On the morning of August 13, 2018, Jiang Zhenghong, member of the Party Group and Vice President of Sinochem Group, and Secretary of CPC Committee and President of Sinochem Energy, visited Sinochem Petrochemical Distribution Co., Ltd. (Sinochem Petrochemical Distribution) for inspection. Mr. Jiang listened to a report made by Li Bo, General Manager of Sinochem Petrochemical Distribution, on the Company's overall work in 2018, and an analysis report made by Chen Huan, Chief US Representative at Sinochem Petrochemical Distribution, on the recent market, which was titled as The Impact of Sino-US Trade War on Chemical Industry. He expressed his great concern about the pre-sales of ethylene, the internal cooperation mechanism, and the "science and technology + sales" cooperation model. In addition, President Jiang had in-depth communication and discussions with the leaders and employees of Sinochem Petrochemical Distribution over certain questions, and gave important instructions for future operations.
Mr. Jiang fully affirmed the achievements of Sinochem Petrochemical Distribution since its establishment and in the first half of 2018. At the same time, he noted the problems and challenges in work and put forward higher requirements for the future work of the Company. The key points are as follows:
Regarding the implementation of "Science First": "Science First" does not require the Company to do technical research and development solely on its own. Leaders should focus on platforms, use technical services as a means of scientific management, conduct substantive research on the "technology + sales" approach, select the best research institutions for substantial partnership, and pay attention to process control and results management;
Regarding the "research, production and marketing" system and cooperation mechanism: The Company should actively establish partnerships with well-known research institutes in China’s chemical industry, such as Sinopec Beijing Research Institute of Chemical Industry and Shanghai Research Institute of Chemical Industry Co., Ltd., for in-depth cooperation on technology development, services and licensing in chemical-related fields.
As for the Sino-US trade war, it is a double-edged sword for the chemical industry. We must actively analyze the market and make clear the fact that it is the changes in exchange rates, pricing cycles, or demand that have brought fluctuations in the Company's actual sales.
Concerning the internal cooperation mechanism, the Company should more frequently use information determined by the market instead of multi-party negotiation. In addition, various factors such as labor cost, logistics cost and sales radius should be considered to determine the pricing formula.
Mr. Jiang emphasized that a key goal of Sinochem Petrochemical Distribution at this stage is to ensure that a sufficient trade volume of ethylene-related products is formed before the ethylene project is completed and put into production. At the same time, it is necessary to deepen technological and model innovation, focus on using scientific and technological concepts to lead the marketing, and avoid homogenous competition with industry oligarchs. Only in this way can the Company survive and develop smoothly, and meet relevant strategic requirements and achieve its goals.
