Interview 3: Sulfuric Acid Business

Interview 3: Sulfuric Acid Business

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Integrated trading companies engaged in the work of value chain from upstream to downstream. And you will find it is out of the reach of many consumers when tracing back from downstream to upstream. "Does a integrated trading company also do this?" asked by people with great surprise. And it is a fact that this kind of work indeed exists. And among these work it is common to find much about business of "a large scale on a global scale". Although being away from consumers' attention, it is an indispensable part in people's daily life. And it has played a supportive role in China's market, which is the function of the integrated trading company. Inorganic Chemicals Section of Performance Chemicals Department of China Chemical & Electronics Business Unit (hereinafter referred to as the Inorganic Chemicals Section) in Sumitomo Corporation (Shanghai) Ltd. (hereinafter referred as Sumitomo Shanghai) is working on the challenge of the world's leading scale market----the sulfuric acid market. So what is the specific business of it? And what is the "driving force" that supports the team? Let us have a visit and look for the answers.

1.Sulfuric business market, a huge market unaware to others

Xue Bin, manager of inorganic chemicals section in Sumitomo Shanghai Xue Bin, manager of inorganic chemicals section in Sumitomo Shanghai, entered Sumitomo Corporation in 1998 and been engaged in the work of "inorganic chemicals/ sulfuric acid" after that. Inorganic chemicals section has six employees totally, with three in Shanghai and three in Guangzhou. And they supply sulfuric acid imported from abroad to Chinese market.

When heard about sulfuric acid, what do you have in your mind? Chemicals? Dangerous goods? Experimental supplies? At least, it is not considered to be one kind of family supplies nor the frequently used items in daily life. As for sulfuric acid, people hold the impression that they are dangerous and hard to be stored. However China has become the world's largest sulfuric acid market. Why?

Now the sales volume of Chinese sulfuric acid market is about 60 million tons per year. According to the market share, the domestic products accounts for the overwhelming majority while the goods imported from abroad is just 1.5-2 million tons a year . Among them, the sulfuric acid volume supplied by Sumitomo Corporation Shanghai is 400-500 thousand tons per year.

The important application of sulfuric acid is as "basic chemicals to the manufacture of chemical fertilizers". As introduced in this column before, China has become the world's largest chemical fertilizer market. With the development of the market, the market of sulfuric acid, which is used in manufacture of chemical fertilizers, has reached the world's largest level. And with the impact of the expanding trend of chemical fertilizer market, the sulfuric acid market in China is also expected to be expanded in the future.

Xue Bin, manager of inorganic chemicals section in Sumitomo Corporation Shanghai, has been engaged in the sulfuric acid work for 12 years since entering this company. According to Mr.Xue, the work is not only beyond people's attention but also of special factors.

Xue "The trading price of sulfuric acid both imported and domestic is almost no difference, thus the adverse market factors due to price does not exist. Apart from that, the quality of imported goods is better than that of domestic goods. With an expanding China's domestic market, there is no need to worry too much about the sales". Xue went on to say:"But on the other hand, the use of imported sulfuric has limited uses, which results in relatively limited target industries to develop customers. In fact, despite of the 400-500 thousand tons of sulfuric acid annually supplied by Sumitomo Corporation Shanghai, our total customers are only two actually, one in Shandong Province and the other in Guangdong province. In addition, although the market is expected to be growing, we cannot increase our sales volume to a large scale. It is because of the limited production capacity of suppliers with the current situation that our supply will not increase at the same time. Currently, we are working with the business units of Sumitomo Corporation to develop suppliers. However, it seems to be uneasy because sulfuric acid is a special commodity of limited use.

2.The team strives to challenge the difficult market

to make quick respondWhat the Inorganic Chemicals Section confronted with is the limited supply and the fixed target customers of sulfuric acid market. And what are the factors that determine the sales? Moreover, what are the important factors? According to Xue, "The important factor that affects sales performance is the transaction price. The price of sulfuric acid largely changes. It occurs to us that the price difference could be doubled within a year. Transaction price not only affect the profit of Sumitomo Corporation Shanghai, but also that of the purchaser. We must take our customers' profit into consideration when doing business. "says Xue. What we emphasize here is "not only our company 's profit but also our customer's profit is important ". Xue continued, "in the business of sulfuric acid, both supply capacity and sales target are limited. Therefore, the important factor that affects the performance of the section is to predict and analyze the changes of the trading price as well as to communicate with our customers to better understand their purchasing purposes. In addition, it is of great necessity to base on the years of accumulated experience when we forecast the transaction price. And we should also maintain close communication with our customers in order to supply what the customers need and order. In order to win the trust of the fixed off-site customers, it is important to avoid damage period of the customers, and to make quick respond to customers.

Next Page >>
Interview 1: Wheat Flour Business
Interview 2: Fertilizer Business
Interview 4: Iron Ore Business
Interview 5: Coil Center Business
Interview 6: Cosmetics Business
Interview 7: Real Estate Development Business