieving the strategic goal of driving financing through industries and serving industries through finance.

Given Volatile External Environment, Trust Industry Urgently Needs to Transform:

In the face of asset bubbles and a high leverage risk, “preventing risks and making structural adjustments for economic stability” has been the focus of recent domestic policies aimed at economic development. Given the country’s focus on preventing financial risks and developing the real economy, “one bank and three commissions” have released several regulatory policies for asset management, expressly requiring asset management institutions to serve the real economy through product design, leverage setting, business models and investment fields, so as to stop capital being distracted from their intended purpose.

In this situation, trust companies urgently need to transform to better serve the real economy. Under the policy of national supply-side reform, FOTIC has taken multiple measures, fully exploited the advantage of the trust system and persistently served the real economy by ‘real action’. While supporting better and faster development of the real economy, it has been transforming its financial services. Based on the financial needs of the real economy, it has constantly innovated product and financial service models and expanded its business space, to create steadier earnings for investors and achieving triple win among the real economy, trust companies and investors.