A business-to-business gem and jade trading platform debuted on Thursday on the Guangzhou Commodity Exchange, aiming to establish standardized and trustworthy trading processes in an industry that lacks transparency.
Dealers have suffered financing issues, Yu Hongbin, president of trading center operator Beijing Jin Dian Pai Information Technology Co., Ltd. (JDP), told EJ Insight in Guangzhou after the launch ceremony.
Non-standard commodities such as jade products are usually traded over the counter but confusing pricing rules and counterfeiting issues have made such products unwelcome by risk control departments in major financial institutions, pushing up capital costs, he said.
Standards do exist among business insiders but the problem is there is no commonly recognized system, a jade product investor, surnamed Zhou, said.
Guangdong is an ideal place to push trading standardization of the industry.
The gem industry in Guangdong province was worth more than 300 billion yuan (US$48.32 billion) in 2013, accounting for more than two-thirds of the country’s market, according to the Jewelry Trade Association of China.
In that time, overall retail sales in the jewelry industry were 470 billion yuan.
The platform will provide a digital identity for every listed item and certified by third-party accreditation bodies such as the Guangdong Provincial Jewelry Testing Center. Professional buyers and major distributors will be invited to give evaluation references.
The members-only online trading platform mainly serves gem and jade manufacturers and processors among other mid-stream enterprises.
On Thursday, the Guangzhou branch of Shanghai Pudong Development Bank signed an agreement to extend a 2 billion yuan loan quota to member companies.
Yu said the Guangdong branches of Hua Xia Bank and Minsheng Banking Corp. may soon join the scheme. Another 30 financial institutions have expressed their intention to cooperate.
Yu expects to help members get 10 billion yuan in bank financing this year.
China Assurance Finance Group Ltd. (CAF, 08090.HK), a provider of corporate credit guarantee services and performance guarantee services to small businesses, injected 12 million yuan into JDP last year for a 60 percent stake.
Nixon Pang, CAF vice chairman, said a standardized trading process for non-standard commodities has great potential as it will benefit the overall development of the industry in the long run while creating demand for various financial services across the industrial chain.
The gem and jade trading center is the first step in that direction. Pang is confident the platform will break even no later than the first half of 2016.
CAF may launch similar trading platforms for agar wood and stamps later this year.
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