Sinopec to Enter New Phase of Cooperation with Suppliers

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Researched by Industrial Info Resources (Sugar Land, Texas)--China National Petroleum and Chemical Corporation (Sinopec) (Beijing) signed three-year strategic cooperation agreements with 23 key suppliers in Beijing in late November. The key suppliers include Baosteel Company Limited, Angang Steel Company Limited, Wuhan Iron and Steel Group Corporation, China First Heavy Industries, China national Erzhong Group Company, China Aerospace Science and Technology Corporation, Shenhua Group Corporation Limited, Huainan Mining Industry Group and Xuzhou Mining Industry Group. This signals a new round of strategic cooperation between Sinopec and its suppliers. Sinopec President Wang Tianpu attended the signing ceremony and delivered the keynote speech. Senior Vice President Cai Xiyou presided over the ceremony and signed the agreements on behalf of Sinopec.

Strategic partnership with key suppliers is an important measure Sinopec takes to tackle competition, to control operation insurance and to improve its material supply chain. In late November 2004, Sinopec entered into three-year strategic partnerships with 18 large coal mines, steel plants and machinery manufacturers. During that three-year period, the partners accumulatively provided Sinopec with 24.31 million tons of coal, 2.73 million tons of steel and $608 million worth of long-term key equipment. Sinopec gave its strategic partners preferential treatment on purchasing, settlement and payment. In return, Sinopec benefited from the partnership in reduced risk in resource supply and increased efficiency in purchasing and shortened cycle for product research and development. The partnership also helped to promote the use of key Chinese-made petrochemical materials and machinery and raised the standards for China's manufacturing industry.

Besides the 23 strategic suppliers, Sinopec also entered into strategic partnerships with 10 large international corporations, including Saudi Basic Industries Corporation, ME Global and SK from Korea.

Wang Tianpu said that in the next three years, Sinopec will engage in another batch of large-scale oil exploring, petrochemical and natural gas pipeline projects. Based on the principles of mutual trust, mutual benefit and risk share, Sinopec expects to create a win-win situation with its strategic suppliers and partners.

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