Geshile Technology is a company that makes components for signal transmission towers. For an enterprise running such a business, the biggest concern is the reliability of supplies.
This is especially true amid big hikes in commodity prices. For example, the price of aluminum increased by over 50 percent in the first nine months of the year, creating cash-flow problems for suppliers making parts made of aluminum. A delay in the delivery of even a single component due to high raw material prices can affect the delivery of final products.
To deal with such issues, Geshile and its suppliers use a financial product called ICBC E-Credit. In case of financial problems, suppliers can take part of Geshile's credit certificate to finance, weather the price rise and purchase raw materials.
ICBC E-Credit is a supply chain financing product launched by the Industrial and Commercial Bank of China (ICBC). The bank's Shenzhen branch said it's a new way of using an existing product.
"Supply chain financing is not new. But this e-credit launched by ICBC combines such products with blockchain technology, which enables the services to reach out to multi-level suppliers in a timely and low-cost way," ICBC Shenzhen Municipal Branch Vice President Yang Fan explained.
The way of using it is easy. All a core enterprise needs to do is log in to the system and make payment to its supplier by issuing online e-credit, which is part of their credit at the bank, and the supplier can take this credit for financing.
He added that facilitating the financing for thousands of small and medium-sized businesses will help them run their business more smoothly, as stabilizing the supply chain is also a part of building a strong domestic market.
Geshile has more than 200 suppliers, and 30 percent of them have already joined this scheme. It says it has a big company to run and a thousand workers to feed, so it needs a stable supply chain to keep the company rolling. It also says it has a responsibility to grow and develop together with all its partners in the production line.