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Steel eBusiness in China and Automotive Steel Chain By BAI Rui, Shanghai Ganglian eBusiness Co., Ltd., Nov 2015

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Steel + Internet Use product as the guide and use the Internet to improve products and operation

Internet + Steel Use users as the guide to obtain industrial users as the driver, build on the huge user base and provide value-added services, make fundamental innovations by using Internet technology

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Leading comprehensive service provider for bulk commodities worldwide Steel mills

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钢材产量粗钢产量

• The steel industry remains a huge market on

the scale of trillions and accounts for 10% of

the GDP

• There are 150,000 steel trading companies,

with 1,000,000+ employees

Market on the scale of trillions

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重点钢厂利润总额合计

• Overcapacity and lower profit causes the

industrial upgrade to accelerate, creating big

opportunities for steel eBusinesses

• Internet + Steel becomes common

understanding

• Highly acceptable to end users, with steel

eBusinesses taking 30%+ of the steel

transaction in Shanghai

• Industrial eBusinesses are favored by capitals

Opportunities coming for steel

eBusinesses

Steel eBusinesses O2O

• End retailer users places high demand on

warehousing and logistic services, and it

becomes a trend to integrate services

• Financing needs are huge, and offline

regulation and online transaction are combined

to bring advantages

Steel OTC market

Steel productsCrude steel 

Total profits of major steel mills

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Status quo of steel eBusinesses

The industrial eBusinesses witnessed a vigorous growth in 2014-15 in China, particularly in bulk commodities. They are favored by the capital market. Take steel eBusinesses for example.

First-party eBusiness

(started by steel companies)

Second-party eBusiness

(started by trading companies or logistic service providers)

Third-party eBusiness

(started by Internet companies or information service providers)

Baosteel: Ouyeel

Hebei Steel: Hebei Iron & Steel

Transaction Center

ShaSteel: Jiulong Online

NJSteel: Jinling Steel Online

Zhejiang Materials Development

XIBEN New Line Stock

Xinyilian.com

Oupu Smart Net

Banksteel

Zhaogang.com

zgw.com

ggang.cn

* zgw.com and ggang.cn have been listed on NEEQ, Oupu Smart Net has been listed on SME, and other steel eBusinesses are looking for ways to stock exchanges

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Traditional marketing channels for steels

1. Direct Supply

2. Distribution

3. Retailing

+ The relative stable demand from customers is advantageous to steel companies;

+ Obtain information on needs and feedbacks, to drive product development;

- High marketing cost; - Cost of funds & market risk;

+ Prepayment from agents creates an advantage in the cost of funds;

+ Market risk passed onto agents, and it is easy to expand the distribution channel;

- Do not know the information of customers; - Market responds slowly;

+ Know the firsthand information from end customers; - Excessively high cost of the retailing channel

Steel millVIP

Steel mill Agent  Agent  End user

Steel mill End user

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Channels for Steel eBusinesses

1. Direct Supply

2. Distribution

3. Retailing

+ The relative stable demand from customers is advantageous to steel companies;

+ Obtain information on needs and feedbacks, to drive product development;

- High marketing cost; - Cost of funds & market risk;

+ Prepayment from agents leads to an advantage in the cost of funds; + Market risk passed onto agents, and it is easy to expand the distribution channel; - Do not know the information of customers; - Market responds slowly;

+ Know the firsthand information from end customers; - Excessively high cost of the retailing channel

Emerging Channels: Channels for Steel eBusiness

Steel millVIP

Steel mill Agent  Agent  End user

Steel mill End user

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What services are needed by customers?

PaymentSettlement

Logistics Transportati

on

Financing Service

Data Information

Easy to operate, fast to complete a transaction

Warehousing and processing needs

Can we provide Door-to-Door service like the retailers do?

Financial support is necessary, and bank loans are too complicated

Easy and secure payment: The funds are monitored and understood dynamically

I need to know the transaction details and industry-related information, which can help my purchase decisions

Transaction Service

Warehousing &

Processing

What services are needed by customers?

终端用户Steel mill End user

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Banksteel eBusinesses = Platform + Service

Platform Service +Leading steel OCT platform

in China

Comprehensive eBusiness value-added services for customers on the

transaction chain

Online Service

Offline Service

• Matchmaking • Consignment • Collective order • Payment and

settlement • Online financing • Data service

Services of banksteel platform

• Warehousing • Processing • Logistics

Seamless docking with partners of Ganglian

Steel mill End user

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Warehousing eBusiness: Ganlian IoT

Smart Warehouses

Our concepts: safe, easy, effective, and intelligent

Our mission: Build on the cloud-based warehousing system, consolidate the

resources in warehousing, logistics, financing and transportation,

to become a leading company and rule-maker in the steel IoT

and form a complete supply chain.

Ganglian IoT

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Logistic eBusiness: 56steel.com

• The Didi Taxi in steel transportation • Consolidate and optimize the

nationwide transportation capacities • Fully transparent logistic information

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12000Special vehicles to transport steels  35500t or above

Daily transaction (peak) 

800000 tTotal transacted steels

Vehicle Nr. YG SH301Vehicle type: 13 m long, flatbed Status: offline 

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Bulk commodity supply chain and financing

Integration of: • Products

• Logistics

• Funds

• Information

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Banksteelfinancing & supervision

platform

Cloud-based warehousing

Safety of goods

Controls Bulk payment

Safety of funds Controls

Info. follow-up

Safety of transaction

Controls

Mega data

Mega data M

ega

data

Companies vs Products

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Steel eBusiness’ development in stages This image cannot currently be displayed.

Integration of closed‐circle transaction 

High

Low

Low HighUser Stickiness 

Data collection, basic data service

Further analysis, industrial consultation 

Customer demands, Up and down‐steam match‐making

Consignment sales, overlap payment 

Overlap prepaid consignment, warehousing, financing 

Info Data

Research & consult

Match‐making 

Transaction platform 

Closed biosphere 

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Ganglian Holdings’ biosphere of bulk commodities This image cannot currently be displayed.

Easier and safer transaction of bulk commodities 

Data

Transact

Warehouse 

Logistics

Finance

Research 

Info

Business service centered on transactions 

Info service centered on data

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Characteristics of automotive steel marketing This image cannot currently be displayed.

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Highly professional and high service requirements

Various steel grades and difficulties in placing orders

High requirement in cutting and processing

Difficulties in inventory management

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How to serve the automotive steel sector?

SME component manufacturers For the various services necessary for the automotive steel sector, the SME component manufacturers cannot be well served by traditional steel mills and traders

Collective purchases Usually SME component manufacturers cannot reach the minimum order quantity (MOQ) required by steel mills. The MOQ problems cannot be well solved due to limited number of customers in the offline purchase

Consignment sales Steel mills and large steel traders can consign their products to an eBusinessplatform, which accelerates the inventory circulation and meet the demand of customers with small frequent orders

One-stop service The eBusiness platform can provide one-stop services by integrating the financing, cutting, processing and distribution functions

Steel application inquiry service Professional steel database with self inquiry service on steel grades, chemical compositions and mechanical properties

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