Twitter

Chinese interests launch electronic wool and product trading platforms

by Terry Sim, 25 September 2017

ELECTRONIC wool and wool product platforms have been launched in China for domestic transactions and to import commercial parcels.

But Australian exporters and brokers as yet doubt the relevance of the platforms to growers, as wool supply constraints lead Chinese mills to build stronger direct relationships with exporters in supplying countries.

Australian Wool Innovation said two electronic or e-commerce trading platforms or portals were announced at the recent Nanjing Wool Conference “for all things wool”, including finance and logistics.

Click here to get the latest Sheep Central story links sent to your email inbox.

Endeavour Wool Exports principal Josh Lamb said the two platforms appeared to be similar to the online trading systems available to Australian growers – AuctionsPlus Wool and Wooltrade.

“All they are trying to do is to put buyers together with wool electronically.

”No-one is re-creating an auction system as such, they are all on-demand systems by the look of it in various forms,” he said.

However, he said the two Chinese systems are based on the trading of commercial parcels of wool and wool products.

“That is, a full container, in some cases already sitting in China, in other cases not.”

The Nanjing Wool Market platform, TTX World, was not just for greasy wool, but is also for the trading of products, tops, carbonised and scoured wool, Mr Lamb said.

“It’s more of an Al Baba-type arrangement that is going to do a bit of everything.”

The TTXWorld.net website offers a number of services for foreign trade, covering import, export, auction and finance. However, as an exporter, Mr Lamb did not currently see a role for the trading of wool from Australia solely by electronic means, because of the issues around finance, guaranteeing payment, efficiency of payments and securing forward orders.

Mr Lamb understood TTX World was more aimed at domestic business in China. He saw it more of a “bolt-on” business to the existing system of moving wool and woollen products into China via the government trading house SDIC, which is the parent company of the Nanjing Wool Market.

Second platform is aimed at wool exporters

Another e-commerce wool platform is run by Chinese wool industry businessman Henry Wu, who is promoting the platform to exporters to ship containers of wool into China for clients to buy.

Mr Lamb said this platform was trying to replace the agent in the chain, who operated between the mill and the exporter.

“The only problem is the agents are proactive, they are on the phone every day, they are trying to sell wool for you and they bring market information back to you.

“His system is static, where you just throw a container of wool up there and wait for someone to buy it, which is generally going to be when the market goes up,” he said.

Mr Lamb said the electronic platforms would not work without incorporating some of the people-people relationship and normal finance guarantees that the current system has.

“I don’t believe so, not at this moment anyway.

“The mills are starting to concentrate now on building strategic relationships with exporters, because are concerned about supply going forward, so what they are all trying to do is find the suppliers they trust, build the relationship to guarantee supply going forward,” he said.

Mr Lamb said wool supply figures around the world in the last five years indicate only minor fluctuations.

“Nothing is really growing and it doesn’t look like it will because of all the sheep meat demand and price factors.”

Mills are looking at securing and guaranteeing wool supply to match their processing capacity in what is a very good healthy market, he said.

“They are probably going away from these sort of electronic platforms towards more traditional older style alliances with a couple of selected exporters.”

The Chinese mills are not necessarily buying more wool and storing it to meet their future needs because of the supply constraints, Mr Lamb said.

“But they want to go in every week and buy their requirements and not have to shop around the industry to get it.

“It’s a continuation of the same system, but what they want to do is make it a bit more personal in a way that they might share a bit more market information with the supplier-exporter and the exporter might share a bit more with them on selections and their market ideas, and together they might find ways of doing more regular business.” he said.

Mr Lamb said Merino wool business has been mainly based on exporters gathering as much market information as possible and then deciding what to buy at auction, but often without guaranteed orders.

“It think it adds a bit more stability to the market and it will change it going forward, but it is all for the better in my opinion.”

Chinese wool agent role diminishing

National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said the Chinese electronic platforms do not appear to be of any relevance to Australian growers at this stage. The TTX World platform seemed to be focusing on raw material in China and he had only heard that the other platform was trading containers of wool coming into the country.

But Mr Wilcox said the role of the agent within China seemed to be diminishing.

“Mills are more and more commonly going direct to Australian exporters or even owning their own exporting company.

“And this (e-platform development) surely would only hasten that reduction of the importance of the agent in China,” he said.

“You still need somebody within Australia to purchase the wool and do all that, but I certainly think on the China side, mills are going to be much more able to go direct to Australian exporters – this will just hasten that process.

“But we all need to keep in mind, when you look around the world, that internet trading platforms start small and they are likely to grow,” Mr Wilcox.

“We can’t be naïve and pretend it isn’t going to happen.”

Australian Council of Wool Exporters and Processors executive director Peter Morgan said he also understood that the electronic platforms were initially for the trading of wool and wool products within China, but this could change.

He said the desire of Chinese mills to form stronger supply alliance was a sign of a maturing market.

“Some people have very strong alliances already.

“Demand is obviously good for them at the moment and they are not seeing large responses in production,” he said.

 

Topics: , , ,

Related Stories

Reader's Comments


Comment

Leave a comment

(required)

(required)

(required)